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Today’s the Day: End of the EU VAT de minimis and the launch of the Import One-Stop Shop (IOSS)

Today (July 1) marks the latest major change affecting the complex world of cross-border eCommerce.

It sees the removal of the de minimis value whereby no VAT is paid on goods of a value of up to €22, making all imports subject to European Union VAT rates.

The VAT amount applicable is subject to the local VAT rate of the customer’s delivery country (destination country). The exemption from customs duties on imported goods below €150 will remain in place and will only be applicable on goods with an intrinsic value of more than €150.

To assist third country online retailers and marketplaces, the EU is simultaneously launching the Import One-Stop Shop – or IOSS for short.

The application of the IOSS portal is intended to facilitate a simplified process for the declaration and payment of VAT from either the EU or a non-EU country.

The message is simple – those who are best prepared will be the ones in pole position to secure and grow their cross-border eCommerce sales.

To implement the IOSS, businesses will have to register on the IOSS portal of any EU member state. This electronic portal will hold businesses responsible for charging and collecting VAT, meaning the consumer will be charged VAT at the point of purchase, subject to their local VAT rate.

With this in place, it will enable quicker clearance times at border control, leading to efficiency gains and cost savings for businesses. Just as important, it will ensure high levels of consumer satisfaction, avoiding the issue of any doorstep shocks.

If a business is non-EU based, it will have to appoint an EU-established intermediary to fulfil its VAT obligations of collection, payment and declaration of VAT under IOSS. This intermediary, or VAT agent, will represent them with the IOSS portal and will share the responsibilities of the supplier for return submissions of VAT payments under the IOSS scheme.

Once registered on the IOSS portal, a unique IOSS identification number will be assigned to you. This number will need to be put on all packages under €150 sent to the EU. VAT will then need to be calculated and charged to the customer at the point of purchase with the invoice submitted with the package at customs. IOSS returns must be filed on a monthly basis either directly or through the intermediary and a record kept by the business.

EU goods eligible for relief

As the IOSS is not mandatory, if a business chooses to opt out of registering to the online portal, their cross-border operations may face challenges. Since they are not registered, VAT will not be charged or collected at the point of sale, meaning consumers will have to pay this fee at the point of import.

This may lead to delayed clearance of the consumer’s goods and unexpected fees of import VAT or other handling fees being charged.

Faced with these additional charges, consumers may refuse to pay to have their goods released from customs resulting in an unpleasant and unsatisfactory experience for the consumer and a potential loss to the business. It will also make the consumer less likely to return to the online seller in the future.

The changes to EU VAT are primarily about creating a level playing field and fair competition between EU and non-EU eCommerce players. Major cross-border trading countries such as China, the US and the UK will be among those most impacted by the changes.

Hurricane has been working closely with its customers, including postal operators, carriers, retailers and marketplaces, enabling them to be ready for July 1.

The provision of complete and valid product and shipment data is essential in order to make use of the IOSS and to take advantage of the simplified process that the new portal allows.

But while many businesses have undoubtedly put in place robust processes and systems to meet the new requirements, many others will be playing catch-up over the coming weeks and months as they come to realise the disadvantages of not being prepared.

 

The path to successful cross-border eCommerce – Why compliance is crucial and how you can protect your business.

Compliance has always been a requirement for any business, but in recent years the Bureau of Industry and Security (BIS) and Office of Foreign Assets Control (OFAC) have started actively monitoring the compliance of businesses trading in the US.

Businesses that have been found to have compliancy violations have their cases made public, to deter others from falling foul of the rules. In fact, recent statistics showed that Denied Parties violations accounted for 66% of fines given out.

No business is too big for compliance

Denied Party screening must be done by every business, regardless of your size, location or which process of the transaction you are involved in.

Most recently, Apple fell foul of the rules and were found to have violated the Foreign Narcotics Kingpin Sanctions regulations by entering an applications development agreement with a Slovenian company whose director and majority owner were designated under the Foreign Narcotics Kingpin Designation Act.

They were ordered to pay US$476,000 for this infringement, in which their screening systems failed to match ‘SIS DOO’ and ‘Sis d.o.o’(D.o.o is a standard corporate suffix in Slovenia identifying a limited liability company), showing that even the top companies struggle with screenings.

Marketplaces at fault

Also guilty of Denied Party failures were Amazon, who admitted to selling goods to individuals in Crimea, Iran and Syria between 2011 and 2018. Although the violations were viewed as ‘non-egregious’ by OFAC, they were still fined $134,523 which amounted to half the value of the transactions.

Small failings in the ability of the screening process to identify spelling mistakes such as ‘Krimea’ in place of Crimea led to further violations and low-value goods being sent to Cuba, North Korea, and Sudan. By admitting to these failings, Amazon were subject to lighter penalties than would normally be given for such large violations.

Individuals are just as responsible as businesses

Although Denied Party screening can be considered more important as the penalties are more severe, a lady attempting to import a crocodile skin handbag into Australia found out the hard way that certain restrictions apply to goods being imported when her handbag was destroyed.

Worth $19,000 the owner did not pay a $70 licence to import it, and although not illegal, crocodile products are controlled under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) to ensure they are not linked to the illegal wildlife trade.

The above examples show that compliance is not an option, and even the biggest companies in the world can fall foul of the rules.

Having an effective screening process in place can minimise the risks associated with cross-border eCommerce.

Hurricane’s Denied Party and Prohibited and Restricted Goods screenings ensure businesses know what they are selling to who and where maintaining compliance and reducing the risk of fines and severe penalties.

Hurricane is quickly becoming the go to data partner for cross-border eCommerce by providing cost-effective solutions that have been built to provide the ultimate customer browse, checkout cost transparency and cross-border delivery experience.

The path to successful cross-border eCommerce – How Hurricane’s solutions can help you successfully trade cross-border.

Cross-border eCommerce can provide any business with the opportunity to expand and open their business up to more markets and customers. Whilst this sounds like a fantastic proposition, there are many issues to contend with when first starting out.

There has recently been a large increase in the amount of regulations and compliance rules that are being introduced and monitored, which are often missed by smaller businesses who may not have any previous experience with customs.

There is a sharp focus on knowing what you are sending, and who you are sending it to.

Unknowingly sending an item into a country that requires a licence or sending goods to a blacklisted customer will end up with a business facing fines, and goods being destroyed.

Hurricane has developed 3 main solutions to help businesses stay compliant, and successfully expand their business into cross-border eCommerce.

They are Import Duty and Tax calculations, Prohibited and Restricted Goods Screening and Denied Party Screening. Below we show what these solutions do, and how they can help your business navigate cross-border eCommerce.

Duty and Tax

Every product has a duty and tax rate applied by individual customs upon importation. Individual countries also have their own deminimis levels, which are the values under which products do not have any duty or taxes applied to them.

It can therefore be difficult to calculate the duty and tax rates applicable in checkout. Hurricane’s duty and tax calculator allows businesses to show their customers the total cost of any purchase, drastically reducing negative customer experiences and customer churn.

Prohibited and Restricted Goods

Each country’s customs have their own rules on what can and can’t be imported, and whether special licences or permissions are required. Having carried out deep analysis of restrictions and requirements for importing, exporting and transporting goods in 154 countries, covering 97% of global GDP, Hurricane provides feedback on prohibited and restricted codes. Hurricane’s screening prevents goods from being wrongly transported or imported, ensuring there are no compliance slip ups.

Denied Party Screening

Denied Party Screening is becoming crucial for any business trading cross-border as punishments become more severe. Hurricane’s screening allows businesses to see if their customers and partners are on any of the global denied parties lists, allowing you to control who you sell your products to.

Compliance is key

Transparency is key to providing a positive customer experience. It is incredibly cost-effective and affordable compared to fines that can be given due to non-compliance.

Hurricane can also be a key selling point for your customers, as they will know that all costs will be paid upfront and transit times will be reduced.

Contact us to find out how Hurricane can help your business navigate the uncertainties of cross-border eCommerce.

Hurricane Tamebay Webinar

Hurricane Commerce signs up for Tamebay Live Show

We are delighted to be a main sponsor and speaker at the first ever Tamebay Live.

The 5-day virtual event in May is set to be a great new addition to the calendar for retailers, brands, marketplaces and anyone else involved in the fast growing world of eCommerce.

More than 30 workshops and a host of masterclasses have been lined up from May 17-21 with each day having its own theme.

Hurricane is the headline sponsor and co-host for Day 1, called ‘Back to Basics’, and will then be a speaker on Day 4, which is all about Cross-Border selling.

Martyn Noble, Hurricane’s CEO, said: “Tamebay have come up with an innovative and hugely timely event that will give retailers, brands and others involved in eCommerce plenty of food for thought and inspiration.

“We are thrilled to be playing a leading part and, particularly, look forward to sharing knowledge and ideas that will help anyone looking to grow their sales internationally.

For more information about Tamebay Live and to register to attend visit https://tamebaylive.com/

Please also keep an eye on the Hurricane website and LinkedIn for further details as we run up to this hugely exciting conference.

Hurricane to be Gold Sponsor at WMX Asia

Hurricane is delighted to announce that it will be a Gold sponsor at The World Mail & Express Asia Conference, taking place in Bangkok, Thailand, from the 1st to the 3rd of November 2021.

This prestigious annual international event brings together leaders in parcel and mail world, providing great opportunities for networking, gaining industry insights and doing business.

As a Gold sponsor, Hurricane will not only be exhibiting, but CEO Martyn Noble will also be speaking about some of the major regulatory changes impacting the postal and carrier industry and the importance of quality data in enabling seamless cross-border eCommerce trade.

Hurricane will be attending the event with Chinese partner ELI Holdings, who are helping us to develop our links in China and the wider Asia Pacific region.

We are looking forward to showcasing Hurricane’s data enhancement technology at WMX Asia, a region that is at the epicentre of global eCommerce trade.

For more information on the event and Hurricane follow the link below:

WMX Asia Conference

Parcel delays loom as STOP Act and ICS2 hit on March 15

Postal operators are bracing themselves for the biggest date in their calendar this year.

Next Monday (March 15) sees the enforcement of the US STOP Act and the European Union’s Import Control System 2 (ICS2).

The STOP Act had originally been due to come into full effect on January 1 until it was moved to March to give US Customs and Border Protection more time to prepare for the regulations.

The Act requires postal operators to provide a higher level of advance electronic data (AED) than had previously been necessary.

ICS2 is also aimed at postal operators and requires entry summary declarations to be submitted on parcels coming into and through the EU.

Cross-border eCommerce specialist Hurricane Commerce’s technology is enabling postal operators across the globe to meet the new requirements for complete and valid data including product descriptions, HS6 codes and country of origin.

Martyn Noble, Hurricane’s CEO, said: “March 15 is the biggest date in the diary for postal operators this year and the level of preparedness varies from one authority to the next.

“But the stark reality is that, as of next Monday, postal operators and their customers will need to produce complete and valid data on their eCommerce shipments.

“We have already seen the impact of a lack of quality data on parcels since Brexit on January 1. The STOP Act and ICS2 are the next major challenges and then we have the introduction of the EU VAT reforms in July.

“With the Coronavirus pandemic continuing to place huge pressures on air freight capacity, the supply chain industry cannot afford delays, returns and additional storage, not to mention the associated extra costs.

“In December, we predicted that a lack of readiness for the STOP Act could result in several hundred million shipments being held up and we believe this remains the case. This is without adding in the impact of ICS2 with the onset of much greater scrutiny.

“The cross-border eCommerce landscape has changed for good, but those postal operators which get their data right will be able to meet these challenges and achieve scale.”

Hurricane’s solutions were specifically developed to enable customers to meet the challenges of the new regulations.

Hurricane’s Zephyr data enhancement API allows bulk clearance facilities to check, find and populate additional or missing data including product descriptions and HS6 codes.

Meanwhile, its Aura API covers three other critical cross-border functions – duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

The company was established in 2016 and clients include Australia Post, An Post, SEKO Logistics and Lenton Group. Postal operators can access Hurricane’s solutions direct or via the IPC’s Dynamic Merchant Platform (DMP) and UPU.

 

Hurricane in the media:

Parcel and Postal Technology International – Parcel delays loom as STOP Act and ICS2 hit on March 15

Post and Parcel – Parcel delays loom as STOP Act and ICS2 to hit next Monday

Hurricane Commerce cross-border eCommerce solutions go live on Magento Commerce

Hurricane Commerce’s data enhancement, duty and tax calculation, prohibited and restricted goods screening and denied parties screening products are now live on Magento Commerce.

The release of Hurricane’s solutions on Magento Commerce comes at a crucial time for eCommerce traders with Brexit and other changes to laws and regulations, making complete and valid electronic data mandatory.

Without the right data, shipments will be held at customs, causing significant delays, customer dissatisfaction and increased costs.

Magento merchants will be able to access Hurricane’s bespoke AI classification engine Bluestone to ensure their products have the right descriptions and HS6 codes.

Bluestone was built to understand detailed product language and nuances to identify descriptions and match them against the most appropriate customs commodity description and subsequent HS6 code.

Merchants will also be able to integrate Hurricane’s Aura solution, its API that covers duty and tax calculation, prohibited and restricted goods screening and screening of denied parties.

Martyn Noble, CEO of Hurricane Commerce, said: “We are excited that our products are now live on the Magento Marketplace and available to help eCommerce merchants drive greater performance in their cross-border trade.

“Our solutions reduce cart abandonment by enabling merchants to provide real-time calculations of duty and taxes, which gives their customers complete cost transparency.

“We know from our experience with existing customers that reducing cart abandonment can increase revenues by as much as 24%.”

The other major requirement for cross-border eCommerce shops is to ensure they are fully compliant.

Martyn added: “Regulations and laws are getting tougher around the globe.

“Merchants need to have complete and valid data on all shipments as well as ensuring they are not trying to ship goods into countries where they are not allowed. There is also the need to ensure you aren’t sending goods to anyone on a denied parties list.

“Hurricane’s industry-leading solutions are already used by merchants, marketplaces, postal authorities and carriers around the world. “We are delighted that they are available to Magento customers to enable them to accelerate the growth of their businesses and remain compliant.”

The Hurricane extension can be downloaded from the Magento Marketplace. Hurricane is a partner in the Adobe Exchange Partner Program.

https://marketplace.magento.com/hurricanecommerce-module-duty-tax-compliance.html

 

Hurricane in the news:

Tamebay – Duty and tax calculation for Magento Commerce from Hurricane Commerce

Early Brexit chaos just “tip of the iceberg” says cross-border trade specialist

Problems in the first few days since Brexit are the “tip of the iceberg”, according to cross-border eCommerce trade expert Hurricane Commerce.

Hurricane says that the issues caused by lack of complete and valid customs data and VAT now being payable on low value goods into the UK will cause severe challenges over the coming days and weeks.

Last week, DPD temporarily suspended parcel deliveries to the EU due to lack of data, stating that 20% of items had incorrect or incomplete information.

Several UK online retailers, including luxury food merchant Fortnum & Mason, have temporarily stopped taking orders from EU countries due to the extra customs paperwork now needed.

And some EU retailers have ceased taking UK orders following the January 1 change making overseas suppliers who send parcels containing goods valued at £135 or less to the UK responsible for paying any import VAT that is due.

Customer satisfaction has also been put under increased strain with consumers in the EU complaining about unexpected VAT charges and clearance fees, and UK consumers being asked to pay higher delivery charges to cover the extra work caused by Brexit.

Another major hurdle resulting from the Brexit trade deal concerns ‘rules of origin’ with the threat of tariffs due if goods do not meet the complex requirements or are not wholly made in either the UK or EU.

Martin Palmer, Hurricane’s Chief Content and Compliance Officer, said: “Online merchants and marketplaces, postal operators and carriers are starting to see the reality of Brexit and the ending of VAT exemption on low value goods by the UK Government.

“With the EU also removing the low value VAT threshold in July, the compliance pressures on all parts of the cross-border supply chain are set to intensify even further with similar issues to be experienced in all EU countries to those current being experienced in the UK

“The first week and a half since Brexit is just the tip of the iceberg.”

Martin added: “We predicted for the last six months of 2020 that many businesses were going to face serious challenges post January 1, while others did their planning and put the best possible systems in place.

“There is simply no escape from the need for complete and valid customs clearance data including product descriptions, HS6 codes, shipper and consignee details and country of origin.

“Retailers which offer Delivered Duty Paid (DDP) give themselves the best chance of keeping their customers happy by avoiding the doorstep shock of unexpected fees for customs duties and import taxes.”

Hurricane Commerce has developed a series of API solutions to help ensure seamless cross-border eCommerce trade covering data enhancement, duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

Its customers include some of the world’s leading postal operators, carriers, online merchant and marketplaces.

 

Hurricane in the news:

Tamebay – Early Brexit chaos just “tip of the iceberg”

Air Cargo Week – Hurricane: Early Brexit problems “tip of the iceberg”

Sky News Business – Brexit trade problems ‘just the tip of the iceberg’, e-commerce expert warns

Retail Times – Early Brexit chaos just “tip of the iceberg” says cross-border trade specialist

Eminetra – Brexit’s trade problem is “just the tip of the iceberg,” e-commerce experts warn 

Q Radio – Brexit trade problems ‘just the tip of the iceberg’, e-commerce expert warns

An Post partners with Hurricane Commerce to enhance eCommerce parcel data quality

An Post is working with Hurricane Commerce to help it develop its cross-border eCommerce capability.

The postal operator in the Republic of Ireland has integrated Hurricane’s Zephyr solution to enhance the quality of its advance electronic data on mail parcels.

The requirement for posts to meet a higher threshold for parcel data will be far greater from January 1, 2021, with Brexit and the enforcement of the STOP Act in the United States.

A further major change follows in March next year with the implementation of the Import Control System 2 (ICS2) requiring postal operators to make entry summary declarations on all packets and parcels.

Earlier this year, Hurricane Commerce launched its easy to integrate Zephyr data enhancement product which allows bulk clearance facilities to check the accuracy of data including product descriptions and HS6 codes, and receive additional pertinent or missing information all under a single quick check function.

Zephyr can process over 700 million requests a day and can, on an item by item API call base, provide for a real time feedback with response times of 100 milliseconds. The screening of a file consisting of a maximum of 10,000 items that is sent to Hurricane takes no more than 15 minutes.

David Spottiswood, one of the founders of Hurricane Commerce, said: “We are delighted to be helping An Post meet the mandatory requirements for data on mail parcels.

“An Post is an innovative, forward-looking post that is putting itself in the strongest possible position to not only be compliant but also to take advantage of the exponential growth in cross-border eCommerce.

“The swathe of regulations coming into effect from the start of 2021 will result in parcels being held up and, in many cases, rejected unless they contain the required customs clearance data. Having the necessary complete and valid electronic data will ensure that mail items flow smoothly through customs and on to their intended customer.”

Cyril Mc Grane, An Post’s Director of International Trade, said: “We are investing heavily in our cross-border eCommerce capability and Hurricane will play an important part in this.

“The continuing enhancement of the data quality on parcels will ensure we meet the regulatory requirements and provide benefits operationally, financially and, most importantly of all, in terms of customer satisfaction.”

 

Hurricane in the media:

https://postandparcel.info/129636/news/post/an-post-investing-heavily-in-cross-border-e-commerce-capability/

https://tamebay.com/2020/12/an-post-hurricane-partnership-to-enhance-ecommerce-parcel-data-quality.html

https://apex-insight.com/an-post-works-with-hurricane-commerce/

Hurricane makes the news around the world

Hurricane Commerce has been making headlines across the global postal and logistics media.

Leading publications including Parcel & Post Technology International, Air Cargo, Post & Parcel, the Handy Shipping Guide, Lloyds Loading List and The Loadstar have all carried articles looking at the likely impact of Brexit and the US STOP Act on cross-border eCommerce trade after January 1, 2021.

The Loadstar article focussed on Hurricane’s warning that as many as 700 million mail items could be rejected for not having the complete and valid advance electronic data required under the STOP Act in just 30 days’ time.

This was confirmed by Martha Johnson, spokesperson for the United States Postal Service (USPS) who told The Loadstar: ““Postal shipments containing goods not accompanied by AED will be considered inadmissible.”

To read The Loadstar article in full visit https://theloadstar.com/tougher-us-drug-legislation-set-to-derail-millions-of-parcels-on-1-january/

Meanwhile, Hurricane’s Chief Content and Compliance Officer, Martin Palmer, has been quoted at length discussing the looming “chaos” of Brexit on the cross-border shipment of eCommerce parcels.

Martin said: “This is not just about the UK and trading into the EU; it is also about the remaining 27 EU member countries and their cross-border trade into the UK.”

Read Martin’s thoughts in full on the Post & Parcel website –

https://postandparcel.info/127999/news/e-commerce/hurricane-commerce-time-is-running-out-to-get-brexit-ready/