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2021 – a year of huge change for cross-border eCommerce

If 2020 was the year of the Coronavirus pandemic, for those involved in cross-border eCommerce trade 2021 will be the year of sweeping regulatory change.

The changes come thick and fast, starting on January 1 with Brexit and the full enforcement of the US STOP Act.

Both make the provision of complete and valid customs clearance data absolutely essential.

Ten weeks later will see the implementation of Import Control System 2 (ICS2) requiring postal operators to provide entry summary declarations on goods into or through EU customs territory.

As if that was not enough to occupy the minds of everyone involved in cross-border trade, both the UK and EU are removing the exemption from VAT on low value items.

And there is also the launch of the EU’s Import One-Stop Shop (IOSS) for retail merchants and marketplaces to contend with.

Combined, this plethora of regulations – all impacting in the first half of 2021 – will test postal operators, carriers, merchants, marketplaces and platforms to the absolute limit.

We know from our work with customers across all of these different segments of cross-border trade that some have invested the time and resource to get prepared for January 1.

They have tackled head-on the knowledge that the compliance landscape will look very different in just a few days’ time to what they had been used to.

For postal operators, good planning and preparation in terms of data enhancement means avoiding the nightmare scenario of parcels being stuck at customs resulting in huge delays and additional costs including warehousing, storage and returns.

For merchants and marketplaces, meeting the higher threshold for parcel data will be essential if they want to ensure the frictionless passage of goods to their end customers. Failure to do so will inevitably result in lost customers and reputational damage.

The final quarter of 2020 has seen increased activity among those whose businesses depend on seamless cross-border trade as the realisation dawned that January 1 really was going to mean a different way of doing things.

And while events like Brexit grab many of the headlines, the reality is that some or all of the regulatory changes outlined above will impact the way different postal authorities, carriers, merchants and marketplaces – irrespective of geography – conduct their business in 2021 and beyond.

Below is a recap of the big changes coming in 2021 and their timescales:

January 1 – Brexit: complete and valid data (including HS6 codes, product descriptions and correct values) will be required from the UK into the EU and vice versa.

January 1 – UK Import VAT Threshold: New regulations will make an overseas supplier who sends parcels containing goods valued at £135 or less to the UK responsible for paying any import VAT that is due.

January 1 – US STOP Act: the USPS has made it plain that from this date parcels will be refused entry into the United States and returned to origin if they do not meet the higher threshold level for advance electronic data (AED).

Martha Johnson, a spokesperson for the USPS, said: “Postal shipments containing goods not accompanied by AED will be considered inadmissible.”

March 15 – ICS2: Postal operators will no longer be exempt from having to make entry summary declarations into the Import Control System before moving goods into or through EU customs territory.

Under ICS2, shipments without the right data will no longer be allowed with the likelihood of severe delays in customs and increased costs.

July – EU VAT Exemption Removal: Abolition of exemption from VAT on low value items under €22. The changes mean that EU and non-EU sellers will charge VAT at the point of sale for consignments of €150 or below.

July – Import One-Stop Shop (IOSS): Modernising of VAT for cross-border eCommerce via the Import One Stop Shop (IOSS) making the retailer, web shop or marketplace liable for the declaration and payment of VAT to the country of destination.

Hurricane Commerce was founded in 2016 to provide customers with industry-leading solutions to changing and evolving regulations and laws impacting cross-border eCommerce trade.

From this starting point, we have created our lightning quick Zephyr API which enhances the quality of parcel data.

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.

Meanwhile, our Aura API covers the three areas of duty and tax calculation, prohibited and restricted goods screening and denied parties screening.

An API call via Aura is super-fast with throughput tested at 640 transactions per second. One single call can perform these three critical cross-border functions, presenting the data back in real-time.

To find out more about Hurricane’s solutions, contact sales@hurricanecommerce.com.

 

Hurricane in the media:

CEP Research – 2021 will be a year of huge change for cross-border eCommerce

Tamebay – Regulatory change to test cross-border traders in 2021

 

US Customs and Border Protection document

Is this the end of De Minimis (Low Value) clearance in the USA?

In 2016, the United States increased its De Minimis threshold to US $800 – one of the highest levels in the world.

The De Minimis level is the financial threshold level at which Customs and Border Protection (CBP) do not collect import duty.

In addition to the benefit of no duty, the clearance process for the importer, transporter, and clearance agent, may be simplified.

The De Minimis exemption applies only to low-value shipments of not more than $800 on non-restricted goods. (Certain goods such as excise, licensable goods are excluded).

We understand that the US CBP is preparing a proposed rule to the Office of Management and Budget (OMB) requesting a change that would eliminate the $800 De Minimis exemption for imports subject to Section 301 tariffs (China). Details are yet to be published.

Section 321 of the Tariff Act of 1930 (19 USC § 1321) provides for an exemption from duties for certain shipments imported having an aggregate retail value in the country of shipment of not more than $800.

Exemption under Section 321 is most applied to eCommerce, low value transactions where the seller ships directly to the buyer from a foreign country.

The removal of the $800 De Minimis exemption would not only increase the delivered price of an item to the US customer, but would also likely increase the number of checks and holds due to poor data from the shipper, additional documentation and possibly a Power of Attorney from the importer.

It may also have implications on the door-to-door delivery time. Complete and valid data will therefore become more important than ever to properly calculate your landed cost.

China, which is likely to be severely impacted by any change in US De Minimis levels, has been identified as a key origin of poor and inaccurate data.

While this proposal is at a very early stage it does mirror actions already taken by countries such as Australia and New Zealand in recent years with the removal of the GST (Sales Tax) De Minimis in their countries and the action that is being taken by EU countries in 2021, with the removal of the VAT threshold for imports.

The Covid19 pandemic has seen an exponential growth in eCommerce with huge implications for the traditional methods of importation and duty collection.

Is this just a targeted proposal aimed at improving data accuracy from China? Is this another part of the ongoing trade wars between the USA and China? Or will we see the US move completely towards the removal of Section 321 De Minimis levels?

Hurricane’s Content and Compliance team will continue to monitor these important proposed changes and keep you full informed as to their consequences for cross-border eCommerce trade.

  • Blog by Martin Palmer, Hurricane’s Chief Content and Compliance Officer.