2021 will be a year of huge change for cross-border eCommerce
By Martin Palmer, Co-Founder and Chief Content & Compliance Officer at Hurricane Commerce
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.
A very different landscape
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.
What changes when?
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.
Supporting cross-border commerce
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.