Glopal: Pressure is on for postal operators

Glopal: Pressure is on for postal operators

Time pressures is a key concern for postal operators introducing new procedures to prepare for the new EU import VAT regulations by 1 July 2021, according to a White Paper by Glopal – a provider of software solutions for managing cross border orders.

Postal Operators – Dealing with Cross-Border VAT in 2021 White Paper, published today (25 March 2021), shares insights collected from 18 European postal operators about the stage of development they are at, ongoing plans and the challenges they currently face with the pressure of several regulatory deadlines.

The new EU import VAT regulations mean that by 1 July 2021 all the EU postal operators have to identify, calculate and collect VAT due on parcels imported from outside the EU.

Benjamin Cohen, COO, Glopal, comments on the significance of the new Import VAT Rule: “It is an issue which goes far beyond changing the rules on cross-border taxes and duties. It involves collaboration between customs and tax authorities and the carrier industry at a national, regional and global scale,” he says.

Survey highlights

  • 50% of survey respondents indicated that between 5 and 50 million parcels a year are currently liable to import VAT, and therefore affected by the new regulations. This is without factoring in the number of Low Value Consignments that may be liable for tax from July 2021.
  • Respondents largely rated the information currently received on incoming parcels as ‘Poor’, compared with that of data on outbound parcels from their own countries, which was thought to be ‘Moderately good’ in all respects.
  • Only two postal operators said that they had completed the implementation of IPC’s ICS2 (Import Control System 2) or similar solutions, so that entry summary declarations on all parcels and packets entering the EU are made. The remainder (and vast majority) of operators said that the work was still ongoing.
  • Less than a quarter of the respondents currently offer a Delivery Duties Paid (DDP) solution to shippers looking to provide a pre-paid tax and duty solution to their recipients. However, more than half the respondents are now planning to introduce a DDP service.
  • In terms of an easy cross-border return service with pre-paid taxes and duties, less than a quarter of respondents claimed to offer this, although half were planning on launching one.

Part of the technical challenge for posts is that ‘compliance’ in the electronic data exchange processes is still not standardised, completed nor established in the same way in every country.

The survey revealed a concern that many postal operators in developing countries will be unable to implement the electronic messaging standards in 2021, considering that the new rules require significant investment and global implementation at operational, IT and commercial level.

The study found that there remains much work to be done, but the commercial benefits should pay off in the longer term. Cross-border e-commerce will be more transparent, efficient and fairer, and there is a major opportunity to introduce robust global delivery services, in particular, cross-border returns with pre-paid or user-friendly refunds for taxes and duties.

The survey and in depth background research was conducted by Triangle Management Services Ltd between November 2020-January 2021.

To download your free copy of the White Paper visit: Postal Operators – Dealing with Cross-Border VAT in 2021 | Post & Parcel (postandparcel.info)

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