Customs Compliance & Risk Management

Issue 22

ISSN 2669-2171

August / September 2023

Editor's message

Samuel Draginich

Member of the Editorial Board

Dear Readers,

On behalf of the Editorial Board I’d like to offer you a warm welcome to the 22^nd issue of the Customs Compliance & Risk Management Journal (CCRM). As a member of this highly international board, I currently work as a Senior Trade Compliance Manager for Amazon at their EU headquarters in Luxembourg where my focus is on import/export trade compliance and AEO governance.

This issue packs a wide array of topics pertinent in today’s trade compliance landscape!

What role does and should the EU play in the development of ‘mega-free’ trade agreements? Asia-Pacific and the Americas take the spotlight, with the traditional WTO-focused model eroding. Take an in-depth look into current and future ‘mega’ free trade agreements, what are the implications for the EU and its role in their development.

With the advent of ChatGPT, the world has been a flutter with talk of AI and its role in the workplace. A customs broker takes an in-depth look and how such tools can be used to assist in HS classification, generating customs response letters and more.

For those of us based in the EU, the upcoming CBAM legislation has undoubtedly been on the docket of many meetings. How CBAM will play out in practice and its management within companies is an open question; explore with us with a thorough analysis of the legislation, its mechanics and management best practices.

I sincerely hope you enjoy this 22^nd issue of the CCRM. While you’re here, why not consider contributing? We are always on the lookout for fresh content from trade compliance practioners around the world. Reach out to info@customsclear.net for more information and to introduce yourself!

Best regards,
Sam Draginich

Content

Case law

Topic spotlight

Perspective

Country update

Explainer

Triangulation - what is it?

No rubric

Information

Case law

Three questions about customs value of goods in transactions between the related parties in Ukraine

Ilona Mishchenko08 Oct 2023

The issue of customs valuation is extremely important for Ukraine. The author has written about it in previous issues of the journal. A special case of customs valuation is no exception - when the seller and the buyer are related parties. The concept of "related parties" in Ukrainian legislation is...

Valuation

Case law

Fraudsters in the supply chain: Who pays taxes as a result of fraudulently completed formalities?

Ingrida Kemežienė24 Sep 2023

Presumption of guilt - you'll say it doesn't work that way. Unfortunately, in tax law, the taxpayer is presumed to be guilty of breaching the tax law unless he proves otherwise. The only question is whether, even if proven not guilty, the taxpayer will not have to pay the tax....

Duties & taxes

Compliance

Case law

A storm in a tea kettle

Omer Wagner17 Sep 2023

A few days ago, an Israeli court accepted a claim by an importer of electric kettles against the customs authority, regarding the classification of the products for customs purposes. The court adopted the importer's position that the kettles should be classified in subheading 851610 of the HS as "immersion heaters"...

Classification

Case law

Country update

Input tax credits on imported goods in Canada

Peter Mitchell08 Oct 2023

The person entitled to claim an input tax credit for GST payable on imported goods in Canada is not always the person who pays the tax. This counter-intuitive situation generally occurs when the importer of record is a non-resident. It arises because more than one person may accept liability for...

Duties & taxes

Country update

Who is a purchaser in Canada and why does it matter for customs valuation?

Peter Mitchell17 Sep 2023

Can a small difference between Canadian customs legislation and the WTO Customs Valuation Agreement really affect the customs valuation process and its outcome? The following article attempts to answer this question.

Valuation

Country update

Topic spotlight

Can Brussels save the worlds rainforests?

David Savage11 Oct 2023

The link between climate change and biodiversity loss is by now well established. As part of its “Green Deal”, the European Union Deforestation Regulation has been published in the Official Journal. This Regulation seeks to protect the worlds forests by banning certain products from being placed on the EU market....

Sustainability

Topic spotlight

CBAM transitional period: roles and responsibilities

Enrika Naujokė11 Oct 2023

EU’s Carbon Border Adjustment Mechanism (CBAM) regulation entered its transitional phase on 1st October, 2023. From that day on, importers have to collect and report data on greenhouse gases emitted during the production of CBAM goods. Since the data must be collected from the manufacturers in non-EU countries, a process...

Sustainability

Topic spotlight

Who is responsible for CBAM in the company?

Enrika Naujokė10 Sep 2023

If you import aluminium, steel and iron products, cement, fertilisers, hydrogen or electricity, you should already have answered the question of who in your company speaks the language of the Carbon Border Adjustment Mechanism (CBAM), i.e. is knowledgeable in this area and responsible for compliance. And not just you, but...

Sustainability

Topic spotlight

Perspective

Management of import taxes other than duties

11 Oct 2023

What are the pitfalls and opportunities of 42 import procedure? What about post-Brexit VAT? What do you need to know about import GST (VAT) in Canada? Do traders and brokers understand excise risk? What about "domestic" import taxation in Latvia? The CBAM – what does the future hold? These were...

Duties & taxes

Perspective

The developments of mega-free trade agreements

Hans-Michael Wolffgang01 Oct 2023

The development of free trade areas around the world, with most attention paid to the Asia-Pacific region and the Americas, is a major theme of the article. It also raises the question of the role of the EU in this development. The article is based on the presentation at the...

Trade policy

Perspective

Chat GPT and Google Bard: How customs brokers can use these AI tools

Gertrūda Bakšienė01 Oct 2023

Artificial Intelligence (AI) - a topic that was barely heard of last year, it now seems to be a topic that appears at almost every conference and can be applied in every field. When we heard about artificial intelligence and its availability on the market, it seemed so distant and...

Digitalisation

Profession

Perspective

Customs HI&AI: new crisis or new opportunities?

Enrika Naujokė01 Oct 2023

'It is December 2039, and various newsbots push the following content to their subscribers: ... Customs is being abolished next January (2040) when the EU's new customs system [Artificial Customs Intelligence Depository, ACID] comes into operation ... The new system means that most of the approximately 5,500 Customs employees will...

Digitalisation

Perspective

Transport services VAT exempt because already in import tax base? You will need to prove it!

Mark Rowbotham24 Sep 2023

The Romanian company provides transportation services. It transported goods from the port of Rotterdam (the Netherlands) to Cluj-Napoca (Romania) under transit procedure. Goods were released into free circulation in Romania. It treated transportation service as VAT exempt because it assumed that transportation cost was included into the import VAT taxable...

Duties & taxes

Perspective

Management of customs procedure code 42 in Austria and Germany – pitfalls and opportunities

Michael Lux27 Aug 2023

Instead of declaring non-Union goods for release for free circulation under code 40 (in which case import VAT will also become due), an importer established in another Member State (MS) than that in which such goods will be released for the procedure (and will thus become Union goods) has –...

Procedures

Perspective

The risk challenge of indirect tax - excise (Part III)

Mark Rowbotham23 Aug 2023

Editors' note: In this article, Mr Rowbotham, author of numerous books on trade and logistics topics, shares some parts of the book he is currently working on. Topics covered: Introduction to domestic duties, excise duty and the UK due diligence requirements, for both domestic and import purposes. This is the...

Duties & taxes

Perspective

The risk challenge of indirect tax - VAT (Part II)

Mark Rowbotham23 Aug 2023

Editors' note: In this article, Mr Rowbotham, author of numerous books on trade and logistics topics, shares some parts of the book he is currently working on. Topics covered: Introduction to VAT and the challenges it poses for businesses, types of VAT fraud, EU triangulation (How do we prove VAT...

Duties & taxes

Perspective

The risk challenge of indirect tax - customs (Part I)

Mark Rowbotham20 Aug 2023

Indirect tax - customs duty, excise duty and VAT - while it must be paid correctly, also offers various cash enhancement opportunities, which is crucial for all organisations seeking to continuously improve their internal indirect tax function. However, the prerequisite is due diligence. In this article, we overview the host...

Duties & taxes

Perspective

Explainer

Triangulation - what is it?

Mark Rowbotham27 Aug 2023

The EU-UK Trade and Co-operation Agreement signed at the end of 2020 made very little mention of the impact of VAT on UK businesses trading within the EU. Zero Tariffs and Zero Quotas were the most pressing concerns for companies looking to see minimal disruption to their trading activities. However,...

Duties & taxes

Explainer

No rubric

Ukraine customs and trade news August/September 2023

Iryna Pavlenko08 Oct 2023

News at a glance: Three EU nations ban Ukraine’s grain export; reinstating smuggling as a criminal offense; updated free trade agreements between Ukraine and Canada, and Ukraine and North Macedonia; anti-dumping measures.

News

EU law news August/September 2023

01 Oct 2023

News in week 39: Prohibition to import iron and steel product processed in a third country that incorporate iron and steel products originating in Russia enters into force on 30 September - see Irish Customs notification and explanations; on 1 October, the Carbon Border Adjustment Mechanism (CBAM) enters into application;...

News