What does Brexit mean for Middle East business? has been saved
What does Brexit mean for Middle East business?
The United Kingdom’s (UK) forthcoming departure from the European Union (EU) will lead to many changes in how goods and services are traded not only between the EU and the UK, but will also with the Middle East. Although it may seem that there won’t be too much difference between trade with the UK post-Brexit and any other non-EU country, there are some key areas that should be
Currently, shipping goods from the Middle East region triggers an export in the Middle East country that they are shipped from and an import into one of the EU Member States (of which there are currently 28). Any applicable taxes and duties need to be paid upon importation in the EU, if applicable. Once this is done, the relevant goods are then considered to be in “free circulation” within the EU.
However, once the UK leaves the EU, you will essentially have another border to cross with regards to goods are brought into the UK from the EU. Accordingly, rather than crossing over to the UK while in “free circulation”, any goods post-Brexit will need to be declared again, with relevant documentation, at the UK border for import into the UK. This also means that you will need to determine
the Harmonized Tariff Schedule (HTS) code, origin and valuation of the goods
(again). Practically speaking, this also means that as a goods trader you will
need to understand the UK specifics requirements for goods and documentation and will need to ensure that your goods meet the (new) UK standards prior to importing them in. The same applies vice versa when goods that are originating in the UK and enter the EU.
In case of related party transactions, it is important to determine the customs value upon importation. HM Revenue and Customs (HMRC) (or the EU (27) customs authorities in the opposite scenario) will check to see whether the transfer price is acceptable for a customs valuation determination and therefore is not influenced due to the nature of the relationship of the related parties. This needs to be demonstrated to the satisfaction of the respective customs authorities in either the UK or EU. Where it is determined that a transfer price is not acceptance and therefore is subject to any change or adjustments, these changes need to be made known to the relevant customs authority
and pro-actively reported (as issuing debit notes may trigger additional duties and taxes to be paid, whereas a credit notes may allow a refund).
In order to secure this and assure that you can continue to have a fluid
entry in the UK (or vice versa EU) post-Brexit, we recommended that you check your current circumstances (including your pricing, and contracts) and evaluate your circumstances as they are to be in January 2021 to see if any correspondence is required with the customs authorities, to avoid
any border delays or surprises later. Given that the review and adjustment of contracts and pricing can be a matter negotiation, we recommend that you look into this now to ensure that you have enough time to act, if need be.