Still breathing even after the change to VAT on imported goods

Esko Holopainen, Head of SA-TU Logistics Customs Clearance Unit, has a long experience in customs clearance and logistics working groups. Since 2001 he has participated in forwarding group of Finnish Freight Forwarding and Logistics Association and the forwarding cooperation group of Finnish Customs

This year one of the hottest topics in the world of customs clearance has undeniably been the change to VAT on imported goods and its impact on customs clearance. Discussion was already brewing last year on the impact of the change and the problems it would bring with it. There was far less mention of what opportunities the change might bring.

Our western neighbours made the transition to a corresponding VAT practice slightly earlier than us, and by monitoring them, we can quite accurately predict the things we should pay attention to in the transition process, and what kind of pitfalls or problems we might expect. Finland has traditionally followed its western neighbours closely.

The new year came and went, customs clearance was carried out, and messages were sent just as they always have been. Something had changed, but customs clearance itself was going smoothly. Challenges began to appear when we started to think about how batches subject to VAT are handled and declared forward. Luckily our neighbours had already encountered this, too, and so we were able to prepare. Nevertheless, the declaration of information kept us rather busy, with update after update. The change to VAT on imported goods also caused clear process changes in the industry. The number of invoices subject to VAT decreased significantly, even though the legislation itself had not changed.

For importers, the change went far deeper than it did for people completing customs declarations. Previously, importers received VAT deduction information conveniently from customs clearance decisions, but now VAT is no longer found on decisions. In addition, logistics sector actors have each had their own interpretation of the legislation, which can be seen in invoices.

The honeymoon stage of the change to VAT on imported goods is nearing its end, and things are beginning to settle.  The same was true for our neighbours; there too, it took time for things to settle down. Nevertheless, our neighbours are still encountering issues and challenges for which they have yet to find a permanent solution.

Once we have VAT matters up and running, we will begin to see new challenges arriving with the EU’s customs reform. That will give us something else to think about for a while.

Before that, we will still have the Russian customs’ green line, electrical installations in Customs’ warehousing, and UTU – the launch of Customs’ new customs system – to deal with. This all keeps the mind active, however, which is purely a positive thing.