Getting It Right With Exports – Business Achievers, powered by Ulster Bank

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FAQ for 2017 Export Industry Awards – Applications

What are the Export Industry Awards?


The Irish Exporters Association’s Export Industry Awards in its 17th year is the premier event for recognising the achievements of Irish Exporters. It is important that we highlight the exporting companies who have excelled in their sector despite some difficult trading conditions and to highlight exporters who have been fundamental to Ireland’s success.

The 2017 event is supported by a number of corporate and industry sponsors: Bank of Ireland, Etihad Airways, KPMG and UCD Michael Smurfit Graduate Business School, Bord Bia, Enterprise Ireland, GS1 Ireland and the Irish Maritime Development Office along with our Media partner The Sunday Times, with more to be confirmed.

 

How and when can I apply for the Awards?

The closing date for applications is Thursday, 31st August 2017. There is no application fee, a straightforward application process and companies are welcome to enter more than one category with 11 categories covering the emerging exporters to established indigenous exporters of manufactured goods, services, software and onward to the multinational companies.

In 2017 we are introducing a user friendly online application system. Applicants can start, save, exit and return to edit and submit their online application forms. If you encounter any issues, please contact Jennifer Condon, Events Manager at [email protected] or 01 642 4178 for assist.

 

What are the benefits of entering the Awards and attending the Gala Dinner & Awards Ceremony?

Entry would provide your company with an opportunity to be recognised on both a regional as well as national level, provide positive PR and increase brand awareness leading to access to new customers. Attendance at the gala event would provide your company with plenty of opportunities to network with some of Ireland’s biggest and best companies and is also a great staff night out!

To learn more watch the video below:

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Measuring Brexit Costs

As of 2016, the value of traded goods and services each week between Ireland and the UK is €1.2 billion. Meanwhile over a year since the UK referendum we still don’t have any real clarity on what the final agreement between the EU and the UK might look like. Given such uncertainty, what can businesses do to identify some of the trade-related implications as a result of Brexit under different scenarios?

Many of these scenarios point to the probability of the UK leaving the customs union, and businesses involved in Ireland-UK trade are now assessing the detail of what the financial impact could be. Unless there is a tariff-free EU/UK trade agreement, Irish goods will be subject to tariffs and the EU’s external border will run through Ireland, with a customs regime between the two jurisdictions. For Irish exporters with imported inputs in their products there are significant implications.

Businesses should consider identifying their impacted supply chains now and quantify the financial consequences of potential additional customs duties, VAT and trade compliance costs. Software such as that developed by KPMG can help businesses deconstruct their supply chains and identify where the costs, bottlenecks and opportunities may lie.

Interrogating your data from different angles is critical. Using VAT and Customs filing data, the software can produce a bespoke report quantifying the key customs duty and VAT impacts arising from Brexit. The tool maps the flows of goods into and out of the UK, giving visibility over the elements of the supply chain that are most exposed to additional cost or supply chain risk as a result of Brexit.

Businesses can then work to identify specific solutions to the issues raised, which could involve alternative supplier sourcing, revision of trade terms or changes to the logistics process. Regardless of possible eventual Brexit outcomes for Ireland, businesses who understand their supply chains now and use innovative technology to quantify product, customer or supply chain exposures will be amongst those best placed for the post-Brexit world – whatever that brings.

Marie Armstrong is a Tax Partner with KPMG in Dublin.

For more details on planning for Brexit and KPMG's indirect tax impact assessment tool, download the pdf by clicking here.
KPMG Ireland is a Platinum sponsor of the Export Industry Awards.

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Ireland’s Maritime Sector is Key Driver of Economic Growth

As a maritime nation and as an economy, we are heavily dependent on seaborne transport, which facilitates international trade and is an indispensable part of a supply chain that links Irish industry to world markets. Our ports and maritime services also support Ireland’s tourism industry by providing ferry services to and from ports in the UK and Continental Europe. In meeting the needs of trade and tourism, the maritime industry has shown itself to be flexible and resilient and has demonstrated the ability to respond appropriately to growth and contraction in the Irish economy.

A recent report by the Socio-Economic Marine Research Unit (SEMRU) of NUI Galway shows that Ireland’s marine economy is outperforming Ireland's general economy, with the shipping and maritime services sector, comprising Irish sea-based transport operations for freight and passenger transport, as well as associated services, playing a key role in driving growth.

In 2016, Ireland’s marine economy had a turnover of €5.7 billion, 37% of which is attributable to the shipping and maritime services sector. The direct economic value of Ireland’s marine economy was €1.8 billion in 2016, or approximately 0.9% of gross domestic product (GDP), which represents an increase of 20% on 2014.

This positive trend is also reflected in a report released earlier this year by the Irish Maritime Development Office (IMDO), the Irish Maritime Transport Economist, which records a 2% increase in total port traffic in 2016, reaching the highest level of throughput achieved since 2007. Statistics for 2017 show continued growth, with shipping and port activity in the Republic of Ireland rising by 7% in the first quarter of 2017 when compared to the corresponding period of 2016. It is clear that our maritime sector can respond to the needs of our growing economy, and indeed has a vital role to play in supporting the development of our national economy for decades to come.

We are delighted to be involved with the Export Industry Awards as sponsor of the Maritime Services Company of the Year category again this year, and we strongly encourage those involved in the maritime industry to put themselves forward to receive recognition for the significant role that they play in the growth and development of the export industry in Ireland, which contributes directly to the wider growth of Ireland’s economy.

Liam Lacey, Director, Irish Maritime Development Office

The Export Industry Awards recognise the remarkable achievements of companies working in the export industry.

For more information and to apply visit bit.ly/2q1JN2Y. There is no application fee and companies are welcome to enter more than one category.

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Deep Sea Container Shipping Rates Continue to Slip Back

Leading Supply Chain Advisors, Drewry, have reported that overall Container shipping rates have continued to fall back from the heights reached during Spring 2017 though they are still considerably higher than the rates at the same point in 2016. Thus, while in the week to 13th July 2017 overall quay to quay rates for shipping 40ft. Laden containers slipped by 2.1%, they are still up by 13% form the same week last year.

On the export side, out of Europe the annual increase has been much larger, with an average Rotterdam to Shanghai rate now standing at USD 1362, a 119% increase on the rate a year earlier. The Rotterdam to New York rate has, on the other hand dropped by 8% over the year to USD 1717.  The westbound Transatlantic rates are now running at about three times the rate for a container coming eastbound while on Europe/Asian routes the rates are very much closer to being in balance.

In a separate study Drewry reports an unexpected development of services offering sailings direct from Indonesian and other countries deemed to be secondary markets, to Europe. These services replace the feeder vessel and hub services offered in recent years. The direct services make use of smaller vessels that would have been displaced from the main-line services by the arrival of the Ultra large container ships. Use of the direct vessels should facilitate faster and more economical door-to-door freight.

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Port of Cork Developments Power Ahead

Speaking at the IEA Supply Chain Workshop held in Cork on 15th June, Port of Cork Commercial Manager, Captain Michael McCarthy, welcomed the granting of the final planning permissions by An Bord Pleanala that will facilitate the development of the deep-water facility at Ringaskiddy. Following the completion of the development the Port plans to re-locate the container services from the Tivoli location and general cargo from the City Quays area. Container capacity at the port will be doubled and feeder and other lines will be able to operate larger and more economical vessels on their Cork services.

Capt. McCarthy also told the meeting that the Port now has a majority interest in the former IFI location at Marino Point. Current plans will see this location being developed so as to facilitate the berthing and discharging of Bulk vessels. The facility is rail linked and the Port’s plans include the redevelopment of the railhead within the terminal area so that this mode can be effectively used to ship cargo to any Irish location.

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Transport Department Initiates “Land bridge” Study

As part of its Brexit preparations the Department of Transport, Tourism and Sport (DTTAS) has confirmed that it has commissioned the preparation of a study and report on the British Land bridge. The study will seek to determine the likely effects of Brexit on the quick and competitive flows of goods to and from Ireland. It will also seek to give guidance to Department on the steps that it and other Government Agencies should take to minimise the problems identified.

DTTAS plan to have the report completed within six months. The IEA will sit on the Advisory Board for the study and will seek to ensure that the interests of manufacturing exporters are fully represented there.

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Neptune Line, Rosslare Service Opens Up Possibilities for Irish Exporters

Rosslare Europort Manager and IEA Supply Chain Initiative sponsor, Irish Rail, reports the very successful introduction of the weekly Neptune Lines service linking Santander, Le Havre and Southampton. While Neptune Line does operate a number of freight ferry service's the company’s main activity is in Trade Car and Truck distribution with services linking a number of European Ports. Discussions are now underway with a trailer freight operator to establish an export service to Iberian Markets for Irish manufacturers based on this service. Further details of the direct service will be announced shortly.

Irish Rail also advise that the revised scheduling of the Stena Line Southern Irish Sea corridor service linking Rosslare with Fishguard has proven to be successful and have noted an increase of freight traffic volumes through the Co. Wexford Port.

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What now for Customs and Brexit?

Theresa May ran a Conservative campaign based on “Brexit means Brexit” which for May meant a Hard Brexit. In May’s vision of the future of the UK this meant leaving the Customs Union and leaving the Single Market.

For Irish Traders this meant the imposition of customs duties on trade with the UK, the imposition of border controls and potential complications for importing UK goods in terms of conformity with EU standards.

For the Agri-Food industry an additional nightmare would be the need for agricultural products to be imported from EU approved plants and the requirement for import licenses.

What Brexit means is still unclear

Brexit might still mean departure from the Single Market and Customs Union as planned by Theresa May and re-confirmed by the UK Chancellor of the Exchequer, Philip Hammond in an interview with the BBC on the 18th June.

However there may still be a Free Trade Agreement concluded which will minimise the impact of customs duties and tariffs.

Finally, with the DUP now entering a confidence and supply arrangement with May the views of Northern Ireland businesses will have to come front and centre in the negotiations. Arlene Foster has made it very clear that the DUP is against a hard border with the Republic of Ireland. For the border this can only mean good news and a focus on what will be good for business trading North to South (which equally impacts positively on South-North trade).

What steps should Exporters be taking at this point?

Essentially this has not changed from the advice provided in previous newsletters.

Firstly review the supply chain and determine the information and other requirements which will be necessary to enable you to complete Import/Export Declarations and minimise any delays at customs.

Secondly review your products and determine the best, likely and worst case scenario in terms of additional duty rates.

Thirdly upskill and train staff to understand and implement the new requirements.
 

What could a “practical” Brexit look like in trade terms and how should business now look to plan ahead for March 2019?

1. Trade Agreements and Tariffs

The first question often asked is whether or not customs duties will apply on imports into the UK from Ireland or on import into Ireland from the UK.  At this point there is no answer to this question as it will depend on the type of agreement the UK and EU conclude and the scope of that agreement (most agreements have limited applicability to agricultural products).

When people refer to a Hard Brexit or a Soft Brexit it generally refers to the UK being outside the EU/Customs Union/Single Market (Hard Brexit) or remaining part of the Single Market or Customs Union.

In the former case this would mean the UK being treated as a third country subject to standard MFN (WTO) rates. This can range up to 10% for industrial products and up to 50% for agricultural products.

In the case of a soft Brexit however any of the following scenarios could apply:

  • The UK and EU agree a Customs Union with the EU – similar to the current arrangement for Turkey. Under the Turkey Customs Union, Turkey agree to adopt the EU’s common external tariffs on third-country imports, as well as all EU preferential trade agreements concluded with third countries. However, Turkey does not have a say in the negotiations of EU Free Trade Agreements with third countries (despite being bound by them in relation to imports). This would mean therefore that the UK apply the EU’s Customs Tariff to all imports into the UK. Goods subsequently imported into the UK or EU would not be subject to an additional duty payment on movement to the other’s territory (subject to an ATR cert to confirm the status of the goods). The UK would be subject to EU Free Trade Agreements (FTA’s) and would have to allow FTA countries preferential access to the UK market (It is to be presumed that they would also easily agree UK access to the FTA countries market).
  • EEA (Norway, Iceland, and Lichtenstein)/EFTA (Switzerland) type arrangement.
    The EEA countries have full access to the Single Market in the same way as current EU Member states on the basis that all EU single market legislation is fully implemented in their countries. In addition they must apply the four freedoms. EEA countries do not however have a say in the EU decision-making process on relevant EU legislation and policies.Goods can move without customs duties where goods qualify as “originating products” (subject to a EUR1 document to prove originating status).
  • Preferential Trade Agreements – The EU has concluded a myriad of trade agreements such as the Canada Trade Agreement and South Korea Trade Agreement. Each agreement is specific to the party and what they agree to. In general however these agreements provide for preferential duty access to each other’s market subject to goods qualifying as “originating” – as per the EEA/EFTA agreements above.

 

2. Border Controls

Regardless of the type of agreement concluded, once the UK becomes a non-EU country a customs declaration will still be required on export from the EU and import into the EU. In addition some form of Border control will have to apply.

Even with imports from Turkey, which has a Customs Union with the EU, a SAD is required to be lodged along with an ATR document to prove that goods are in free circulation in the Union.

Similarly with the Norway- Sweden border there are customs controls and the requirement for customs declarations. On the Norway-Sweden border for example there are 10 customs checkpoints with HGVs required to travel via one of these road border crossing points.

However, with an EEA/EFTA type arrangement or a Customs Union then the possibility of an electronic border and customs facilitation stations, as envisaged by Revenue, becomes more likely. While this would simplify the position on the North-South border in terms of movement of goods it does not negate the need for customs compliance and declarations to be submitted to Customs to account for the movement of those goods.

For more information about our partnership with BDO Ireland click here.

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Impact of Brexit on VAT

Since the introduction of the Single Market in 1993, there has been no VAT charged on cross border supplies of goods to business customers (B2B) based in other European Union (EU) Member States and no requirement to pay VAT on import when an EU based business brings goods in from another Member State.

Instead, supplies of goods between VAT registered entities within the EU are ‘zero rated’ for VAT purposes, provided that the customer’s VAT number in a different EU Member state is obtained and there is proof that the goods have left the country of departure.

Under the current system, the onus is on the customer to self-account for any VAT arising  on the intra community acquisition of the goods on a reverse charge basis, at the rate of VAT prevailing in the country of arrival, with VIES/EC Sales and Intrastat filing obligations generally arising as part of the related procedure.

So what will change post Brexit when goods are being supplied to business customers based in the UK, including Northern Ireland?

Ultimately the VAT implications will depend on the outcome of the forthcoming Brexit negotiations between the UK and the EU.  If we assume that trading with the UK post Brexit will be similar to trading with any other non-EU country the following scenarios are likely to prevail in addition to any Customs related implications:

  • VAT on importation will become payable on the value of goods being brought into the UK from EU Member States (and vice versa) by both business customers and consumers (allowing for likely de minimis amounts on which VAT will not be collected).The Value for VAT purposes includes the cost of the goods, the related freight & insurance and the customs duty.  In these circumstances arrangements will need to be made by importers of goods to discharge any VAT arising on import or alternatively, to put a VAT deferral account in place which involves lodging a bond with the Tax Authorities. Otherwise the goods being imported will not be released by the Authorities until the related VAT liability is paid.
  • VIES/EC Sales listings and Intrastat filings which supplement details included on VAT filings will no longer be relevant for supplies of goods and services into the UK as these only pertain to cross border supplies between EU based suppliers
  • UK VAT Rates may differ to those currently in existence (standard rate is now 20%) and it is possible, albeit unlikely, that the UK could reduce its VAT rates significantly to encourage trade, as it will no longer be confined by the EU requirements to maintain VAT rates within a certain range.
  • VAT registration may be required in the UK by EU based suppliers maintaining ‘call off’ stocks of goods, there for draw down by single customers, where simplification measures currently exist to avoid the necessity for such registration.UK Registration requirements may also crystallise in circumstances where simplified triangulation arrangements currently applicable involving a chain supply between ‘VAT registered’ entities in 3 different EU Member States enables the avoidance of a VAT registration by an intermediate supplier.  It is also possible, albeit unlikely, that the UK could oblige non-UK established service providers to register for VAT in the UK in respect of the provision of certain services to UK VAT registered entities where the VAT on such services is currently accounted for by the recipient of the services under reverse charge.
  • UK VAT which is correctly chargeable to businesses established in other European Union Member States which are not obliged to register for VAT in the UK, will no longer be reclaimable under the Eighth VAT Directive Electronic VAT Refund (EVR) scheme. This VAT will most likely have to be reclaimed under the Thirteenth VAT Directive Claim procedure which currently applies to businesses in other non-EU Countries.
  • The VAT Margin schemes currently in operation throughout the EU which apply to sales of second hand goods (including cars), works of art, tour operators/travel agents etc. across the European Union may no longer apply in the UK post Brexit.
  • Distance Sales (i.e. sales of goods from a business in one EU Member State to Consumers based in other EU Member Satiates) thresholds will no longer apply in respect of supplies of goods from the EU to UK based consumers and in respect of supplies of goods to EU based consumers by UK based suppliers.

 

It will also be a lot more cumbersome for goods to be supplied cross border to consumers both by UK suppliers into the EU and EU suppliers into the UK due to VAT and possibly Customs duty liabilities crystallising at the time of importation.

At least some of the above scenarios will result in additional administrative requirements and cash flow management costs.

Additional Administration costs include staff costs in preparing and processing the necessary back up detail, obtaining professional advice regarding the VAT implications of trading with the UK, registering for VAT and additional compliance obligations – filing VAT returns etc.

Cash flow management will become critical when managing the time lag between paying and reclaiming VAT because if not managed effectively it can give rise to financial negative cash flow implications / additional working capital requirements as VAT on importation of goods may not be refunded for a matter of months or even longer.

Under the likely new regime VAT physically paid on importation or paid using a deferral account should continue to be reclaimable in line with current rules underpinning entitlement to VAT recovery with Single Administration Documents (SADs) being required when reclaiming VAT paid on import in Ireland and C79s in the case of UK VAT on import.

So what VAT steps should exporters and importers take now in preparation for Brexit?

Be Brexit ready – Start to review your business strategy with regard to the likely impact of Brexit on your business and try to minimise any negative VAT impact as much as possible.  Please see below for further suggestions on how you can become Brexit ready:

  1. VAT deferment facility – This should be considered in the context of bridging the gap between paying the VAT on importation and reclaiming it.
  2. Delivery Terms - Serious consideration should be given to the terms of delivery agreed with suppliers. DDP as opposed to DAT/DDU should be preferred.  This also needs to be considered from a commercial perspective.
  3. Review your supply chain – Have a Brexit Impact study carried out on your business with a view to identifying what steps can be taken at this stage to avoid potential exposure to your business.

 

BDO is actively working with a number of our clients to examine their supply chains to determine the risks of Brexit to their businesses.  We are considering what alternative strategies can be taken to plan as early as possible, rather than them running the risk of being exposed following the conclusion of the negotiations between the UK and the EU.

For more information about our partnership with BDO Ireland click here.

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