Trade and Customs News - Edition 3 | KPMG | BE

Trade and Customs News - Edition 3

Trade and Customs News - Edition 3

The Trade & Customs newsletter is designed to highlight changes in the global trade landscape.

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KPMG in Belgium

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In this edition:

  • 1) Update on the Union Custom Code
  • 2) ITA extended: scrapping import duties on 200 IT products
  • 3) Latest news on TTIP
  • 4) WCO’s new Guide to Customs Valuation and Transfer Pricing
  • 5) Classification of electronic book reader (e-Reader)
  • 6) Draft classification regulations
  • 7) Sanctions on Iran will be lifted
  • 8) EU and China: a joint statement on Authorized Economic Operators
  • 9) Competent customs office of export
  • 10) Future reduction of excise duties on natural gas in Belgium
  • 11) Dutch Supreme Court - principle of respect for the rights of the defense
  • 12) Reimbursement of interest in the Netherlands

1) Update on the Union Custom Code

On 28 July, 2015 the European Commission adopted the Delegated Regulation supplementing the Union Customs Code. The European Commission has now sent the Delegated Regulation to the European Parliament and the Council for their consideration.

It is expected that the European Commission shall adopt the Implementing Regulation supplementing the Union Customs Code after the summer.

2) Information Technology Agreement (ITA) extended

On 24 July, 2015 the WTO announced that a vast majority of WTO Members reached agreement to eliminate import duties within 3 years, beginning next summer, on more than 200 IT products. Longer, phased-out periods for high-sensitive IT products will be foreseen. A detailed list of the IT products foreseen is not available yet.

3) Latest news on TTIP

The 10th round of negotiations between the EU and the US to conclude an ambitious and comprehensive Transatlantic Trade and Investment Partnership (TTIP) started this week. TTIP aims at improving market access, reducing (non-)tariff barriers through regulatory cooperation and to develop a common framework to address challenges and opportunities.

 

On July 8, 2015, the European Parliament, a key player in the ratification process of a potential TTIP, approved a non-binding resolution calling for a complete overhaul of the current Investor-State Dispute Settlement (ISDS) system and to continue with the talks in order to conclude an ambitious, comprehensive and balanced deal. It is currently still unclear whether (and when) the much-debated TTIP negotiations will come to an end. If a TTIP is concluded between the EU and the US, it will likely take two to three years before the TTIP will actually take effect.

4) WCO’s new Guide to Customs Valuation and Transfer Pricing

The interaction between the customs valuation and transfer pricing regimes has long attracted the attention of international business, Customs administrations and tax administrations. Both regimes apply to international transactions within a multi-national group. Customs administrations aim to ensure that the transaction price of imported goods is not influenced by the relationship between the buyer and the seller, and tax administrations examine the same transactions to ensure that, for profit tax purposes, the conditions are consistent with the arm’s length principle.

 

On June 24, 2015 the World Customs Organization released the first version of its Guide to Customs Valuation and Transfer Pricing. This new guide sets out the relevant methodology for both regimes and explores the linkages and possibilities for Customs to use transfer pricing information to examine related party transactions.

 

It encourages Customs and tax administrations to work together and exchange information and knowledge in this area. At the same time, businesses are encouraged to take Customs requirements into account when preparing documentation such as transfer pricing studies and Advance Pricing Agreements.

5) Classification of electronic book reader (e-Reader)

On June 11, 2015, the Court of the Justice of the EU (CJEU) ruled that an e-Reader with pre-installed dictionaries must be classified under the residential CN code 8543 70 90 (electrical apparatus with an individual function, not specified or included elsewhere in Chapter 95) where the translation or dictionary function is not its principal function.

 

According to the CJEU, the fact that the Combined Nomenclature does not include a specific tariff heading for reading devices does not mean that a device must then be classified under a specific subheading (CN code 8543 70 10 – electrical machines with translation or dictionary functions) based on one of its ancillary functions.

6) Draft classification regulations

The European Commission recently published Commission Implementing Regulations concerning the classification of the following products in the EU’s Combined Nomenclature:

  • “Textile article to hold person in sitting position when lifted by hoist” (CN code 6307 90 98)
  • “LED wall” (Update of Council Regulation (EEC) No 103/2012 - CN code 8528 59 39)
  • “Wrist stabiliser” (CN code 6307 90 10)
  • “Table legs” (CN code 9403 90 10)
  • “UV water steriliser” (CN code 8421 21 00)
  • “Toy with built-in music module” (CN code 9503 00 41)
  • “Electric skateboard” (CN code 9506 99 90)
  • “Plastic sheet containing 24 antennae to be used as part of smart cards” (CN code 8504 50 95)
  • “Cartridges for game consoles” (CN code 9504 50 00)
  • “Remodelled cars” (CN code 8703 32 90)
  • “Four-wheel drive utility vehicle” (CN code 8704 21 91)
  • “Fittings for central heating” (CN code 7307 93 19)

 

 

7) Sanctions on Iran will be lifted

On July 14, 2015, the E3+3 (Germany, France, United Kingdom, United States, Russia and China) and Iran agreed on the final text of a Joint Comprehensive Plan of Action (JCPOA), which will ensure that Iran’s nuclear program will be exclusively peaceful. The JCPOA will produce the comprehensive lifting of all worldwide sanctions related to Iran’s nuclear program including steps on access in areas of trade, technology, finance and energy.

 

Under the JCPOA, the sanctions against Iran will be lifted in a phased approach. After endorsement of the JCPOA by the UN Security Council and once the International Atomic Energy Agency (IAEA) has verified that Iran has taken all of the key nuclear-related steps stipulated in the JCPOA, the EU will adopt a Regulation lifting most of its Iranian nuclear sanctions, the US will lift most of its nuclear-related sanctions, and the UN Security Council resolutions imposing sanctions on Iran will be nullified.

 

At a later stage (approximately eight years from the date of the UN Security Council’s endorsement of the JCPOA, or earlier if the IAEA reaches the broader conclusion that all nuclear material in Iran remains in peaceful activities), the EU will lift any remaining sanctions, and the US will lift or soften their remaining sanctions. In the final stage, the UN will no longer be seized of the Iran nuclear issue.

 

With regard to the above, it is important to note that if at any time Iran fails to fulfill its obligations under the JCPOA, the sanctions will be reinstated.

 

For the time being, all EU and US sanctions will remain in place, with the exception of the limited sanction relief as agreed by the E3+3 and Iran in the Joint Plan of Action (JPA). One of the more interesting examples of relief in the JPA is the suspension of the prohibition on the import, purchase or transport of Iranian petrochemical products, including related services (e.g. financing and insurance).

8) EU and China: a joint statement on AEO

On June 29, 2015 the European Commission and the Customs Administration of the People’s Republic of China signed a joint statement on the last steps to be taken before mutual recognition of Authorized Economic Operators (AEOs) takes effect in November this year.

 

9) Competent customs office of export

In Belgium it is possible in the case of direct export under the normal procedure (competent customs office of export and exit are established in Belgium) to file export declarations for all goods, with the exception of agricultural products eligible for export refunds, with the following customs offices of exit: 

  • Seaports: Antwerpen, Gent, Zeebrugge and Oostende
  • Airports: Zaventem, Bierset and Gosselies.

It is expected that these flexible rules will enhance the role of logistic platforms at Belgian seaports and airports and will facilitate the export procedures for small and medium-sized enterprises.

10) Future reduction of excise duties on natural gas

Since 2015, Belgian (energy-intensive) companies with an environmental policy agreement are no longer entitled to benefit from a reduced (nil) excise duty rate on natural gas used for heating purposes (commercial use). The Belgian government decided in late June to introduce a reduced excise duty rate (based upon the minimal level of taxation allowed in the EU) for Belgian companies holding an environmental policy agreement. This reduction has not yet taken effect.

 

 

11) Principle of respect for the rights of the defense

Initially, the CJEU judgment in case C-349/07 (Sopropé) led to the conclusion that an infringement of the rights of the defense always leads to the annulment of the decision at hand. But the outcome of a recent court case in the Netherlands learns that this conclusion needs to be nuanced.

 

The Dutch Supreme Court requested the CJEU to render a preliminary ruling in relation to two cases in which recipients of recovery decisions were not heard by the Dutch customs authorities before the decisions were imposed, but only during the subsequent objection proceedings. In its judgment in the joined cases C-129/13 and C-130/13 (Kamino/Datema) the CJEU ruled on the legal consequences of the non-observance of the rights of the defense. Based partly on this CJEU judgment, the Dutch Supreme Court rendered its judgment on June 26, 2015.

 

According to the Supreme Court, an infringement of the rights of the defense does not have to have any consequences if the inspector and the taxpayer do not disagree on the relevant facts and the appreciation thereof. Which consequences an infringement of the rights of the defense might have if the inspector and the taxpayer disagree on the relevant facts or the appreciation thereof is not clear.

12) Reimbursement of interest in the Netherlands

With effect from January 1, 2015 Dutch legislation was amended to allow the tax collector to pay statutory interest on refunds of tax payments to taxpayers in situations in which the tax inspector decides to refund tax payments because the taxes at stake have been levied contrary to EU law. 

 

To obtain the payment of statutory interest, the taxpayer will have to lodge a request for the payment of statutory interest with the tax collector within six weeks of the date of the decision by the tax inspector.

 

It is not yet clear whether the tax collector will also pay interest in situations where a refund of tax payments is not based on a decision by the tax inspector but on a court ruling under which a tax assessment is canceled.

© 2017 KPMG Tax and Legal Advisers, a Belgian Civil Cooperative Company with Limited Liability (burg. CVBA/SCRL civile) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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