Businesses should assess how they may be affected by the UK's "Brexit" decision.
Although the full scope and magnitude of this change is not yet known, the free movement of people, goods, capital and the freedom to provide services between the UK and the EU member states will likely be affected. As a result, there will be changes to the customs and Value-Added Tax (VAT) rules for cross-border transactions between the UK and the rest of the world. To help businesses deal with Brexit, KPMG has developed an approach which can include an automated methodology to assess the potential changes of custom duties and VAT on their operations and transactions.
The EU is a union of 28 member states that essentially works as a single market that allows people and goods to move freely between the member states. The UK voted to leave the EU on June 23, 2016. The government plans to begin secession negotiations by the end of March 2017, after which it will have two years to negotiate the terms of its exit from the EU. Until then, the UK remains an EU member and is bound by EU laws and treaties.
Businesses moving goods - VAT and duties
It is not yet clear how the UK will secede from the EU. The study of exit alternatives and the negotiations may require a fundamental review of how indirect taxes, and custom duties will operate after Brexit. While two years of negotiations may seem long, businesses may want to start to consider the potential effects of this change, including the effect on the movement of goods in and out of the UK. Companies doing business with the UK will need to review their entire supply chains in order to fully assess the impact of any required changes to their operations and, where possible, put in place plans to manage these adjustments.
For its part, the UK will likely consider trade alternatives such as:
We can help
To help businesses deal with the transition, KPMG has developed an approach that can include an automated customs and VAT methodology to help quantify potential post-Brexit business costs, such as higher duty costs of importing goods from certain countries, administrative costs in processing customs entries, potential cash flow implications and lost benefits of existing Free Trade Agreements.
KPMG's analysis can identify areas within the supply chain where additional costs may arise, while at the same time suggest potential solutions to help mitigate these additional costs. The analysis can also help companies minimize the uncertainty and plan for business continuity so that their resources can focus on growing their businesses.
For more information, contact your KPMG adviser.
Information is current to November 15, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500