Cheap products from China are flooding the European market via ‘Quick Commerce’ platforms. According to the trade association, the customs authorities are overwhelmed, the interest group announced in a press release on Wednesday. An eight-point action plan for fairness in digital trade aims to improve the situation. For example, the tax-free limit should be reduced to zero euros, that is to say de facto abolished.
“Up to 35 air cargo flights per day from China are overwhelming customs authorities,” the trade association said. The customs authorities are therefore unable to carry out the necessary controls. In addition, there are incorrect declarations, poor data quality and complaints about a lack of product safety. In addition to lowering the tax-free limit to zero euros, the association calls for more resources and more staff and for better data exchange.
Over the past 18 months, Chinese platforms have implemented the new “direct e-commerce” business model that emerged in China during the coronavirus pandemic in cross-border retail. Consumers are directly connected to manufacturers and suppliers of products and delivery is organized “on demand”. The products offered would only be ready after ordering.
There is no need for intermediate storage, wholesalers or middlemen, explains the director of the trade association, Rainer Will. While domestic consumption is now weakening in the People’s Republic of China, this model is being rolled out globally. The end-consumer price (including shipping costs) is 30 to 40 percent lower than that of comparable European offers.
“Gaps in customs legislation are deliberately exploited”
Applicable EU law is often poorly enforced, Will criticized. At the same time, “gaps in customs legislation are being deliberately exploited”, and Austrian trade with its more than 700,000 employees is suffering from this development. About ten years ago, the EU amended the rules for low-value shipments of goods (up to 150 euros).
For all shipments of goods: preliminary information including clear identification of the supplier, the recipient and the taxable person is mandatory. Buyers must pay import taxes, but customs duties only apply to goods with a value of more than 150 euros.
Eight-point action plan presented
For customs enforcement to take place in the digital age, the following next steps are necessary:
- the mandatory collection of import tax for cross-border B2C shipments of goods with a value of less than 150 euros when purchased via platforms,
- the mandatory prior sending of a standardized e-invoice as part of the data set for the electronic customs import declaration,
- uniform UID numbers to adapt digital reporting requirements across the EU for direct and indirect taxes,
- a reduction of the customs limit for B2C goods shipments from 150 to zero euros,
- a simplification of tax rates in the EU,
- the data harmonization of postal transport documents,
- the digital identification of operators throughout the entire goods management and supply chain
- and the establishment of the EU Customs Digital Data Platform to ensure real-time data exchange on retail movements across the Union.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
