What are express consignments and low-value shipments?
With the advent of e-commerce in the digital economy, the Universal Postal Union (UPU) has recognized the increasing “parcelization” of trade. In fact, over 80% of cross-border goods bought online are small packets weighing up to 2 kilograms, and the majority of those packages (roughly 70%) are delivered through the postal system. This has changed the needs of customs processing as more and more shipments are sent by individual or small sellers with different capacities.
There is now a strong need to make customs more straightforward and to improve the efficiency of customs to collect revenues, both of which can be accomplished through simplification and automation. The simplified tax/duty collection processes for express consignments or low-value shipments include: (1) introducing a flat rate for shipments below a certain value; (2) simplified duty collection for products below a certain value where duties are applied on broad categories of goods and the seller collects and remits duties to the authorities on a periodic basis; or (3) simplified consumer tax collection system through goods and services tax (GST)/value-added tax (VAT), where domestic and international sales transactions have the same treatment, such as in Australia.
The Global Express Association (GEA), a not-for-profit association of leading international express delivery carriers, has a short video and a proposal on tax/duty collection on imported low-value shipments that can provide more information.
What are the benefits of these types of customs regimes for MSMEs?
MSMEs may not have the expertise to comply with customs, or may be deterred from entering trade altogether given the paperwork and requirements to ship commercial packages abroad. Making tax/duty information readily available and easy to understand in order to calculate expected costs is a first step in the process.
Where can I access additional resources?
- The Universal Postal Union has a number of resources, including a mobile phone application for submitting electronic advance data (EAD) for customs declarations, along with guidelines and guides, recommendations, and standards.
Where can I access best practices and examples of simplified customs regimes?
- Australia’s GST system applies to goods imported into the economy as well as domestic production. An explanation of how Australia’s GST system works can be found here and an explanation of importing goods with GST is available here, along with a presentation on Australia’s e-commerce experience.
- Canada’s generic harmonized system for household imports is described in the GEA’s a proposal on tax/duty collection on imported low value shipments. There is also a presentation on Canada’s low-value shipments policy.
- The Enhanced Integrated Framework (EIF) and UPU, in conjunction with the United Nations Conference on Trade and Development (UNCTAD) have launched a project in Vanuatu to facilitate the efficient post–customs clearance of postal packages through the exchange of pre-arrival/pre-departure information. An additional 23 least developed countries (LDCs) in which the national interfaces between UPU’s Customs Declaration System (CDS) and UNCTAD’s ASYCUDA (a computerized customs management system) can be established quickly have also been identified. For more information, visit the EIF’s Trade for Development News.
- New Zealand, similar to Australia, also has a GST system in place. More information on GST for overseas business in New Zealand is available here.
- UPU publishes both case studies and best practices, such as Easy Export to develop a simplified and easy export system for MSMEs. Originally created for Brazil, Easy Export is now being applied in other economies as well, including Tunisia and Morocco.