Will the UK tax-inclusive FBA service be cancelled? Logistics and shipping costs have risen three times!

Recently, rumors that "freight forwarders have begun to cancel UK tax-inclusive FBA services" have been widely circulated among European sellers.

According to a seller, the freight forwarder he had been working with notified that it would begin to cancel the UK tax-inclusive FBA service. He could no longer use the tax-inclusive channel, and the logistics freight costs increased by 3 times.

What is going on?

According to multiple freight forwarders, due to Brexit, Amazon and other cross-border e-commerce platforms will stop transferring British goods to other EU warehouses for sale from November. At this time, if goods are imported from other EU ports to the UK, secondary tariffs will be incurred.

The UK’s withdrawal from the EU has now entered the substantive stage. The main sales destination is the UK. Direct shipping to the UK should be selected to avoid the risk of secondary customs clearance or return shipment.

At present, it is foreseeable that in two months most tax-inclusive channels will suspend receiving goods or change customs clearance channels, and sellers need to prepare in advance.

To mitigate the impact of the changes, sellers are advised to consider splitting their inventory and shipping it to Amazon fulfilment centres in the UK and EU respectively, ensuring there is sufficient stock on both sides of the new seaside border.

If the UK tax-inclusive FBA service is completely cancelled, the UK site format will inevitably force all FBA sellers to formalize their tax operations. There are two reasons:

First, Amazon will directly deduct value-added tax and consumption tax in the background. At this time, FBA sellers will not be able to avoid taxes by under-declaring, which makes the sellers' cross-border e-commerce operations more and more formalized.

Secondly, the seller can deduct the VAT amount that he normally declares and pays during import customs clearance from the UK tax authorities and then get a tax refund. So there is no need to study how to make a low declaration or double customs clearance, which is even more uneconomical.

Based on these points, cross-border sellers must put the post-Brexit operational strategy on the agenda and do a series of work including corresponding inventory allocation, logistics planning, VAT declaration, cross-border transport declaration, etc.

(Source: Seller Growth Academy)