Page 86 - Linkline Yearbook 2018

Trade is a Taxing Question in a Post Brexit World
At the time of writing, we are still no closer to understanding what the trading relationship with the UK will look like from March 2019 and beyond, and how much impact Brexit will have on trade and the Irish economy.
The ability of Irish businesses and the Irish Government to plan for life post-Brexit is hampered by the uncertainty surrounding the desired UK position on exit.
The real action on the Brexit front continues with ongoing negotiations between the UK and the EU for agreement on the Brexit ‘divorce bill’ acting as a stumbling block to the commencement of meaningful discussions on the trading position post-Brexit, and in particular whether any transitional period will be agreed.
The final shape of the Brexit negotiations will ultimately determine the future customs relationship between Ireland and the UK and importantly, whether there are customs duties to be paid on goods traded with the UK, whether there are restrictions on certain goods, and what form, if any, of customs import and export procedures will apply.
This in turn will influence the impact of Brexit on trade and the economy, in particular on the more Brexit-sensitive industries.
Possible options post-Brexit
At this point the two certainties we know are (i) the UK has a hard stop date of 29 March 2019 to exit the EU unless a transitional period is agreed and (ii) Brexit in whatever form it eventually takes is likely to result in some fundamental changes to the VAT and customs environment in which current trade with the UK takes place.
The UK and Ireland’s membership of the Customs Union allows goods to flow freely between the two without the imposition of tariffs, quotas or customs checks facilitating trade whilst maintaining a uniform EU-wide position on non-EU trade.
It is clear that if the UK exits the Customs Union without any equivalent Free Trade Agreement, the UK will become a ‘third country’ from a customs perspective and customs duties and procedures will apply to goods traded with the UK.
This would mean the imposition of a range of tariffs on goods traded between the UK and Ireland from 29 March 2019. The duty ranges can vary, for example, from 0% to 14% for industrial goods, 8% to 50% for agri-food products and up to 12% for clothing.
The customs regime provides some reliefs which can mitigate the potential burden of customs on international trade and facilitate trade between the EU and its partners.
Fionn Uibh Eachach, Director, VAT, KPMG
Even if the UK were to remain in the Customs Union, the chal- lenges associated with the UK leaving the EU should not be underestimated.
86 The CharTered InsTITuTe of LogIsTICs & TransporT
KPMG