Integration Point recently hosted a webcast, featuring Bart De Rybel, Senior Manager of Global Strategic Indirect Tax at Ernst & Young, Brussels, as he provided a better understanding of the tangible benefits behind becoming AEO certified, along with applying for the EU AEO programme and maintaining AEO certification once achieved. Due to time constraints, there were several questions that were not answered during the live event. Bart De Rybel agreed to answer those remaining questions, over a series of posts. The first post contains questions and answers regarding mutual recognition and shared service centres. The second post contains additional questions regarding mutual recognition, along with the differences in AEO certifications. This final post contains questions regarding the AEO application process and requirements.
If you missed the live webcast, you can register for the on-demand playback here.
Q: If each location must have their own application or no group applications, why can’t a location be excluded?
A: It is the EU established economic operator that applies for AEO. Where a legal entity has for example a Headquarters (HQ) and three branches within the EU, all aforementioned locations are in scope of the AEO application file. In case one of its sites is not yet fully in line with the prescribed AEO criteria, it will not be allowed to exclude it from the scope of the AEO application.
Q: Here in the United Kingdom (UK) companies can see the benefits of AEO to exporters, but are not at all convinced about the benefits to importers. What are your thoughts?
A: Depending on the situation at hand, benefits may be obtained by exporters and/or importers. It is important that once AEO accredited, the certified business engages in negotiations with Customs Authorities and other Agencies involved in the import/export clearance to obtain benefits.
Q: I assume the experience within Ernst &Young is for the larger corporations. What about SME’s (Small to Medium Enterprises)? What is the recommendation for these smaller companies?
A: Customs Authorities have indicated in guidelines, but also demonstrated in practice, that the effort required by the economic operator to become AEO certified, should be in line with the complexity of the applicant. Therefore, and although the AEO criteria are identical to all applicants: Multinational Enterprises (MNEs) and Small to Medium Enterprises (SMEs), the requirements put forward by Customs during the AEO application process may turn out to be smaller for SMEs than for MNEs. Examples include: requirements to systems (plain Excel reports versus ERP reports), requirements to security hardware, etc.
We have provided tailor-made assistance to SMEs such as some Customs brokers and smaller manufacturers in the past, with positive outcome.
Q: Please explain further the issue of “waiver for guarantees”. How can revenue agencies not indemnify themselves from revenue losses because of prospective good behaviour?
A: Currently, and depending on the Member State, AEO certified businesses already obtain to some extent waivers of guarantees for specific Customs procedures (e.g. transit). Whether a guarantee is required or is waived, this fact alone shall not impact the collection of a Customs debt by Authorities. Where a guarantee is waived, other means will be applied by Authorities to collect any fiscal debt. Such waiver is one of the favours granted to AEO certified companies again to stimulate the success of the program.
Q: What is the scope of required compliance from other governmental agencies for AEO at the new Customs Code?
A: Customs officials, auditing the files and processes of AEO applicants, currently focus mainly on Customs. Likely their scope will be expanded to “a record of compliance with Customs and tax requirements” (Union Customs Code). In practice, this will not result in corporate tax officials scrutinizing tax procedures, but cooperation between Customs officials and Revenue/Tax authorities will be stimulated during the application process.