Leniency for entrepreneurs in the time of corona
At an early stage of the corona pandemic, the Dutch government introduced a support package to guide businesses through a threatening economic decline. Dutch Customs, too, contributed to this by taking some temporary measures for importing and exporting businesses, always carefully considering the wishes and needs of the trade and logistics sectors, and paying close attention to feasibility and possible risks. Frank Heijmann, Head of Trade Relations at Dutch Customs, explains the special arrangements.
“From the very start of the Covid-19 outbreak, Customs has tried to support the market in a proactive manner”, Heijmann says. “As early as during the second week of the crisis – at the end of March – we held consultations with our permanent contacts from the Customs-Business Consultation (ODB), and the crisis ODB has met on Fridays ever since. This way, we always knew exactly what was going on and what was needed, and we could anticipate this. Gradually we created a number of targeted arrangements, which we quickly and consistently published on our website, clearly stating which parties could make use of it, and how.”
Deferment of payment
“The corona measures taken by Customs can be divided into several categories*”, Heijmann continues. “First of all, we created facilities for deferring payment – of both national and European taxes. When it comes to the first facility – excise duty –, we took advantage of the possibilities already set up by the Tax Administration. On the Tax Administration’s website, businesses that were in acute financial distress could simply apply for a few months’ postponement of their tax obligations – and such requests were granted by default. We added excise duty to that.”
“Of course, Customs also has obligations towards Brussels when it comes to all matters involving the import process. That is why we started searching for options within European legislation that would allow the business sector more breathing room in terms of finances. The law provides, for example, that certain payment arrangements can be made. We informed businesses that this is automatically the case if they are affected by corona. We also pointed out to them that if a business may get into social or economic difficulties by providing security, it would be possible to agree on a payment arrangement without guarantee. We coordinated this view with the European Commission, which went along with it. The Commission ruled that it was possible for customs authorities to deal with payment obligations of market players in a flexible manner, but that this had to be substantiated and recorded in a file on a case-by-case basis. Unlike in the Netherlands, a business was required under European law to prove that it was actually suffering from Covid-19.”
Statutory time limits and penalty policy relaxed
“Another measure was leniency in terms of time limits, which was very important at the beginning of the crisis”, Heijmann says. “Both the General Administrative Law Act and the Union Customs Code contain provisions on the inability to meet a deadline due to special circumstances or force majeure. If a business can demonstrate that this is indeed the case – which is normally a requirement – the deadline is considered to have been met. Now we abandoned that strict condition, and we assumed that all cases in which a business was hit by the corona crisis were situations of force majeure. In various areas, we showed generosity in this respect. The same was true for customs transit: if a market player presented its goods too late, they would normally be fined. However, we did not impose that sanction, as corona was raising all kinds of practical barriers resulting in administrative and logistical delays. Perhaps the staff members of a business were working from home and had no login facilities, and no one was able to cancel the shipment in the system… And so we also responded favourably to refund requests and objections, for example. Under normal circumstances, notices of objections from businesses should be received by us in time and on paper. Now we also accepted a digital version, sent by e-mail. We used the date on which we received the e-mail, and waited patiently for when the physical document arrived. Otherwise, trade would have been brought to a standstill.”
“What is related to this is that we created new facilities for digital communication”, Heijmann continues. “During processes in which usually only original certificates are valid – as with respect to origin – we now accepted copies that were delivered in electronic form. For due to the special circumstances, it was very likely that the authorities in a far away country would be unable to issue such a document in writing, which would prevent the business in question from submitting such document to us. The European Commission devised special arrangements for this, and we implemented them. Businesses are allowed to submit the original document to us later, and the deadline for submission has been extended.”
A next corona arrangement made by Customs provided for a certain degree of leniency when it came to compliance with obligations concerning customs procedures and formalities. Heijmann: “For certain customs authorisations, for example, businesses must meet certain solvency requirements – they must have a certain financial position in the longer term. This position may, of course, be threatened by the crisis. We asked business facing this problem to report to us, so that we could assess whether we could offer such parties a customised solution. We could not offer a general solution to the entire business sector, because every case is different. All in all, our support package allowed us to ensure that trade could continue as much as possible.”
A lot of work done
A lot of efforts were required from the organisation in order to set up and implement the measures in such a relatively short period of time. Heijmann: “Take, for example, the arrangement for deferring payment of excise duties – we had to make a considerable effort to achieve this. By taking such a measure, we knowingly accepted a risk to the Treasury, since, as a recipient, we no longer had the certainty of recovery of an existing debt. As an executive agency, we could do this without reason; it also required political support. We dealt with this quickly and decisively, and then we carefully monitored the risks related to recovery and always weighed up these risks in consultation with the state secretary. On the policy side, we were also in constant contact with the parties from which we received our instructions, such as the Directorate-General for Tax and Customs Policy and Legislation of the Ministry of Finance. At the same time, we were aware of internal feasibility, and we deployed additional staff in departments where capacity was under pressure. And we immediately made two regional directors responsible for managing the whole. This way, the support package was and continued to be manageable for us in all respects.”
The special crisis arrangements of the Tax Administration – and therefore of Customs – were to expire on 1 October. However, at the end of September, they were extended to 1 January 2021 after the government had announced new measures. “In any case, once the support package expires, businesses that are in difficulties can still come to us for an arrangement,” Heijmann explains. “However, such market players will then have to demonstrate, on the basis of their specific individual case, that they have problems. Corona will then no longer be the reason for accepting a request for support by default.”
* Some of the measures taken by Customs also pertained to the import of personal protective equipment for healthcare providers, for example. You can read more about this in the article titled ‘Everything for healthcare’, which can be found elsewhere in this publication.
Looking back on the first few weeks of the global crisis, Heijmann says that Customs noticed a sharp decline in the supply of goods from China as early as in February. “It started with a huge decline in sea cargo, followed by a drastic decline in air cargo as well. It took a long time for sea cargo to recover, because it takes a lot of time before one can start loading sea containers. Air cargo recovered relatively faster, as goods that were urgently needed were now transported by air. Customs constantly had to respond to these dynamics of international goods flows.”