Surprise Brexit tax on juice
ÍSAM imports juices produced in the UK, but its contract is with a company in Scandinavia. That company gathers products made all over Europe in Sweden, from where it exports them to Iceland and other destinations. The Brexit transition period ended on 31st December and ÍSAM now has to pay 20 percent duty on the company’s products that are manufactured in Britain. If ÍSAM imported the same products directly from the UK, they would be tariff-free under the interim trade agreement between Iceland and the UK.
"We didn’t have a clue about it. We didn’t consider the possibility that we might have to pay duties. We were only thinking about extra forms and paperwork,” says ÍSAM CEO Hermann Stefánsson. The 20 percent extra cost is a major blow: “We are in discussions with the warehouse about solutions to this so that the product can stay on the market,” Hermann tells RÚV.
He says, however, that it is not simply a case of starting to import the juices direct from the UK. Some companies are only producers and do not sell directly to customers, he says. The proportion of total output in this case that is sold to ÍSAM in Iceland is comparatively small and possibly not economical to set up a direct trading partnership. “We have held off on ordering more while we’re getting our head around it. We are in discussions over solutions, but if it cannot be solved then there will be a shortage of the product and it will either disappear or increase in price,” Hermann says.
According to the retail and services association, this is not an isolated incident and the problem lies in rules on the origin of products, all the way through production to final sale.