EU Exclusionism?

EU Exclusionism?
November 13, 2021 Leo Kwan
In Perspectives, Tea Log

I have grown up in a free-trading city where there is still no tax on retail sales or importation of goods. However, this and other freedom that Hong Kong used to enjoy had existed under the shadow of totalitarian Communist China. That’s why we have always aspire to the freedom and democracy of the West, previously also the progressiveness of Europe.

That was before we saw the agony that UK had when leaving EU and now the EU’s imposition of a global VAT for any parcel going into its member states.

We want to comply

Don’t get me wrong. I have no objection whatsoever for a country charging a sales tax. Neither do I have a problem with being responsible for charging it in representation of that country that I sell to. Although we have been exporting wholesale to EU nations, it has been our clients who are responsible for importation and VAT taxes. Nevertheless when EU made the announcement we began studying the route to get registered for it so we can continue to grow our minuscule retail customer base there.

A posting box holding an order for a EU member state

A posting box holding an order for a EU member state. We hope we can be doing this again soon.

Nowadays with the advancement of IT technology, accounting and reporting for the different sales tax rate in EU’s 27 countries can easily be automated. So can be the auditing for it. However, it took us 4 months and many failed attempts to have discovered how bureaucratically snobbish the whole set up design is. EU has created a gate by requiring an “intermediacy” that is setup in EU for any entity outside of Europe intending to sell to their member states. These de facto VAT reporting agents are solely charged with the duty of relaying our registration details and sales tax reports to the government. The unreasonably high fees they charge aside, these unnecessary gate guards are mostly irresponsive, arrogant and can charge you additionally hundreds of Euros simply for the step of creating an invoice for paying their fees.

Is it sales tax? Or alienation?

While big consumer brands and corporations may have the money and spare labour hour to deal with such nonsense, we smaller operators have found it both unreasonable and exclusionary.

In a world when one can pay a stranger online retailer for sending a super yacht or a chocolate bar from five thousand miles away with the click of a button, and when a company’s legal details and sales datas can be verified through portals with the right permission, all these “intermediacy” nuisances seem so much like a deterrent rather than the simple act of taxing.

We have now stopped seeking to register for the EU IOSS ( the name of that EU VAT registration scheme ) until a better solution can be found. Not that we haven’t tried, but EU have made us small operators so difficult to enrol. They have in effect barred us from their market.

Alert to EU wholesale clients: wholesale export with formal customs declaration is not affected

Freedom to choose

My sincerest apologies to all consumer customers in EU states. It has been you that we have gone through the lengthy struggle for, even though we failed. Hopefully soon enough your representatives in Brussel will improve on the scheme so that it is easier for us small shops to get registered. By then the freedom of choosing from us can be yours again.

The other option meanwhile is to have a shipping address outside of EU, say in UK, Norway, Switzerland, North America or any other country which has a functional postal service*. We shall happily continue to serve you.

While our economy is rapidly dominated by super corporations and their monopolising power, exclusionary acts by the government such as this EU IOSS are not only limiting the choice for EU consumers, but also in effect accelerating the disparity between the powerful and the independents, the enrichment of the billionaires and deprivation of consumer options for value and quality. We will not give up on our principals and believes that hugely profitable companies have largely forsake for margins and sales. Yet it is the larger companies who are taking over the markets. Rather like Gresham’s law of bad money drives out good, isn’t it? But is that a world we want?


* Except China, Myanmar, Pakistan, Philippines, Bangladesh, North Korea, and anywhere that the postal service is not stable because of natural disasters, or other social, political, or economic instability.

This is a personal opinion post. If you have any opposing ideas, comments, critique, or any suggestion, you are welcome to write down your thoughts below.

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