Cypriot exports to the UK were not affected despite Brexit, he told a conference

The conference on "Brexit: What and how many are the consequences in Cyprus", organized by Financial Media Way

imagew 22 Brexit, exports, effects

Despite the significant decrease in imports from the United Kingdom as a result of Brexit, Cypriot exports, mainly of dairy products, have remained at the same levels, said the Deputy Secretary General of the CCCI Leonidas Paschalidis in an online conference organized by Brexit Financial Media Way entitled "What and how many are the consequences in Cyprus".

As explained at the conference, the problem with imports is the issue of documenting the origin of a product in order to avoid the imposition of an import duty under the UK-EU trade agreement, while Cypriot exports do not face such a problem, as the origin is documented. At the same time, Cypriot importers seem to have replaced the United Kingdom with other European countries, such as the Netherlands and Italy.

"Based on the latest data, until the end of September 2021, we observe a 43% decrease in imports on an annual basis," said Mr. Paschalidis, noting in particular that from € 431 million, which was pre-pandemic imports (January - September 2019), imports in the corresponding period of 2021 fell to € 246 million.

At the same time, he added, exports have remained at about the same level. "I do not think that exports were affected because the products we export are dairy products, see halloumi, fruits and vegetables, and medicines and all these products have no problem meeting the rules of origin, while imports of products have a problem with the rules of origin. ", explained.

Mr. Paschalidis expressed the hope that the Cypriot exports will not be affected in the future, as the British authorities will implement controls and certifications in the food sector by 2022, which will mean much more formalities.

Regarding imports, Mr. Paschalidis explained that the imposition of import VAT creates a liquidity problem in Cypriot companies, since they pay for the import, while they have to wait for the sale of the product in order to collect VAT and then make the settlement.

The UK has fallen to 7th place in terms of imports from 3rd place and we are seeing reductions in all products, he said.

He noted that imports from Italy increased by 44% and from the Netherlands by 18%. "It makes sense and is expected because entrepreneurs want to work together, to do business as easily as possible and when you are a member state it is much easier than doing business with a third country," he explained.

The problem with used cars
In her own intervention, the Director of the Customs Department, Theodora Dimitriou, stated that the exit of the United Kingdom led to an increase in the burden of the department, but also of the post office to deal with the problems that arose.

"We have been through the UK's exit from the EU and throughout this period new data has been created for both citizens and the business world," he said.

According to the data provided, the volume of import declarations, which concerned exclusively the United Kingdom, increased by 24,7%, while the total number of export declarations in 2021 increased by 15,8% exclusively to the United Kingdom.

However, as he said, based on the experience gained, some distribution centers in the United Kingdom are considering, even late, the possibility of relocating or establishing subsidiaries in EU countries to alleviate the existing problems.

A significant problem arose in particular in the import of cars from the United Kingdom, which has the same driving direction as Cyprus. The problem is that second-hand importers can not submit a certificate of origin even for cars made in Europe, in order not to pay an import bond.

As Mrs. Dimitriou explained, cars made in Europe, which are transported and sold in a third country, are losing their EU character.

"Here are the problems that importers face. "There are no relevant documents to be submitted to the Customs Department, as a result of which they are treated as imported and import duties and VAT are imposed", he explained.
At the same time, according to Ms. Dimitriou, used cars that can be imported from the UK and accompanied by a certificate of origin are imported without payment of import duty due to the UK agreement with the EU, but are subject to the origin of import VAT.

The same applies to used cars that are transported from European countries through the transhipment process and come to Cyprus, they will meet the re-import rules, as a result of which they are imported without the payment of import duty, but only with the imposition of import VAT.

"However, if these used vehicles are sold and used for a long time in the United Kingdom, their identification as European cannot be substantiated and therefore an import duty and import VAT are imposed," he said.

The flight to a promising destination that did not depart
In addition, Konstantinos Polykarpou, Secretary of State for European Affairs at the Ministry of Foreign Affairs, described the political landscape that prevailed and continues to prevail in the EU-UK talks, saying that despite the political agreements, difficulties arise when the talks move to the technocratic level.

According to Mr Polykarpou, the UK's exit agreement from the EU and the Cooperation Agreement were ambitious insofar as the two sides were ambitious.

"We are in the phase of waiting for the departure of our flight to a promising destination, promising in the degree of ambition, we saw that the departure was delayed and is still delayed," he said characteristically.

He said talks between the European Commission and the United Kingdom were monopolized by the protocol for Ireland and Northern Ireland, while there were difficult discussions on fisheries, while at the same time bureaucracy led to blockades of trucks in ports. while there were also cases of shortages of products in supermarkets in the UK.

The General Manager of the Cyprus Association of Chartered Accountants, Kyriakos Iordanou, said that the services sector was the "poor relative" of the UK withdrawal agreement.

In the field of services, there are two or three specific restrictions for Cyprus in relation to the provision of tax, accounting and auditing services between Cyprus and Britain, "which may significantly reduce the activity".

At the same time, according to Mr. Jordanou, while the academic degrees of the United Kingdom are recognized, the same is not the case with the professional degrees (ACCA etc), which from 1 January 2022 are treated as degrees from a third country and should be recognized again and again the issue of experience.

Answering a question whether there is interest in registering British companies in Cyprus after Brexit, Mr. Jordanous said that despite the fact that Cyprus applies common British law, nevertheless the peculiarities of Cyprus's connectivity compared to other continental European countries, but also that some member states are the seat of European institutions and organizations is an obstacle to the admission of British companies in Cyprus.

He noted that he was not "very optimistic" about attracting a large number of companies, saying that this issue should be addressed within the entire investment environment in Cyprus regarding the operation of companies.

Finally, regarding the changes in the trend of choosing a place of study in the post-Brexit era, Mr. Polykarpou said that although he does not have specific data, there is a shift to other countries, the Netherlands and Sweden, while there may be a flow to other countries.