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ISRAEL: Israeli Postal Service Imports to Go Through Customs Clearance

Starting 15 February 2020, all packages valued at more than US$75 imported to Israel through the Israel Postal Company (Israel Post) will be required to undergo individual customs screening, similar to that required for parcels shipped through private courier companies.

The ruling from the Supreme Court of Israel follows a petition by the Federation of Israeli Chambers of Commerce and the Israeli National Federation of International Freight, Forwarders & Customs Clearing Agents that claimed that the country is biased against private courier firms in favour of the postal service. They argued that private firms are required to declare the value of all parcels shipped into the country, whereas Israel Post only has to declare the value based on its samplings of imported items. Consequently, the lack of thorough checks results in some consumers not paying VAT due on purchases, albeit without their knowledge or initiative, and higher costs of compliance for private firms.

According to Israel Post, it has been working for some time with Israeli customs agencies in anticipation of the change. The new ruling and its tight deadline, however, is expected to be a serious challenge for the national postal service, which is already struggling to keep pace with delivery schedules. In part, this is due to the rapid growth in items ordered through Amazon, with which it has recently partnered. In a bid to grab market share from more established online shopping portals, such as Alibaba, Amazon has been running a free delivery introductory offer for purchases valued at more than US$49.

According to a report in The Times of Israel, postal workers claim the post office is having serious difficulties in handling the volume of packages, with the number of deliveries more than doubling in recent months. Increasing numbers of parcels are taking weeks for delivery or getting lost completely. Israel Post is already being sued in a class action over ongoing delays in its delivery of packages in a filing in the Haifa District Court by Mordechai Alon, the owner of an online auction company.

Given that Israel Post handles vast majority of such imported goods, many industry experts believe it is unlikely to be able to meet the tight deadline or absorb the massive increase in costs that will result. Consequently, the service is likely to need to outsource substantial operations to the private sector. Foreign online vendors may find themselves facing higher delivery costs in future as a result.

Content provided by Picture: HKTDC Research
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