How to: navigate local regulations when exporting
Selling in overseas markets will bring your business into contact with different sets of laws and regulations, new customs procedures, licences in certain cases, as well as new standards and certification systems. While this can seem daunting, there are many support services available to early-stage exporters that are unfamiliar with their obligations. This section provides a broad outline of some of the issues you may have to consider.
Know your obligations for reporting in the country in which you plan to sell, and make sure you follow those procedures to the letter. These rules will vary according to what company form you have chosen. See the sections on setting up overseas and dealing with taxes for more information. The good news for exporters is, many financial reporting and auditing systems are becoming harmonised, making compliance obligations slightly less onerous.
Some countries apply sector-specific regulations or technical standards for products and services. Research these properly before entering a market. In some countries such as Germany, for example, accreditations are often held to a higher standard than EU or international norms. Be aware of changes you may have to make to your product or service to comply with local standards; this may also affect how you package and market it.
Licensing and paperwork
International trade is subject to heavy regulations for certain categories of goods, and it’s essential to have the appropriate documentation. Following the correct procedures prior to exporting will help you to avoid delays in transport or processing. There are also trading schemes such as preferences or tariff quotas which reduce duties in order to boost trade in certain products and with particular countries. You may need to obtain permission to export certain products, such as import licences or certificates. More details can be found at: www.nibusinessinfo.co.uk/importexportprocedures or at www.enterprise-ireland.com/en/Export-Assistance/Market-Research-Centre/Export-and-Import-Regulations.html.
In some markets, you may encounter requests for illegal payment or other forms of corruption. There are now stringent anti-bribery and anti-corruption laws with which companies across the island must comply. Details of the UK Bribery Act are at www.legislation.gov.uk/ukpga/2010/23/contents and a cross-departmental website is at www.anticorruption.ie. Information about combating bribery in international business is at www.oecd.org.
Expert advice: Aidan Lambe, Chartered Accountants Ireland
Companies exporting to new markets will often face new regulatory issues involving financial reporting, company law, and audit requirements. This will very much depend on whether export activity is conducted through a local entity established in the foreign location. Aidan Lambe, Technical Director with Chartered Accountants Ireland, explains why it’s important to become aware of the regulatory frameworks exporters are likely to encounter and the most appropriate business entity for conducting such activity.
What are the key regulatory issues?
There will be questions such as: what forms of business entities are available in a particular jurisdiction? Which is the most common? What is the most appropriate for the exporting company – is it a straightforward local company, and, if so, what are the company law requirements, financial reporting requirements and auditing requirements? Or, will it be some kind of partnership arrangement and if so, what are the regulatory frameworks around the partnership structure – for example, limited liability partnerships? There may be lots of different potential vehicles, including a joint venture or a branch. If you’ve a company looking to mainland Britain or to the EU, the advantage there is that the corporate and regulatory framework that applies to doing business is becoming more and more harmonised throughout Europe. Great Britain and Ireland share quite similar company law regulatory frameworks and the financial reporting requirements are broadly similar in terms of annual financial statements and very similar for filing of information and auditing requirements. And this all hangs off EU law; so while there are probably more differences with mainland Europe than with Great Britain, you still have the same basic company law and financial reporting requirements, whether they are for general corporates or more specialised entities.
“Financial reporting has become much more harmonised over the last 10 or 15 years”
How easy or complex are these rules?
Financial reporting has become much more harmonised over the last 10 or 15 years. You now have international standards for financial reporting by companies, so, for example, similar measurement and disclosure requirements for ‘revenue’ or ‘turnover’ exist between all jurisdictions which have adopted IFRS or local standards based on these. And given that international standards have been adopted by more than 120 countries around the world, reporting by companies has become much more harmonised. Similarly, the discipline of auditing has become more internationalised in the last 10-15 years. It is reasonably similar in terms of what type of entity needs an audit and what type of entity is audit exempt. A lot of the legislation impacting on business, such as competition law, product packaging and employment law, is all harmonised on an EU basis.
In today’s environment, there won’t be too much difference that companies need to cope with. Nevertheless, attention needs to be paid to local regulatory requirements that are particularly relevant to particular businesses or products.
Where can SMEs go for further advice?
Typically, the larger accounting firms have extremely well-connected international networks, so any budding entrepreneur whether in engineering, pharma or IT, would find a lot of advice available through the larger accountancy practices by virtue of that association. It’s quite a seamless service in many respects. Indeed, many of Ireland’s smaller boutique chartered accountancy firms also have well established international connections too.
How can Chartered Accountants help?
Attention to detail is a key attribute, I believe, of the Chartered Accountant – an essential skill to have when entering new markets with potentially different legal and regulatory requirements. Being a member of Chartered Accountants Ireland gives access to a network of contacts that is second to none and through the Institute itself, we can put people in contact with the appropriate and relevant sources of expertise if they feel they’re lacking it themselves. We have very strong links with the local accountancy bodies in Asia, the US, Australia and New Zealand, and with our sister associations in the UK. Those connections to other accountancy bodies globally provides a potential huge network for companies looking to export. Through our own members, we have access to a huge raft of expertise and knowledge throughout the world.