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Latest News
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2018 BUDGET
WILL HURT SOUTH AFRICAN CITIZENS
Finance
Minister Malusi Gigaba’s maiden Budget Speech was a first in many aspects.
The
Value-Added Tax rate has been increased (from 14% to 15%) for the first time
since 1993. In other words, this has been the first increase in the new
South Africa.
The
standard rate of VAT will increase from 14% to 15% with effect from 1 April
2018. According to the publication LAPD-VAT-G13 VAT Pocket Guide on the VAT
rate increase from 1 April 2018, this means that, from 1 April 2018, all
taxable goods or services supplied by vendors, goods imported, as well as
certain services supplied by non-residents to residents for non-taxable or
private use (imported services), are subject to the VAT rate of 15%.
(Download the external guide from the SARS website).
The VAT on
goods imported into South Africa from within the SACU region is calculated
on the aggregate of the customs value, 10% thereof and on any non-rebated
duty. For example, if the customs value is R100, and there are no duties
payable, then VAT would be payable on R110. VAT of 15% on R110 = R16,50. In
other words the import VAT rate on goods imported from within SACU would be
16,50% without any customs and excise duties. If the goods are subject to
customs duty at a rate of 10%, the VAT would be calculated on R120 (if the
customs value is still R100). That is customs value, 10% thereof and 10%
customs duty. Then the VAT rate will not be 16,5%, but 18%.
Other major
proposals that have an affect on customs and excise are:
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An
increase in the ad-valorem excise duty rate on luxury goods from 7 per
cent to 9 per cent;
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An
increase of 52 cents per litre in the fuel and road accident fund levies
(22 cents per litre for the general fuel levy and 30 cents per litre
increase in the Road Accident Fund Levy); and
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Increases in the alcohol and tobacco excise duties of between 6 and 10
per cent
The
increase in the ad valorem excise duties on imported goods will also have a
cascading effect since ad valorem excise duty is calculated on the aggregate
of the customs value, 15% thereof, and on any customs duty. For example, if
a product is subject to a 7% ad valorem excise duty, and that product has a
customs value of R100 and does not attract any other customs duties, the ad
valorem excise duty on that product would be R8,05. In other words, the 7%
would amount to 8,05% as a result of the formula. That same product would
attract R10,35 (10,35%) ad valorem excise duty when the ad valorem excise
duty rate is 9%. Thus, without any duties and taxes the increase will be
2,3%. |
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Classification Corner
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The
Harmonized Commodity Description and Coding System (Harmonized System) is a
combined tariff/statistical nomenclature. It plays just as import a role in
the compilation and collection of statistics as in revenue collection.
There are
also many other instruments that are used in the collection of statistics
dealing with economic activities, transportable goods and services. There
are various correspondence tables available on the website of the United
Nations Statistical Division in terms of which code numbers of the
nomenclatures can be mapped or linked. However, these correspondence tables
will not be useful if goods are classified incorrectly.
For
statistics to be meaningful it must be compared with other nomenclatures
over a period. All these nomenclatures are also amended regularly, and in
some instances the statistics are covered by more than one review cycle of a
specific nomenclature. For example, if one needs statistics on replacement
LED bulbs, you would need to determine the classification thereof under the
current version of the HS (HS 2017) and you will also need the statistical
information for the HS 2012 version. For this reason, the WCO are publishing
correlation tables which list and explain all changes since the 1988 version
(HS 1988/HS 1992); HS 1992/HS 1996); HS 1996/HS2002; HS 2002/HS 2007; HS
2007/HS2012 and HS 2012/HS 2017). There were mainly editorial changes in the
1992 version of the HS, but since then there has been many important and
ground-breaking changes to assist Customs administrations and other
competent/controlling authorities to monitor and control strategic goods:
dual use goods, weapons of mass destruction, hazardous chemicals, substances
of environmental concern, and for the last couple of review cycles also to
monitor and control foodstuffs that must be monitored for the purposes of
food security. The HS is also reviewed because of changing trade patterns
and due to changes in technology.
The HS
currently has more than 5 300 six-digit subheadings (codes) compared to the
3 121 headings of the United Nations’ Standard International Trade
Classification (SITC). The HS and the SITC are the two most important
nomenclatures for statistics on transportable goods. From time to time the
most important (international) reference nomenclatures for statistical
purposes are amended at the same time to make comparison of data easier.
The
Harmonized System is and remains the most important statistical nomenclature
because it is the most comprehensive statistical nomenclature. The review
cycles of the HS is also shorter and more frequent than the rest.
The General
Interpretative Rules, the legal provisions, and certain principles of
classification make the HS user-friendly and the most successful
international trade instrument that has ever been developed. In addition,
there are many tools and complimentary publications to assist with
classification – such as the Alphabetical Index, the Harmonised System
Explanatory Notes and the Compendium of Classification Opinions. These
publications are in loose-leaf format or in electronic format. These
publications are available from LexisNexis as sole Southern African
distributor of World Customs Organization (WCO) products and publications.
Then there
are also national and regional publications, such as the Jacobsens Guide to
Classification, which is a companion to the Jacobsens Harmonized Customs
Tariff, the Common External Tariff of Botswana, Lesotho, Namibia, South
Africa and Swaziland (the Southern African Customs Union). The Guide to
Classification is also available from LexisNexis. |
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Customs Tariff
Applications and
Outstanding Tariff Amendments
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The International Trade Administration Commission (ITAC)
is responsible for tariff investigations, amendments, and trade
remedies in South Africa and on behalf of SACU.
Tariff
investigations include: Increases in the customs duty rates
in Schedule No. 1 Part 1 of Jacobsens. These applications apply
to all the SACU Countries, and, if amended, thus have the
potential to affect the import duty rates in Botswana, Lesotho,
Namibia, Swaziland and South Africa.
Reductions in
the customs duty rates in Schedule No. 1 Part 1. These
applications apply to all the SACU Countries, and, if amended,
thus have the potential to affect the import duty rates in
Botswana, Lesotho, Namibia, Swaziland and South Africa.
Rebates of duty
on products, available in the Southern African Customs Union (SACU),
for use in the manufacture of goods, as published in Schedule
No. 3 Part 1, and in Schedule No. 4 of Jacobsens. Schedule No. 3
Part 1 and Schedule No. 4, are identical in all the SACU
Countries.
Rebates of
duty on inputs used in the manufacture of goods for export, as
published in Schedule No. 3 Part 2 and in item 470.00. These
provisions apply to all the SACU Countries.
Refunds of
duties and drawbacks of duties as provided for in Schedule No.
5. These provisions are identical in all the SACU Countries.
Trade
remedies include: Anti-dumping duties (in Schedule No. 2
Part 1 of Jacobsens), countervailing duties to counteract
subsidisation in foreign countries (in Schedule No. 2 Part 2),
and safeguard duties (Schedule No. 2 Part 3), which are imposed
as measures when a surge of imports is threatening to overwhelm
a domestic producer, in accordance with domestic law and
regulations and consistent with WTO rules.
To remedy such
unfair pricing, ITAC may, at times, recommend the imposition of
substantial duties on imports or duties that are equivalent to
the dumping margin (or to the margin of injury, if this margin
is lower).
Countervailing investigations
are conducted to determine
whether to impose countervailing duties to protect a domestic
industry against the unfair trade practice of proven subsidised
imports from foreign competitors that cause material injury to a
domestic producer.
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Safeguard
measures, can be introduced to protect a domestic industry
against unforeseen and overwhelming foreign competition and not
necessarily against unfair trade, like the previous two
instruments.
Dumping is
defined as a situation where imported goods are being sold at
prices lower than in the country of origin, and also causing
financial injury to domestic producers of such goods. In other
words, there should be a demonstrated causal link between the
dumping and the injury experienced.
The International Trade Commission of South Africa (ITAC) also
publishes Sunset Review Applications in relation to anti-dumping
duty in terms of which any definitive anti-dumping duty will be
terminated on a date not later than five years from the date of
imposition, unless the International Trade Administration
Commission determines, in a review initiated before that date on
its own initiative or upon a duly substantiated request made by
or on behalf of the domestic industry, that the expiry of the
duty would likely lead to continuation or recurrence of dumping
and material injury.
The first
Customs Tariff Application for 2018 (List 01/2018) was published
in Government Gazette No. 41445 of 16 February 2018.
Chemical
Initiatives (Pty) Ltd, a subsidiary of AECI Limited, applied for
an increase in the rate of duty on phosphoric and polyphosphoric
acids, classifiable under tariff subheading 2809.20, from free
to 20%.
An additional
(8-digit) subheading will be created to give effect to the
application.
For enquiries
contact Mr Christopher Sako
(csako@itac.org.za)
at telephone (012) 394 3669 or Ms T Morale (tmorale@itac.org.za)
at telephone (012) 394 3694.
List 01/2018
was published under Notice 68 of 2018. |
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Customs Tariff Amendments
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With the exception of
certain parts of Schedule No. 1, such as Schedule No. 1 Part 2 (excise
duties), Schedule No. 1 Part 3 (environmental levies), Schedule No. 1
Part 5 (fuel and road accident fund levies), the other parts of the
tariff is amended by SARS based on recommendations made by ITAC
resulting from the investigations relating to Customs Tariff
Applications received by them. The ITAC then investigates and makes
recommendations to the Minister of Trade and Industry, who requests the
Minister of Finance to amend the Tariff in line with the ITAC's
recommendations. SARS is responsible for drafting the notices to amend
the tariff, as well as for arranging for the publication of the notices
in Government Gazettes.
During the annual budget
speech by the Minister of Finance in February, it was determined that
parts of the tariff that are not amended resulting from ITAC
recommendations, must be amended through proposals that are tabled by
the Minister of Finance.
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Once a year, big tariff
amendments are published by SARS, which is in line with the commitments
of South Africa and SACU under international trade agreements.
Under these
amendments, which are either published in November or early in December,
the import duties on goods are reduced under South Africa's
international trade commitments under existing trade agreements.
Except for the
amendments resulting from the Budget Speech, there were no amendments at
time of publication.
For more information
visit the latest Customs Watch on the Jacobsens website.
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Customs Rule Amendments
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The Customs and
Excise Act is amended by the Minister of Finance. Certain provisions of
the Act are supported by Customs and Excise Rules, which are prescribed
by the Commission of SARS. These provisions are numbered in accordance
with the sections of the Act. The rules are more user-friendly than the
Act, and help to define provisions which would otherwise be unclear and
difficult to interpret.
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Forms are also
prescribed by rule, and are published in the Schedule to the Rules.
There were no rule
amendments at the time of publication.
The latest Rule
amendment (DAR/170 and DAR/171) were published in Government Gazette
41351
of 22 December 2017. The notice numbers are R. 1471 and R. 1472. |
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