Customs News Bulletin

18 February 2015

Latest Amendments and News

 

FOCUS ON THE IMPACT OF THE NEW CUSTOMS LEGISLATIVE CHANGES ON TRADERS

There will be dramatic changes to South Africa’s import and export legislation after the implementation of the Customs Control Act, 2014 and the Customs Duty Act, 2014 after June 2015.  These changes will bring about a fundamental change in the way the importers, exporters and manufacturers will interact with Customs.

Importers and exporters must make an effort to get information about compliance issues. If they are compliant they will also be rewarded certain trade facilitation benefits which will increase, amongst other things, the global competitiveness of their businesses.

Importers’ responsibilities in respect of customs clearance will increase dramatically.

In future, Customs will increasingly focus on (post-clearance) audits to evaluate importers’ compliance procedures and internal systems.

Audits enable Customs to determine the extent of any non-compliance, assess the amount of Revenue due, penalties due and categorise the trader as a low, moderate or high risk client to Customs.  Audits also set forth ways to strengthen internal controls.

The risk classification has and will have a direct impact on the trader’s future relationship with Customs. 

Audits are also there to assist Customs to adopt a risk-based approach to selecting importers for audits that involved analysis of the essential import attributes and characteristics. Companies with the highest risk scores are selected for more frequent audits.

Audits are also designed to assist Customs to focus on the evaluation of internal controls of companies.

The new legislation provides for advance rulings as a mechanism to avoid problems with Customs.  Traders v=can apply for advance rulings on tariff classification, Customs valuation and origin.  Advance rulings will give importers legal certainty of how their goods will be dealt with by Customs.

Regardless of the frequency and methodology with which they are or may be conducted, audits can be a major headache for any importer.  It should not be if the importer is compliant.

The new Customs legislation provides for self-assessment and self-determination by importers.  In other words importers will be responsible for the accuracy of information to be provided to Customs and need to assess their own compliance risks and come up with a plan to address them.

Typical risk areas are customs clearance, tariff classification, customs valuation, origin and liability for duty payment.

The risks associated with every business are unique and clients must identify the risks associated with their operations together with all the Customs rules and regulations that apply to their industry periodically.

The audit period has been increased from two years to three years which means that, if Customs picks up any errors during audits, records for a period of three years will be reviewed compared to the current two-year period.

 

SOUTH AFRICAN NATIONAL BUDGET 2015

Finance Minister Nhlanhla Nene will table the 2015 Budget in Parliament on 25 February 2015. It will be the Minister’s maiden Budget speech.

The Ministry has appealed to members of the public who wish to send suggestions to the Minister on the budget to do so by using the following contact details:

·         Link: http://www.treasury.gov.za/documents/national%20budget/default.aspx

·         Fax: 012 406 9055.

DRAFT RULES: CHAPTERS 32 TO CHAPTER 41 AND ANNEXURE A TO THE CUSTOMS CONTROL ACT NO. 31 OF 2014

(Comments extended to 20 February 2015)

The fourth and final batch of draft Rules to the Customs Control Act has been published by SARS Customs for comment. Comments were due on 30 January 2015 but it has been extended to 20 February 2015.

The draft rules are the Rules for Chapters 32 to Chapter 41 of the Customs Control Act which are entitled:

·         32. Recovery of debt under the Act

·         33. General enforcement functions

·         34. Detention, seizure and confiscation of goods

·         35. Prohibited, restricted and sectorally controlled goods

·         36. Counterfeit goods

·         37. Reconsideration of decisions and dispute resolution

·         38. Voluntary disclosure relief

·         39. Administrative penalties

·         40. Judicial matters

·         41. Miscellaneous matters

Download the Draft Rules, Annexure A and the Comment Sheet by clicking on the links below:

See links at http://www.sars.gov.za/Legal/Preparation-of-Legislation/Pages/Draft-Documents-for-Public-Comment.aspx.

Annexure A contains the “penalty list” and has been incorporated in the document for ease of reference. Although it doesn't currently form part of the Rules, it will be published at a later stage in section 876(1)(a) of the Customs Control Act.

The draft amendments proposed for Chapter 37 are aimed at establishing uniform appeal and dispute resolution procedures for the Customs Control Act and the Tax Administration Act (TAA) and for that purpose to align the provisions of Chapter 37 of the Control Act with the corresponding provisions contained in Chapter 9 of the TAA.

 

 

 

Customs Tariff Applications and Outstanding Tariff Amendments

 

 

 

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 the 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.

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.

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.

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.

In the WTO system, a member may take a safeguard action, which is, restricting imports temporarily in the face of a sustained increase in imports that is causing serious injury to the domestic producer of like products. Safeguard measures are universally applied to all countries, unlike anti-dumping and countervailing duties that are aimed at a specific firm or country.

Schedule No. 2 is identical in all the SACU Countries.

The International Trade Administration Commission (ITAC) has published the first amendment applications to the Southern African Customs Union Tariff for 2015.

The Southern African Customs Union comprises of South Africa and Botswana, Lesotho, Namibia and Swaziland.

The Notice (Government Notice R.74 of 2015) was published in Government Gazette 38419 on 30 January 2015.

Comments are due by 27 February 2015.

Both applications are in relation to amendments to Part 1 of Schedule No. 3.

The first application relates to the creation of two rebate provisions for the upholstered furniture sector, namely:

Woven fabrics, containing 85% or more by mass of synthetic filaments, of yarns of different colours, classifiable in tariff subheading 5407.73, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, for use in the manufacture of upholstered furniture classifiable in tariff heading 94.01; and

Woven fabrics of polyester staple fibres, (excluding that mixed mainly or solely with wool or fine animal hair) , in such quantities, classifiable in tariff subheading 5515.1, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, for use in the manufacture of upholstered furniture classifiable in tariff heading 94.01.

(ITAC Reference 10/2014. Enquiries: Ms T. Morale. Telephone:
(012) 394 3694. Fax (012) 394 4694. E-mail: tmorale@itac.org.za. The second application relates to the creation of a rebate provision for:

"Goods of any description (excluding mounted or populated circuit boards) for the manufacture of prepayment electricity supply meters classifiable in tariff subheading 9028.30, at such times, in such quantities and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the Commission is satisfied that the circuit boards are mounted and populated in the SACU region."

(ITAC Reference 20/2014. Enquiries and correspondence
to be directed to Ms Lufuno Maliaga. Telephone:
(012) 394 3845. Email: lmaliaga@itac.org.za.

 

 

 

 

Customs Tariff Amendments

 

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.

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.

There were no tariff amendments at time of publication

The last tariff amendments (dated 6 February 2015)  have been sent to subscribers under cover of Supplement 1043 which should reach subscribers soon.

Download the latest Customs Watch to have access to the latest tariff amendments.

 

 

 

Customs Rule Amendments

 

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.

 Forms are also prescribed by rule, and are published in the Schedule to the Rules. 

Forms are also prescribed by rule, and are published in the Schedule to the Rules. 

There were no rule amendments at time of publication. The last amendment (DAR/140) was published on 8 August 2014.

Download the latest Customs Watch to have access to the latest tariff and rule amendments.

 

 

 

 

 

 

 

 

 

 

Contact Information:

Mayuri Govender

Jacobsens Editor

Tel: 031-268 3273
e-mail: 
jacobsen@lexisnexis.co.za

 

 

Contact the Author:

Leon Marais 
GMLS Associate: Customs Specialist
Tel: 053-2030727

e-mail: leon.marais@intekom.co.za/