Customs News Bulletin

	5 August 2015

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DRAFT TAXATION LAWS AMENDMENT BILL, 2015 AND DRAFT TAX ADMINISTRATION LAWS AMENDMENT BILL, 2015 (Comments due: 24 August 2015)

The National Treasury published the 2015 Draft Taxation Laws Amendment Bill (and its Explanatory Memorandum), as well as the 2015 Draft Tax Administration Laws Amendment Bill (and its Memorandum of Objects) for public comment together with a media statement on 22 July 2015.

The bills provide the necessary legislative amendments required to implement most of the tax proposals that were announced in the South African National Budget, 2015 on 25 February 2015.

The 2015 draft Tax Administration Laws Amendment Bill (TALAB) deals with administrative provisions of tax legislation currently administered by SARS.

The 2015 draft TALAB contains proposed amendments to, inter alia:

· the Customs and Excise Act, 1964, so as to insert certain provisions and to amend certain provisions

· the Tax Administration Act, 2011, so as to amend certain provisions; to effect technical corrections; and to effect textual and consequential amendments

· amend the Customs Duty Act, 2014, so as to effect technical corrections; to effect consequential amendments; and to insert a provision

· amend the Customs Control Act, 2014, so as to amend certain provisions; to effect consequential amendments; and to insert a provision

· amend the Tax Administration Laws Amendment Act, 2014, so as to effect technical corrections

and to provide for matters connected therewith.

Important proposed amendments in the Tax Administration Act, 2011 relate to:

Section 1 ad paragraphs (a) and (b) which proposed a common term including all customs and excise legislation to avoid having to refer to each Act separately; and

Ad paragraph (b) which provides for greater transparency and the automatic exchange of information between tax administrations is an important step forward in countering cross border tax evasion and aggressive tax avoidance. This amendment is required to implement a scheme under which SARS may require South African financial institutions to collect information under an international tax standard, such as the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters, which encompasses the Common Reporting Standard (CRS) that was endorsed by G20 Finance Ministers in 2014. In order to implement the standard on a consistent and efficient basis, certain financial institutions must report on all account holders and controlling persons, irrespective of whether South Africa has an international tax agreement with their jurisdiction of residence or whether the jurisdiction is currently a CRS participating jurisdiction.

Under ad paragraph (c) the definition of “Tax Act” is amended to include the new definition “customs and excise legislation”.

The proposed amendment to section 69 of the Tax Administration Act, 2011 provides that taxpayer information obtained by a current or former SARS official in the course of performance of duties under a tax may be disclosed by that official for purposes of the administration of the Customs and Excise Act, 1964, the Customs Duty Act, 2014 and the Customs Control Act, 2014.

Important amendments under the Customs Duty Act, 2014 relate to the duty deferment benefits (sections 24 and 25) and an important amendment to section 39, which broadens the circumstances in which a customs broker will not be relieved of liability for payment of a duty. A customs broker may only act on authority of a clearance instruction of his or her principal containing the customs broker’s mandate, and should not be relieved of liability in terms of section 39(1) of the Customs Duty Act if that customs broker was not in possession of such a clearance instruction.

The proposed amendment to section 67 of the Customs Duty Act, 2014 is aligned to Note 7 to Schedule No. 5 which has a broader application than section 67 of the Customs Duty Act.  The proposed amendment is aimed at broadening the provision to bring it in line with Note 7.    The proposed amendment provides flexibility to enable the Commissioner to authorise payments of refunds or drawbacks to persons other than the person who made the payment or that person’s representative. Such an authorisation can in terms of section 918 of the Customs Control Act, 2014, be granted subject to conditions.

Section 21 of the Customs Control Act, 2014 is amended to broaden the scope of the confidentiality provision and aligns these provisions with the confidentiality provisions in the Tax Administration Act, 2011.  

See the Memorandum of the objects of the Draft TALAB, 2015 for more information. Download it at http://www.sars.gov.za/AllDocs/LegalDoclib/Drafts/LAPD-LPrep-Draft-2015-37%20-%20Draft%20Memorandum%20of%20the%20Objects%20of%20TALAB%202015%2022%20July%202015.pdf.

View and download the documents which include the media statement issued by the National Treasury from http://www.sars.gov.za/Legal/Preparation-of-Legislation/Pages/Draft-Documents-for-Public-Comment.aspx.

The amendments start on page 45 of the Tax Administration Laws Amendment Bill. Download the TALAB from http://www.sars.gov.za/AllDocs/LegalDoclib/Drafts/LAPD-LPrep-Draft-2015-36%20-%20Draft%202015%20Tax%20Administration%20Laws%20Amendment%20Bill%20released%2022%20July%202015.pdf.

The amendments will take effect on the date the Customs Control Act, 2014 and the Customs Duty Act, 2014 takes effect.

The Treasury has requested that comments be forwarded to Nomalizo Bulisile at Nomalizo.bulisile@treasury.gov.za and Adele Collins at acollins@sars.gov.za by close of business on 24 August 2015.

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. ITAC published the following application to amend the Customs Tariff of Botswana, Lesotho, Namibia and Swaziland under List 07/2015. The application was published under Notice R.792 of 2015 in Government Gazette 39045 of 31 July 2015. WITHDRAWAL OF PARTIAL REBATE ITEM 316.23/85.29/03.06 ON DISPLAY PANELS FOR THE ASSEMBLY OF MONITORS. ITAC is the applicant and argues that there has been a significant shift from the semi-knocked down (SKD) model of assembly towards full completely-knocked down (CKD) manufacturing in the local industry and subsequently, the CKD manufacture has resulted in higher value-addition and capital investment. Enquiries: ITAC Ref 06/2015: Ms L Maliaga, Tel: 012 394 3835, Email: lmaliaga@itac.org.za. Comments are due by 31 August 2015. ITAC also published a notice to maintain the anti-dumping duties on CLEAR DRAWN AND FLOAT GLASS ORIGINATING IN OR IMPORTED FROM THE PEOPLE’S REPUBLIC OF CHINA (CHINA) AND INDIA.  The provisions exist in Schedule No. 2, item 213.03. The Notice (R.793 of 2015) was published in Government Gazette 39045 of 31 July 2015. List 06/2015 was published under Notice R.589 of 2015 in Government Gazette 38877 of 19 June 2015.

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.

The following tariff amendments were published in Government Gazette 93035 on 31 July 2015.. Under the amendments: 1) Anti-dumping duty items 215.02/7324.10/01.06, 215.02/7324.10/02.06 and 215.02/7324.10/04.06 are deleted and anti-dumping duty items 215.027324.10/03.06 and 215.02/7324.10/05.06 are amended to maintain and amend the anti-dumping duties on stainless steel sinks originating in or imported from China and Malaysia as recommended in ITAC Report 497.  (Notice R.655, Reference A2/1/368); 2) Item 621.03/104.23.03/01.01 is deleted and items 621.13/104.21.01/01.01 and 621.13/104.23.03/02.01 are inserted to provide for spirits obtained from grape wine or grape marc with an alcoholic strength in excess of 80% by volume, when the spirits is used to fortify wine.  (Notice R. 653, Reference A6/1D/05). The loose-leaf pages to amend the Jacobsens Harmonized Customs Tariff were sent to subscribers under cover of Supplement 1053.

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. On 3 July 2015, SARS Customs published an Amendment of the Customs and Excise Rules under section 21A relating to special economic zones (SEZs).

The rule amendment (DAR/156) was published on 3 July 2015 in Government Gazette 38925 under Notice R. 566. The effective date of this amendment will be on the date that the regulations under the Special Economic Zones Act, 2014 come into effect. Download the latest Customs Watch at www.jacobsens.co.za to have access to the latest tariff and rule amendments.

Contact Information:	Contact the Author:
Mayuri Govender Jacobsens Editor Tel: 031-268 3273 e-mail to: jacobsen@lexisnexis.co.za	Leon Marais Independent Customs Consultant Tel: 053-203 0727 e-mail to: leon.marais@intekom.co.za

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