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Customs News Bulletin

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19 August 2015

 

 

Latest News

CUSTOMS REGULATIONS UPDATE

On Friday 14 August 2015 the South African Revenue Service published three notices that will be implemented with effect from the date the Regulations to be published in terms of the Special Economic Zones Act, 2014 (Act No. 16 of 2014) come into operation. (See heading “Customs Tariff Amendments” for more information).  

The Customs Rule amendment that was published on 3 July 2015 will also amend the rules to section 21A of the current Customs and Excise Ac with effect from the date that the regulations under the Special Economic Zones Act, 2014 comes into effect.

A ‘‘SEZ enterprise’’ is defined in the Customs Control Act, 2014 as an enterprise within a special economic zone or part of a special economic zone designated in terms of section 43(2)(c) as a customs controlled area. 

The term ‘‘special economic zone’’ is also defined in the Customs Control Act as an area designated as a special economic zone in terms of the Special Economic Zones Act, 2014 (Act No. 16 of 2014);

It is thus clear that there will be a close relationship between SARS’ legislation and the Special Economic Zones Act, 2014 (Act No. 16 of 2014), and within the next 12 months the legislative framework pertaining to special economic zones and customs controlled areas will be substantially different.

It is important that importers, manufacturers and exporters familiarize them with the new legislation in order to benefit from it.  For the purposes of this article we will focus on the role of Customs in the SEZ Act.

The concept of special economic zones is an international one.  There are many synonyms for special economic zones: free ports, foreign trade zones (FTZ’s), export processing zones (EPZ”s), industrial development zones (IDZs) and sector development zones.    There are however similarities between these zones: These zones are generally specially designated areas in a country that are set aside for specific activities (such as importing, manufacturing and exporting) with minimum customs intervention. SEZ enterprises qualify for certain benefits: there are subsidies and government assistance on the initial cost of factory setup, and rebates of customs duties and VAT on imported inputs, provided the goods are exported. In South Africa the current IDZ scheme (under item 498.00) also provides for rebates on raw materials for local production, but VAT is not rebated.

The Department of Trade and Industry (the dti) established the Industrial Development Zone (IDZ) programme in the year 2000.

The objectives of the IDZ programme was to attract foreign direct investment, increase exportation of value added manufactured products and creates linkages between local industries and industries that are based in IDZ’s in Coega; East London, Richards Bay, OR Tambo, Saldanha Bay and Dube Trade Port (wef July 2014).

The dti were not happy with the performance of the IDZ programme and  SEZs were identified as instruments to improve South Africa’s industrial performance.

There is however a misconception that special economic zones are   a geographic area where goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities.

The sooner importers, exporters and manufacturers realise that free zones are also subject to customs control, the better.

 

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.

Two notices were published to amend the Customs Tariff of the Southern African Customs Union.

In the first notice, rebate item 498.00 is amended to reflect the new Special Economic Zones Act, 2014 (Act No. 16 of 2014) as requested by the Minister of Trade and Industry.

In the second notice, rebate item 498.02/00.00/01.00 is amended to reflect the new Special Economic Zones Act, 2014 (Act No. 16 of 2014) as requested by the Minister of Trade and Industry.

Both notices were published in terms of section 75 of the Customs and Excise Act, 1964.

The notices will take effect on the date the Regulations to be published in terms of the Special Economic Zones Act, 2014 (Act No. 16 of 2014) come into operation.

A notice to implement consequential changes in paragraph 8 of Schedule 1 to the Value-Added Tax Act, 1991 was published.

The tariff amendments and VAT notice were published in Government Gazette 39100 on 14 August 2014. See Notices R. 722 to R. 724.

A draft page to amend the Jacobsens Harmonized Customs Tariff was sent to subscribers under cover of Supplement 1054.

 

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.

 

LexisNexis

 

 

 

 

 

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

 

LexisNexis

 

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