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Latest News
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EXPORT COMPLIANCE IS NOT THAT SIMPLE
International trade is document-driven. An international trade transaction
starts with procedures in terms of which contracts are negotiated and
concluded.
Documents in international trade are interlinked. In other words, the
documents relate to each other, and some of the information appear on more
than one document. It is therefore important that one understands the
export/import process and makes sure that there are no errors on documents
from the beginning of the process. The UN/CEFACT’s Buy-Ship-Pay model
illustrates the main process in the global supply chain.
The Buy-Ship-Pay model illustrates five steps of the international trade
transaction. These steps are:
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Prepare
for export
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Export
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Transport
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Prepared for import; and
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Import.
During the first step the sales contract is established. It is important
that all information on the (export) sales contract is completed accurately
because the information relates to aspects such as the full description of
the goods which determines any compliance issues.
The contents on the sales contract are negotiated and can have legal
implications if the exporter does not comply with it.
There are three steps in any international trade transaction, namely: trade
compliance (for example customs clearance which must be done prior to the
exportation of the goods, the shipping (transportation) (which cannot take
place before customs clearance), and payment of the goods (settlement).
The sales contract does not only have an impact on the financial success of
the transaction, it also relates to information that will be used on
documents relating to each step in the transaction.
An international trade transaction starts in the country of export. In many
instances goods move across the territories of other countries before it
reaches the importing country. Information on documents should thus be
accurate. Inaccuracies can and will have an impact on clearance in the
importing country, will or could cause delays in transporting the goods and
will or could cause payment delays for the goods, or even non-payment.
International trade is document sensitive, and documents move goods.
However, only accurate information on documents move goods. Inaccuracies
lead to delays which add additional costs to transactions. Therefore,
customs modernisation and initiatives such as the national and international
single window systems have been introduced. The role of the exporter in
information provided to authorities must not be under-estimated. In fact,
South African importers, SARS and customs clearing and forwarding agents are
already relying on the information provided by exporters for tariff
classification. HS codes appear on commercial invoices, certificates of
origin, transport documents, and even on suppliers’ literature.
It is in the interest of all parties in international trade that South
African exporters also adapt the culture of providing accurate information –
and in many instances more information that is required on all documents.
The sooner it happens, the better. It is in the interest of improving
international competitiveness. And the sooner it happens, the smoother the
transition to national and international single window systems will be. |
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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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Documents for Comments
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DRAFT CUSTOMS RULES RELATING TO REPORTING OF CONVEYANCES AND GOODS ("RCG")
(Comments due by 19 January 2018)
The South African Revenue Services (SARS) Customs has published draft rules
under section 8 of the Customs and Excise Act 91 of 1964, relating to the
reporting of conveyances and goods ("RCG"). The intention is to replace the
current rules under section 8 of the Customs and Excise Act, 1964. According
to SARS the content of the proposed rules under section 8 is, within the
context of the 1964 Act, closely related to Chapter 3 of the Customs Control
Act 31 of 2014. The proposed rules are intended to bring the RCG
requirements under the 1964 Act closer to what will be required in terms of
the Customs Control Act when that Act comes into effect.
This is a clear indication that we will not see the introduction of the two
new Customs Acts soon.
Comments should be submitted to
c&e_legislativecomments@sars.gov.za.
Comments
are due by 19 January 2018. |
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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).
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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.
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.
On 24
November 2017, ITAC published an application (LIST 13/2017) to
amend the Customs Tariff of the Southern African Customs Union (SACU)
by the creation of a rebate provision in Schedule 3 to the
Customs and Excise Act for the importation of digital smart
cards, classifiable under tariff subheading 8523.52.10, under
rebate of duty provided the smart cards are not available in the
SACU area.
Notice 919 of
2017 was published in Government Gazette 41270 of 24
November 2017. |
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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.
There were no
amendments to the SACU Tariff at time of publication.
There will be
amendments on Friday 17 November 2017.
The tariff amendments
was sent to subscribers under Jacobsens Supplement 1097.
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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/169) was published in the Government Gazette 41165
of 6 October 2017. The notice number is R. 1081. |
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