|
Four categories can be identified in any international trade
transaction:
·
Firstly, it is an ordinary local commercial transaction with a
few intricacies.
·
Secondly, the transaction has a
strong emphasis on customs and
trade compliance.
·
Thirdly, there has to be a strong
emphasis on shipping
(transportation) of the goods from one area to another.
·
Lastly, there has to be payment for the goods.
Financial aspects can also not be ignored.
The objectives of the four categories must be met and
documents and processes are required for the seamless flow of
international trade and to achieve these objectives.
The categories above are also inter-linked and inter-dependent,
and for importers to succeed, they must be able to at least calculate
the duties they need to pay in order to perform a landed cost
calculation.
The landed cost calculation is important. It is inter-related
with other processes and features that the solution should have, and
the seamless flow of these processes within the solution is important.
In this week’s edition, we will look at the importance of the
ability of the solution to calculate the landed cost.
The landed cost of a product is the total all-inclusive cost
of that product. It cannot be calculated correctly if the duty of the
product is not calculated. In order to calculate the duty, the user of
the product should be able to insert the tariff classification (correct
tariff subheading) of the goods together with the correct customs value
of the product and the origin of the product.
One should remember that there will be many documentary
requirements that should be met to satisfy Customs in order for importers
to qualify for preferential rates of duty. Although supporting
documents, such as commercial invoices, are not submitted in all
instances, the importer must have copies of all required documents such
as certificates of origin, valid movement certificates and preferential
status of the goods. In the event of goods coming from a country which
South Africa has a free or preferential trade agreement with, the
documents will be used in support of the qualification for preferential
rates and allows the goods of that tariff subheading to be imported at
a lower rate of duty than goods coming from areas with which the
country does not have such an agreement.
Developers of landed cost calculators must, as a minimum
requirement, be able to calculate the duty of the goods accurately.
Above the fact that the users of the software must be able to insert
the correct tariff classification, customs value and origin of the
goods, the duty calculator must be able to identify the different types
of duties and the software must assist the user to calculate the duties
accurately.
How will your duty calculator deal with the calculation of all
types of customs and excise duties? Can it only do straight forward
duty calculations (such as ad
valorem calculations that are based on a percentage of the customs
value) or can it also do more complex calculations (such as composite
duty calculations in terms of which the ad valorem rate of duty has to be calculated), and as a
separate calculation the specific rate of duty (for example amount of
duty per kilogram) has to be done for the same commodity. These types
of duty are separated by the word “or” and the higher of the two rates
of duty should be the applicable rate of duty. In this regard, the
developer of the solution should have incorporated the capability of
the calculator to do this calculation and if the developer does not
know this, the duty and landed cost will not be accurate.
Duty calculators should also be able to explain to the user
how to do the calculations. The General Notes to Schedule No. 1 explain
how to do these calculations.
Developers should also be aware of the definitions of the
different types of customs duty. They should then be in a position to
allow their software to accurately link the different parts of the tariff
to one another and to do all calculations separately.
Does your developer know that duty and levies in other parts
of Schedule No. 1 to the current South African Customs and Excise Act
are to be calculated in addition to the duty in Schedule No. 1?
Is the solution you are using able to identify goods that are
subject to not just anti-dumping duties in Schedule No. 2, but
information such as provisional payments in relation to anti-dumping
duties?
In order to calculate the VAT and excise duties on commodities
accurately, the developer has to be aware of and incorporate all the
charges that should be included in the formulas for the calculation of
these charges. If these charges are not included, and if the other
rates of duty are calculated incorrectly, the VAT and excise duties
will also be calculated incorrectly.
Rebates, refunds and drawbacks on commodities are very
specific provisions that allow for goods to be imported at a lower rate
of duty provided the imported goods comply with certain provisions. Is
the duty calculator able to identify those conditions, and deduct the
rebates, refunds and drawbacks from the prevailing rates of duty.
This is one of the most important features of a duty
calculator and it is essential that it is able to perform this.
Landed cost calculators should be able to do much more than
these simple calculations. Developers should know what other charges
should be included in these calculations, and their software should be
able to ask for the right questions to do these calculations. Are the solutions you use able to do
this?
THIRD
BATCH OF DRAFT RULES TO THE CUSTOMS CONTROL ACT RELEASED FOR COMMENTARY
(Comments due by 14 November 2014)
SARS Customs have published the third batch of draft Rules to
the Customs Control Act (Act 31 of 2014). The draft contains the draft
rules proposed under Chapters 21, 23 and Chapters 25 to Chapter 31.
Comments on
the Draft Rules are due on 14 November 2014.
With the
exception of the draft Rules to Chapter 22, dealing with international
postal articles handled by the South African Post Office, the draft
rules of the first 31 Chapters of the Customs Control Act have now been
published. The draft Rules for Chapters 32 to Chapter 41 are still
outstanding. Download the Jacobsens Customs
News Bulletin of 16 October 2014 for more information.
|
