CUSTOMS AND EXCISE TRAINING - UKZN Extended Learning … · • customs, excise and international...

CUSTOMS AND EXCISE TRAINING Virusha Subban

OVERVIEW

This presentation covers the following topics:

• Overview of Customs, Excise and International Trade Law Practice of Bowman Gilfillan Africa Group (“BGAG”)

• What is customs?

• What is excise?

• Customs modernisation and legislative overview

• International trade

• Transition to the new legislation

OVERVIEW OF CUSTOMS, EXCISE & INTERNATIONAL TRADE LAW PRACTICE OF BGAGOur highly regarded international trade law practice is located within the broader Tax Department. We offer a variety of legal services, which includes advice on:

• trade remedies such as anti-dumping, countervailing measures and safeguard duty investigations, applications and reviews (which include representations before the ITAC) –Wiesenhof AG, Brasil Goods, TATA North America

• customs, excise and international trade related aspects of imports, exports and local manufacturing of goods – SAB, adidas, ACSA, Givaudan

• applications for tariff adjustments• advice relating to the application of WTO Agreements, e.g. the GATT• export and import controls such as the classification of dual-use products regulated by the

Wassenaar Arrangement in South Africa• international trade sanctions and trade embargoes• regional trade liberalisation agreements including SACU, SADC and the COMESA• government procurement and SA’s National Industrial Participation Programme or offsets• SA’s investment law regime• legal aspects of trade finance• litigation

WHAT DO WE DO?

• IMPORT AND EXPORT ADVICE AND STRUCTURING

• EXCISE DUTIES (TOBACCO AND ALCOHOL)

• ENVIRONMENTAL LEVIES

• FUEL LEVY, RAF LEVY

• DIESEL REBATES

• CARBON TAX

• SUGAR SWEETENED BEVERAGES TAX

• AIR PASSENGER TAX

• DTI INCENTIVE SCHEMES

• PERMITS (FUEL, LPG)

• EXPORT CONTROLS

• INTERNATIONAL TRADE

• Anti-dumping (against dumping) –accounts for approx. 90% of trade remedy disputes internationally

• Countervailing measures (against subsides)

• Safeguard measures (against surge in imports)

• Import tariff adjustments (increases from applied to bound tariffs)

WHAT ARE TRADE REMEDIES OR TRADE DEFENCE INSTRUMENTS?

ANTI-DUMPING IN INTERNATIONAL TRADE

• Dumping is defined in a number of different manners in literature on the subject, but, central to all suggested definitions however, is the concept of price discrimination in different markets

• Dumping occurs when

• a country exports a product at a price (“the export price”) that is lower than the price it normally charges on its own home market (“the normal value”), or

• if it exports for a sustained period at prices which are below their average cost of production and producers in the importing country are materially injured as a result

• The World Trade Organisation (“WTO”) ,through its General Agreement on Tariffs and Trade (“GATT”) and the Antidumping Agreement, permits governments to act against dumping in instances where there is material injury to the competing domestic industry

• The Agreement of the implementation of Article VI of the General Agreement on Tariffs and Trade 1994

APPLICABLE LEGAL REGIME IN SA

• South Africa has been a member of the WTO since 1 January 1995. Although the Antidumping Agreement has not been specifically enacted into municipal law, its provisions are binding on South Africa in international law

• The WTO, through Article VI of GATT (the Antidumping Agreement) permits governments to act against dumping in instances where there is material injury to competing domestic industries

APPLICABLE LEGAL REGIME IN SA CONT.

• The legal regime regulating dumping/ anti-dumping in South Africa is encapsulated in:

• the GATT and the Antidumping Agreement;

• the Customs and Excise Act 91 of 1964;

• the International Trade Administration Act 71 of 2002 (“the ITA ACT”);

• trade agreements such as the SACU AGREEMENT, TDCA and now EPA; and

• the Anti-Dumping Regulations promulgated in terms of the ITA Act

• The ITA Act is the most important statute as it defines terms such as dumping, normalvalue, export price, among others

APPLICABLE LEGAL REGIME IN SA CONT.

• The Anti-Dumping Regulations, in particular, deal with how investigations into alleged dumping may be conducted and how confidential information may be dealt with

• Because South Africa is a member of the Southern African Customs Union (“SACU”), the practical reality is that any dumping and anti-dumping investigation assumes a SACU wide ambit, and local industry which is being harmed or threatened with harm refers to the specific industry in the SACU region, not just South Africa

• SACU comprises South Africa, Botswana, Lesotho, Namibia and Swaziland

ANTI-DUMPING PROCEDURE

• An application for anti-dumping action can only be made by or on behalf of the SACU industry

• Anti-Dumping Regulation 7.3 provides that an application shall be regarded as brought by or on behalf of the SACU industry if –

• at least 25% of the SACU producers by domestic production volume supports the application; and

• those who express an opinion about the application, at least 50% by domestic production volume supports the application

ANTI-DUMPING PROCEDURE CONT.

• In order to take action against dumping, the government has to be able to show that the dumping is indeed taking place, calculate the extent of the dumping and be able to prove that the dumping is causing injury to the domestic market or threatening to cause such injury

• Retaliation against dumping is achieved by charging additional import duty on the particular product that is being dumped from the particular exporting country in order to bring its price closer to the ‘normal value’ or to remove the injury to the domestic industry in the importing country

• There must be an investigation directed at identifying the existence and effects of the alleged dumping. This investigation must concentrate on both the existence of the dumping and of the material injury. Evidence has to be provided that there is dumping as well as a material injury and that there is a causal link between the dumping and the injury

• Investigations by the International Trade Administration Commission may take 9 – 18 months to conclude, but the investigation in total must be concluded within 18 months

ANTI-DUMPING PROCEDURE CONT.

• Interested parties, particularly foreign exporters, must be given the opportunity to defend themselves. In this connection, the parties are entitled to have access to all information gathered during the investigation, except when this information is confidential (for instance financial statements of a private company)

• When the competent authorities decide after their investigation that dumping is taking place, and that such dumping is causing material injury to the domestic industry, they can impose anti-dumping duties. They must thereafter notify the interested parties of their decision.

• Anti-dumping duties can only be properly levied for so long and in so far as this is necessary to neutralise the dumping which is causing material injury. In all cases, any anti-dumping duty must be terminated after five years from its imposition, unless the authorities determine that the expiry of the duty or undertaking would likely lead to a continuation or recurrence of dumping and material injury

INTRODUCTION TO CUSTOMS DUTY

• Dates back to Egyptian pharaohs 609 B.C.

• South Africa 1678 Cape Colony

• Customs duties

• Fiscal “purse” / “basket”

• Protection of domestically manufactured goods

• Link to VAT on importation

• o Non BLNS countries: (Customs Value + Duty + 10% upliftment) X 14%

• o BLNS Countries : (Customs Value + Duty) x 14%

• o Bill of entry – SAD500 declaration

• Three pillars

• Clearance and release

• Customs powers

INTRODUCTION TO EXCISE DUTY

• Excise duties and levies first levied in 1878 Cape Colony

• High-volume daily consumable products

• Non-essential or luxury items (ad valorem)

• Manufactured within the geographic borders

• Aims:

• Fiscal / revenue generating

• Protection of domestically manufactured goods

HISTORICAL BACKGROUND TO THE C&E ACT

Customs and Excise Act 91 of 1964• The need for change

Draft Bills issued on 30 October 2009. Comments due by 26 February 2010• Draft Customs Control Bill – operational issues

• Draft Customs Duty Bill – duty liability

Second round of Customs Control Bill released on 18 April 2011• Comment by 16 May 2011

CURRENT STATUS OF OVERHAUL

• The Customs Duty Act, 2014 (Act 30 of 2014) as published in the Government Gazette No. 37821 of 10 July 2014

• The Customs Control Act, 2014 (Act 31 of 2014) was published in the Government Gazette No. 37862 of 23 July 2014

• The Customs and Excise Amendment Act, 2014 (Act 32 of 2014) was published in the Government Gazette No. 37863 of 23 July 2014

• Acts only take effect on a date determined by the President by proclamation

• SARS aimed to implement at least 70% of both the Customs Control and Customs Duty Acts in June/July 2015 – now postponed to 2018

• Likely to be a phase-in approach

ACT 91 OF 1964

Act 91of

1964

Customs and Excise

Schedules/ Tariff

Other instruments,

e.g. SACU

Rules

NEW CUSTOMS LEGISLATION

From the effective date –

• The new customs and excise legislation will replace the

Customs and Excise Act, 1964Customs Duty Act

30 of 2014

Customs Control

Act 31 of 2014

Excise Duty Act

91 of 1964

Customs and Excise Act 91 of

1964

CUSTOMS CONTROL AND SARS’ ROLE

• Customs – movement of goods and people entering or exiting the border of South Africa

• Imports – air, sea, road, rail or post

• Exports - air, sea, road, rail or post

• Extensive powers of search and seizure

CUSTOMS REGISTRATION, LICENSING & SURETY

• a) Once Off

• If this is a once-off importation, or if the importer has already applied for an importers code by means of a DA185, the general 70707070 code may be used for an amount less than R50 000 and not more than 3 times per calendar year.

• Note: A provisional payment of 10% of customs value with a minimum of R2500 and maximum of R50 000 might apply

• b) Who is required to register

• Any importer of goods into South Africa is required to register with SARS as an importer or an exporter as the case may be in terms of section 59A of the Customs Act and Rules thereto.

FRAMEWORK OF THE CUSTOMS CONTROL ACT

• Establishes control over all goods imported into or exported from SA

• Will be the foundation for other tax levying Acts relating to the import or export of goods in SA, e.g. Customs Duty Act, Excise Duty Act (await first draft)

• Operational aspects for Customs control – will be supported by the Rules (still being drafted)

• 41 chapters

• 944 sections

• Major changes include:

• New terminology

• 12 procedures listed, each having its own chapter

• Facilitates modernisation

• New timelines for compliance

• Complete framework for Export Duty

SUBMISSION OF CLEARANCE DOCUMENTS

• • Customs must accept if all requirements are met, and issue a receipt

• • IMPORT clearance declarations must be submitted within 3 working days of arrival at:

• • Customs seaport; section 90(1)(a) CCA

• • Customs airport section 90(1)(b) CCA

• • Licensed rail cargo terminal section 90(1)(c) CCA

• • Land border post section 90(1)(d) CCA – when the vehicle arrives at the land border-post

• • EXPORT clearance declarations must be submitted:

• • Sea –94(1)(a)(ii) CCA – not later than two hours before delivery to sea cargo terminal

• • Air –section 94(1)(b)(ii) CCA – not later than one hour before delivery to air cargo terminal

• • Rail –section 94(1)(c) CCA – not later than one hour before delivery to rail cargo terminal

• • Road –section 94(1)(d) CCA – any time after the goods have been loaded but not later than the time the truck reaches the land border-post

• • Cross-border pipeline – period will be prescribed by rule

• • Electricity – period will be prescribed by rule

• • Containerised goods – as above only after container is sealed

• • Vessels, aircraft, etc. under own power – before departure from licensed seaport/airport

NEW CUSTOMS PROCEDURE CODES

1. National transit procedure

2. International transit procedure

3. Transshipment procedure

4. Temporary admission procedure

5. Warehousing procedure

6. Tax free shop procedure

7. Stores procedure

8. Export procedure

9. Temporary export procedure

10. Inward processing procedure

11. Home use processing procedure

12. Outward processing procedure

RELEASE

• Clearance is a pre-condition to release• No release if:

• Pre-conditions not met

• Tax not paid

• Security not paid

• Release will be refused if:• Clearance and release not permissible

• Results in a breach of the tax laws

• Goods are to be removed to the state warehouse

• Goods were seized

• Conditional release • Only become goods in free circulation upon compliance with the condition

• Unconditional release• Of goods for home use become goods in free circulation

• Goods released for a customs procedure• Remain subject to the Act despite release

TARIFF CLASSIFICATION

• All import and export commercial transactions

• Tariff classification and rates of duty

• Normal customs duties

• Excise duties

• Ad valorem duties

• Anti-dumping duties

• Countervailing duties

• Necessity for import control permits, rules of origin obligations and applicability of customs rebate provisions

TARIFF CLASSIFICATION CONT.

• General Rules of Interpretation

• Complex cases of tariff classification

• Advanced tariff determinations

• Tariff Determinations

• Tariff Disputes – appeal to the High Court

VALUATION

• Customs Values• Six valuation methods• Price paid or payable• Particular attention must be paid to

• Relationship between the buyer and seller• Royalties and licence fees

• Complex valuation cases + transfer pricing

• Advanced value determinations• Value Determinations• Valuation dispute – appeal to the High Court

ORIGIN

• Rules of origin are the criteria that are used to define where a product was made.

• Used to determine the import duty payable

• Non-preferential and Preferential rates of duty

• Most-favoured nation (MFN)

• Free Trade Agreements

• South Africa has signed a number of trade agreements with its trading partners

TRANSITION TO NEW CUSTOMS LEGISLATION

The Customs Control Act (CCA) and Customs Duty Act (CDA)

• Removal of the customs provisions from the 1964 Act and creation of two new Acts

• Rules under 1964 Act to be partially replaced by separate sets of Rules under the CCA and CDA

• Current Schedules 1 to 6 of the 1964 Act to be split into a Customs Tariff and an Excise Tariff

• Customs duties regulated in terms of Customs Tariff, attached to the CDA as an addendum

Excise Duty Act (EDA)

• Provisions relating to excise and related matters will remain in the 1964 Act, and together with further amendments, be renamed the EDA

• EDA provides additional definitions dealing with provisions which appear to deal with customs matters – to restrict the scope and application of the EDA to excise matters only

• The 1964 Act Rules in relation to excise and related matters will continue and be renamed “Excise Rules”

• Existing excise provisions of 1964 will continue to apply under the name of EDA until the EDA is replaced by a new, revamped Act on excise matters

• Excise Tariff to regulate excise duties, including fuel levies, RAF levies and environmental levies, attached to EDA as an addendum

Default position (section 927)

• CCA, CDA and EDA will apply to all goods, persons and matters to which they relate as from the effective date

• CCA will apply to all goods, persons and matters subject to customs control falling within the ambit of the CCA

• CDA will apply to all goods, persons and matters regulated by the CDA for purposes of import and other customs duties as envisaged in the CDA

• EDA will apply to all goods, persons and matters regulated by the EDA for purposes of excise tax, including fuel, RAF and environmental levies and air passenger tax

• Default position is applicable to imported goods and goods to be exported, as well as locally manufactured goods in the excise environment

• Default position will be implemented unless excluded categories apply

Exceptions to default position (section 929)

• Excluded categories of goods and persons will not become subject to the CCA, CDA or EDA but will continue to be regulated by the 1964 Act as if nothing has changed

• Goods which, immediately before the effective date, were subject to or being dealt with in terms of an entry under the 1964 Act

• Inbound travellers and crew who arrived in the Republic before the effective date

• The accompanied and unaccompanied baggage of travellers and crew referred to above

• International postal articles to which, and whilst, the 1964 Act continues to apply

• 1964 Act will continue to apply to goods so excluded only for as long as those goods are subject to or being dealt with under that particular entry

HOW TO APPLY NEW CUSTOMS LEGISLATION AS FROM EFFECTIVE DATE

HOW TO APPLY NEW CUSTOMS LEGISLATION AS FROM EFFECTIVE DATE – EXCLUDED CATEGORIES

Goods which were subject to or being dealt with in terms of an entry under the 1964 Act• 1964 Act will continue to apply only where the goods, at the effective date, are subject to or being

dealt with in terms of an entry under the 1964 Act

• Where goods caught up in the transition have, as at the effective date, actually been entered under the 1964 Act – exception applies

• CCA will apply to goods that have arrived before the effective date if not entered by the effective date

• 1964 Act will continue to apply to goods if entered before arrival in the Republic

• Factual question: whether or not the goods have been entered as at the effective date

• If not entered – default position will trigger the CCA

• If entered – exception will trigger continuation of the 1964 Act

Remaining excluded categories are self-explanatory• 1964 Act will continue to apply to goods or person falling within any of the remaining 3 categories as if

the CCA, CDA or EDA did not come into effect.

Raw materials moved to excise manufacturing warehouse• Local materials moved to and used for manufacturing in an excise manufacturing warehouse

• Entry only required when manufactured product is moved out of the warehouse in bond or for home consumption or export

• Local materials being used for manufacturing purposes, at effective date, will be non-entered goods – default position: EDA will apply to the manufacturing process

CATEGORIES OF EXCLUDED GOODS – SECTION 923(3)(a)

The entered goods that are excluded are imported goods to be entered for home consumption

Imported goods entered before effective date for a purpose or procedure (warehousing) provided for in the 1964 Act

To be moved out of the current entry (warehousing) into home

consumption

• Upon completion of current entry, 1964 Act will cease to apply

• To move goods into home consumption, the goods must be cleared for home consumption under the CCA

• Effect: CCA will become applicable to the goods upon clearance for home use

• Clearance for home use will trigger application of the CDA and EDA if any taxes are payable upon clearance for home use

CATEGORIES OF EXCLUDED GOODS – SECTION 923(3)(b)

The entered goods that are excluded are imported goods, or products (other than locally manufactured excise goods) derived from those imported goods, and those goods or products are to be entered for a purpose which is a customs procedure under the CCA

Imported goods entered before effective date for a purpose or procedure under the 1964 Act – including products derived under customs control from those goods To be entered after the effective date for

another purpose or procedure under the CCA

• Example: if imported goods were entered under tariff item 470.00 for inward processing before the effective date those gods to be exported after the effective date must be cleared for export under the CCA

• Effect: 1964 Act ceases to apply to the compensating products as from the date of clearance for export under the CCA

• Only applies if the purpose for which the goods/products are to be entered is a customs procedure under the CCA

• Locally manufactured excise goods are excluded as these goods fall in a different category with a different regime

CATEGORIES OF EXCLUDED GOODS – SECTION 923(3)(c)

The entered goods that are excluded are locally manufactured excise goods to be entered for home consumption

Locally manufactured excise goods have been entered before the effective date for a purpose or procedure provided for in the 1964 Act To be moved out of the current entry

into home consumption

• Upon completion of the current entry, the 1964 Act will cease to apply

1. where the raw materials used in the manufacture of excise goods were imported goods, which were entered under rebate before the effective date; or

2. where excise goods were, before the effective date, entered for removal in bond from one excise warehouse to another

• The EDA will regulate the passage of the goods into home consumption

• Note: must be distinguished from the situation where excise goods are manufactured in an excise warehouse in circumstances where the goods were not subject to any entry before the effective date.

• Default position will apply and the goods will be subject to the EDA as from the effective date

CATEGORIES OF EXCLUDED GOODS – SECTION 923(3)(d)

The entered goods that are excluded are locally manufactured excise goods to be entered for a purpose which is not a customs procedure under the CCA

Locally manufactured excise goods that have been entered before the effective date for a purpose or procedure provided for in the 1964 Act To be entered for a purpose which is not

a customs procedure under the CCA

• Very limited scope – customs procedures extensively covered under the CCA

• Upon completion of the current entry, the 1964 Act will cease to apply

• Example: section 18(1)(a) of the EDA: removals in bond from an excise manufacturing warehouse to another excise manufacturing warehouse.

• Upon entry for the new purpose, the EDA will become applicable to the goods

CATEGORIES OF EXCLUDED GOODS – SECTION 923(3)(e)

The entered goods that are excluded are locally manufactured excise goods to be entered for a purpose which is a customs procedure under the CCA

Locally manufactured excise goods that have been entered before the effective date for a purpose or procedure provided for in the 1964 Act To be dealt with in a manner which is a

CCA customs procedure

• Example: where goods manufactured in an excise manufacturing warehouse are to be exported or to be supplied as stores or to a tax free shop

• 1964 Act will cease to apply

• The goods will have to be cleared to the applicable CCA procedure, i.e. export procedure, stores procedure or tax free shop procedure

• Note: to be distinguished from the situation where locally manufactured excise goods are manufactured in an excise warehouse in circumstances where the goods were not subject to any entry before the effective date

• Default position will apply and the goods will be entered under the EDA as from effective date

• Any subsequent clearance of the goods for a procedure which is a CCA customs procedure would be effected under the CCA [sections 18A(4) and 20(4)(d) of the EDA]

CONTINUATION OF CERTAIN MEASURES UNDER 1964 ACT

“Measure”• Excludes a rule or other instrument referred to in the definition of “this Act” in section 1 of the 1964

Act• measures in force immediately before the effective date of the CCA, CDA and EDA, in relation to

specific matters will continue after the effective date• only applies if and to the extent that a measure of a corresponding kind can be issued, imposed, or

made effective after the effective date in terms of the CCA, CDA or EDA• measures that continue in force, will for all purposes be regarded to have been issued, granted,

imposed or made in terms of the CCA, CDA or EDA

Specific measures included in the definition-• Any directive, direction, ruling, determination, requirement, restriction or other stipulation;• Any registration, licence, accredited status, certification or other official recognition• Any approval, permission, authorisation, exclusions, exemption, rebate, relief or other dispensation• Any condition, qualification or limitation;• Any appointment or designation• Any delegation; and • Any other act or decision not mentioned above that has a continuous legal effect

CONTINUATION OF EXISTING CUSTOMS AND EXCISE REGISTRATIONS – SECTION 931 AND 932

• Holder of registration must apply for a new registration to replace existing customs registration within 30 days after the effective date

• Existing registration continues in terms of CCA• Failure = existing registration lapses

Existing customs registration - Issued under 1964 Act for a specific

purpose in terms of the 1964 Act- In force immediately before effective date

- Issued to a person who must or may be registered for a similar purpose in terms of

CCA

• Not affected by the enactment of the CCA• Registration continues as a “measure” until the

registration is replaced by a new registration, is withdrawn or lapses in terms of the EDA.

Existing excise registration- Issued under 1964 Act for a specific


- Issued to a person or in respect of any premises, property, plant or equipment or

other matter- Excludes existing customs registration

CONTINUATION OF EXISTING CUSTOMS AND EXCISE LICENCES – SECTION 933 AND 934

• Licensee must apply for a new licence to replace existing customs licence within 30 days after the effective date

• Existing licence continues as a “measure” in terms of CCA• Failure = existing licence lapses• Consequences if new licence application is refused and

existing licence lapses – sections 662 and 663 CCA• NB: warehoused goods

Existing customs licence- Issued under 1964 Act for a specific


- Issued to a person or in respect of any premises or facility required to be licensed

under the CCA for a similar purposes

• Not affected by the enactment of the CCA• EDA will apply to all excise-related matters• Registration continues as a “measure” until the

registration is replaced by a new registration, is withdrawn or lapses in terms of the EDA.

Existing excise licence- Issued under 1964 Act for a specific


- Issued to a person or in respect of any premises, property, plant or equipment

- Excludes existing customs licence

Existing customs registration/licence• First level accredited status lapses on

effective date• New application for accredited status

under CCA However… Second level accredited status in terms of section 64E of 1964 Act: • Continues as a “measure” and

regarded to be first level accredited status in terms of Chapter 30

Third level accredited status in terms of section 64E of 1964 Act: • Continues as a “measure” and

regarded to be second level accredited status in terms of Chapter 30

Existing excise registration/licence

• Continues as a “measure” after the effective date unless accredited status is –

• replaced by a new accredited status;

• Withdrawn; or

• Lapses

in terms of EDA

CONTINUATION OF ACCREDITED STATUS GRANTED UNDER 1964 ACT BEFORE EFFECTIVE DATE – SECTION 935

APPROVALS GIVEN TO RIGHT-HOLDERS FOR CUSTOMS PROTECTION AGAINST COUNTERFEIT GOODS – SECTION 936

• Lapses 30 days after effective date unless

• right-holder pays the administration fee within 30 days after effective date

• Payment = existing approval continues until approval lapses or is withdrawn in terms of the CCA

SECURITY GIVEN BEFORE EFFECTIVE DATE –SECTION 937

• Security provided before effective date may –

• after the effective date, but

• before expiry date of the security

be used by SARS for

• payment or recovery of tax or other money;

• which is owed to the Commissioner under the 1964 Act

• SARS may require new or additional security in terms of CCA or EDA

CONTINUATION OF FURTHER MEASURES

ADMINISTRATIVE AND JUDICIAL PROCEEDINGS –SECTION 938• Enactment of CCA, CDA and EDA does

not affect institution, continuation, completion or enforcement of administrative, civil or criminal proceedings

arising from• anything done before the effective

date or anything done or omitted before effective date which is or is believed to be an offence under or breach of the 1964 Act; or

in respect of• Any debt, obligation or liability incurred

under the 1964 Act; or

• Any seizure, forfeiture, penalty or punishment imposed in terms of the 1964 Act

INVESTIGATIONS – SECTION 939

• Any investigation arising from anything done or omitted before the effective date, which is or is believed to be an offence or a breach of the 1964 Act is not affected by the enactment of the CCA, CDA and EDA

• But note – a customs officer or another SARS official conducting the investigation may apply the investigative powers under the CCA for purposes of the investigation

CONTINUATION OF FURTHER MEASURES

CUSTOMS CONTROL ACT

New processes and concepts• New terms – “breach”, “clear”, “clearance declaration”, “customs broker”, “customs

authority”, “declaration”, “home use”, “permissible”, etc

• No distinction between goods imported or exported from other SACU members and imports/exports from other territories

• Provision for customs officers to be issued with identity cards – enhance legitimacy of enforcement functions and promote institutional respectability

• 24-hour rule: new advance cargo loading notice for containerised cargo

• 3 days within which imported goods must be cleared – reduced from 7 days

• Release of imported goods will only be granted after arrival of the goods

• “home use of goods” replaces the current “entry for home consumption” – for use by specific parties

• National transit clearance declaration to be submitted at the first place of entry –replaces the manifest currently used to declare goods removed from a place of entry to an inland terminal/depot

• Concept of “confiscation” which is currently terms “forfeiture” in the 1964 Act.

RECONSIDERATION OF DECISIONS, DISPUTE RESOLUTION AND JUDICIAL MATTERS

Mechanisms for internal reconsideration of decisions:

• Reconsideration – customs authority has the discretion to reconsider decisions on own initiative

• Administrative appeals

• Alternative dispute resolution

• The Ombud: review and address complaints relating to customs matters

• Reference to “days” refers to calendar days

Judicial matters

• Two categories of offences

• Category 1 – more serious, e.g. fraud, misrepresentation and diversion of goods. Fine not exceeding R1 million and/or imprisonment not exceeding 5 years; and

• Category 2 – e.g. hindering or interfering with a customs officer in the execution of his duties and contravening/failing to comply with a condition imposed. Fine not exceeding R500 000 and/or imprisonment not exceeding 3 years.

VOLUNTARY DISCLOSURE RELIEF AND ADMINISTRATIVE PENALTIES

Voluntary disclosure• Aligned with Tax Administration Act• Enables person benefiting from faulty duty determination to voluntarily disclose such faulty

duty determination in exchange for an undertaking by the Commissioner not to institute criminal proceedings

Administrative penalties• Customs may impose certain administrative penalties for breaches.• “breach” includes contraventions that are offences and breaches that are technical

contraventions• Provision for the following types of administrative penalties:

• Fixed amount penalties • Prosecution avoidance penalties • Termination of seizure penalties• Withdrawal of confiscation penalties; and • Missing goods penalties

• Escalation of fixed amount penalties within three years

CUSTOMS DUTY ACT

Scope

• Confined to providing for the imposition, assessment, payment and recovery of customs duties on goods imported into or exported from the Republic

• Give effect to the notion of “self-assessment” – persons liable for duties are required, as part of the clearance process –

• to make their own tariff classification, value determination and origin determination of goods;

• to assess the amount of any tax applicable to the goods; and

• to pay tax according to their own assessment

Structure

• Imposition of duties

• Assessment of duties

• Payment and collection of duties

CUSTOMS DUTY ACT

Customs Tariff

• For the levying of duties on goods

• Replaces Schedules 1, 2, 3, 4 and 5 to the 1964 Act

Refunds and drawbacks

• Customs authority must consider a validated application for a refund or drawback, and approve (where appropriate), and pay the claim within 21 working days from the date of validation

• Failure to pay within 21 working days – interest to accumulate for the taxpayer

• Automatic refunds when Customs Tariff is amended retrospectively

• 3 years – period within which an application for a refund or a drawback may be submitted

• Extended from 2 years

CUSTOMS DUTY ACT

Assessment of duties

• Duty assessment or re-assessment based on best information available where particulars of the goods are not disclosed or sufficiently disclosed

• Re-assessment of duty by customs authority must be made within 3 years from the date the goods acquire tax due status in terms of Chapter 6 of the CCA

Tariff classification of goods

• Self-determination of tariff classification by person clearing goods

• Determination and re-determination of tariff classification of goods by customs authority

• New time limits and limitations in respect of tariff determinations or re-determinations (section 103)

• Statutory presumption that determinations and re-determinations are correct

CUSTOMS DUTY ACT

Valuation• Person who submits a clearance declaration must make a self-determination of the customs value

of the goods and state the value so determined on the declaration• Customs may accept the value self-determination or refuse to accept it and make its own

determination• Customs may re-determine the customs value of goods previously determined or re-determined by

it

Origin• Persons submitting clearance declarations must make a self-determination of the origin of the

goods and state the origin of the goods on the clearance declaration• Irrespective of whether duty is payable on the goods

• Customs may accept the origin self-determination or refuse to accept it and make its own origin determination

• Customs may re-determine the origin of the goods as previously determined or re-determined by itNew requirement: for preferential tariff treatment, certificate of origin number to be stated on the customs clearance declarationAdvance rulings in respect of tariff classification of goods, determination of the valuation of goods and determination of the origin of goods

7 KEY FOCUS AREAS FOR THE NEXT 5 YEARS

• Wealthy South Africans and their trusts

• Large business and transfer pricing

• Construction industry

• Illicit cigarettes

• Undervaluation of imports in the clothing and textile industry

• Tax practitioners and trade intermediaries

• Small businesses

SARS COMPLIANCE PROGRAMME 2012/13 – 2016/17

• Will be focusing on creating a sustainable improvement in compliance levels in the construction industry through:

• Integrated multi-tax audits, where entities are audited for all taxes simultaneously

• The imposition of administrative penalties for late filing and payment

• Ensuring continued compliance for the duration of a government tender –rather than only requiring a Tax Clearance Certificate at the beginning of the process

• Introducing an early contact strategy with non-compliant taxpayers to ensure that unexpected tax debts do not threaten their on-going viability

• Making use of agency appointments to recover outstanding debts

SARS STRATEGIC PLAN 2015/2016 – 2019/2020

Increased customs compliance = PRIORITY

What SARS will do to achieve this outcome –

• Implement changes to its systems and processes in order to align them to the recently enacted Customs Control and Customs Duty Acts

• Continue to offer a differentiated service offering in the customs environment

• Continue to automate and digitise the customs environment in order to improve efficiencies and turnaround times

• Continue to adopt a whole of government view in managing the customs border environment

• Continue to strengthen our risk management capabilities

• Continue to strengthen international agreements and links with other jurisdictions

• Improve capturing and analysis of trade statistics

• Improve Customs valuation, origin and classification skills

• Invest in modern state warehouse facilities

• Enhance the Customs enforcement capability

“Have healthy tax habits all year round”

SARS Compliance Programme, April 2012

BOWMANS OFFICE CONTACTS

Virusha SubbanPartner

165 West Street, Sandton, JohannesburgPO Box 785812, Sandton, 2146South AfricaT: +27 (0)11 669 9000 I D: +27 (0)11 669 9383F: +27 (0)11 669 9001 I M: +27 (0)84 510 5165E: [email protected]

Follow us on@Bowmans_LawBowmansBowmans

www.bowmanslaw.com

THANK YOU

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