Contact Details
4th Floor, The Forum 2 Maude Street Sandown, Sandton
http://www.khl.co.za   |   27 (0)11 669 6000   |   Fax: 27 (0)11 669 6299
Home Profile Official Website Visit Polity.org.za

 

Knowles Husain Lindsay Inc Attorneys News

← Back

South Africa’s new customs regime – progress or regress?

The Customs and Excise Act, 1964 may understandably be said to be out of date and no longer adequate for the proper monitoring and control of the import and export of certain goods in South Africa. Simply, in terms of the massive technological advancements which have taken place in the last 20 years, it is easy to see why Parliament and the South African Revenue Service (SARS) felt that it is appropriate to overhaul the current regime.

As a result, two new Customs Acts were assented to in July 2014 – the new Customs Control Act 31 of 2014 and Customs Duty Act 30 of 2014 which are to be brought into effect before the end of the 2016/2017 financial year. Each of the Acts contains a set of Rules which set out how the Acts will be implemented. These Rules are still under consideration by SARS and their scope and provisions have not yet been finalised. Following the publication of the Rules for public comment, SARS have held numerous public hearings and workshops in order to address concerns raised by stakeholders and to facilitate the assessment and possible inclusion of comments and suggestions from stakeholders.

These meetings were reportedly well attended by stakeholders and a number of comments and suggestions have been included in the revised drafts of the Rules.  The latest versions of the Rules were published for comment in December 2015 and the deadline for stakeholder submissions was April 2016. The process should be nearing its end in the coming months and SARS are hopeful that the first phase of implementation may commence early in 2017.

The aim of the new Customs regime is to bring South African customs law in line with international standards, including the revised Kyoto Convention and the World Customs Organisation’s SAFE Framework, as well as to bring the procedures and protocol required in line with technological advances. The new Acts aim to streamline the customs administration process as well as to enhance SARS’ end-to-end visibility of the transport of goods for fiscal purposes. All importers and exporters will have to re-register in terms of the new legislation – once the Rules relating to the Acts have been finalised and the effective date of the Acts has been announced, importers/exporters will have 30 days to complete their new registration, failing which their existing registrations will automatically lapse.
One of the major changes sought to be brought about by the new regime is the shortening of the time period allowed for the submission of import clearance documents from seven to three days. While the Acts focus on electronic submission of documents in order to allow the process to be streamlined, the proposed changes to the penalty regime have caused concern in the import industry.

In terms of the Customs Control Act, information supplied by customs brokers on behalf of importers or exporters is regarded as being information submitted by the importer/exporter themselves, and they will be held liable for any inaccurate information or reporting. While the penalty tables to be included in the Acts have not yet been finalised, previous drafts included the possibility of criminal liability being attached to inaccurate reporting after a certain number of incidents have occurred. Potential criminal liability adds an entirely different dimension to the new ‘express’ reporting requirements.

A further concern raised regarding the Customs Control Act is that it envisages downgrading South Africa’s inland “dry” ports to depots and stripping them of their customs clearing capacity. This will mean that all customs clearing activities, other than some inspections, will have to take place at the already over-burdened seaports. Johannesburg’s City Deep inland port has been upgraded at great expense to enable the handling of 400 000 containers a year. This makes it Africa’s biggest inland port and an essential transport hub both internally in South Africa and for neighbouring countries. SARS argues that it is necessary to fully inspect and ascertain what is in the containers before they leave the seaports to allow for maximum security – this means ‘downgrading’ the functions of the inland ports to remove the customs clearing roles which they currently hold, essentially rendering Johannesburg’s inland port defunct. However, SARS also plans on implementing new systems and procedures which aim at further streamlining the seaport inspection and reporting processes which will hopefully minimise the potential backlogs caused by the new regime.

The Customs Control Act also has implications for the movement of goods within the SACU (Southern African Customs Union) in which imports of signatory countries were previously classified as “movements” of goods that had their own set of rules and regulations. The transport of these goods will now also be classified as imports and exports. SARS argues that doing away with the two separate regimes and requirements will streamline the transportation of these goods. However, questions have been raised about the impact of these provisions, especially in relation to our landlocked neighbours that are reliant on the use of South African seaports for their trade. The World Trade Organisation is in the process of addressing the freedom of transit for developing nations which are landlocked. South Africa is a signatory to this agreement and the new customs regime could potentially infringe on South Africa’s obligations in this regard.

Whilst the objectives and basic rationale behind the new Customs regime are laudable, the potential impacts of some of their more contentious provisions may result in more damage being caused to South Africa’s import and export industries than our developing nation’s economy can handle. While many stakeholders are understandably uneasy about the potential challenges the new Acts will cause, most are hopeful that SARS’ optimism regarding their ability to properly facilitate the change-over will be justified, especially in light of the numerous public engagements SARS has had with stakeholders in respect of these Acts. Only time will tell.

Written by Sarah Macqueen, candidate attorney (Litigation), Knowles Husain Lindsay