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SAIT INDIRECT TAX CUSTOMS & EXCISE MONTHLY NEWSLETTER                                       ISSUE 4- April 2024

PART A: AfCFTA: WHAT’S NEW?

AFRICA CONTINENTAL FREE TRADE AREA (AfCFTA)

News on AfCFTA

April 2024 Activities

AfCFTA April-News Highlights:

 

The AfCFTA discussed five key point:

 

1. Guided Trade Initiative (GTI)
   The GTI, launched on October 7, 2022, is a strategic program designed to jumpstart significant commercial trade activities within the AfCFTA framework. By demonstrating the efficacy of the AfCFTA's legal structure, evaluating private sector readiness, and gathering feedback on national legal and institutional setups, the GTI aims to enhance intra-African trade and strengthen economic integration across the continent.    
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2. Smart AfCFTA:
   The Smart AfCFTA portal is a comprehensive resource for accessing tailored information on market access and trade opportunities within the AfCFTA region. By offering customisation options, the platform enables users to make informed decisions, ultimately supporting smoother market entry and business growth in the area covered by the trade agreement.

 

3. NTB Online Reporting Mechanism
   Effective removal of Non-Tariff Barriers (NTBs) is vital for enhancing intra-Africa trade under the AfCFTA, as it reduces trading costs, facilitates cross-border movement of goods, and maximises the benefits of the agreement. Annex 5 of the Protocol on Trade in Goods provides a mechanism for reporting and addressing trade obstacles encountered by traders, emphasising the importance of efficiently managing and eliminating NTBs to ensure smooth trade operations within the AfCFTA framework.

 

4. AfCFTA Adjustment Fund
   The African Union (AU) Summit and the AfCFTA Council of Ministers charged the AfCFTA Secretariat and Afreximbank with establishing the AfCFTA Adjustment Fund to aid AfCFTA State Parties in adapting to the new liberalised trading environment under the AfCFTA Agreement. Comprising of a base fund, a general fund, and a credit fund, the Adjustment Fund will address tariff revenue losses, provide support for implementing AfCFTA provisions, and offer concessional and commercial funding to assist both public and private sectors in adjusting to and leveraging opportunities within the AfCFTA. With an estimated need of $10 billion over 5-10 years, Afreximbank has already committed $1 billion to the Fund.

 

5. PAPSS (The Pan African Payment and Settlement Systems)
   PAPSS enables instant cross-border payments in local currencies within Africa by streamlining processes such as instant payments, pre-funding, and net settlement. By eliminating the need for currency conversion into foreign currencies outside of Africa, transactions are expedited, with compliance checks conducted instantly within the system, resulting in near-instant payments processed in under 120 seconds.

 

Reference: Online: https://au-afcfta.org/#; Date: 26 April 2024

SAIT Customs Comment

The guided trade initiative, Smart AfCFTA, NTB online reporting mechanism, AfCFTA Adjustment Fund, and the PAPSS represent key initiatives under the AfCFTA aimed at streamlining trade processes, addressing challenges, and promoting intra-African trade.

 

These initiatives are designed to enhance market access, reduce trade barriers, simplify trade procedures, provide financial support for adjustment, and facilitate instant cross-border payments, ultimately benefiting traders by offering improved trading conditions, increased opportunities for market expansion, decreased costs and delays, enhanced access to financial resources, and efficient payment mechanisms, collectively driving overall growth and prosperity in the African trading community.

 

PART B: BORDER MANAGEMENT AUTHORITY (BMA) NEWS

News on BMA

April Activities

In its inaugural year of operation, the BMA in South Africa has effectively thwarted more than 281 000 unauthorised entries into the country, marking a significant milestone in enhancing border security.

 

This achievement underscores the BMA's pivotal role in controlling various critical functions such as immigration, health, agriculture, and environmental oversight at all entry points across the nation.

 

Commissioner Michael Masiapato has rightfully highlighted the BMA's success in consolidating and streamlining border control duties that were previously dispersed among multiple government departments and security forces. By centralising these responsibilities, the BMA has demonstrated the advantages of a unified and coherent approach to border protection. This integration likely resulted in improved coordination, operational efficiency, and overall effectiveness in managing South Africa's diverse entry points.

 

Commissioner Masiapato's emphasis on the agency's accomplishments underscores the necessity of establishing a specialised entity like the BMA to address the multifaceted challenges associated with modern border management. By bringing together various functions under one umbrella, the BMA has shown that a cohesive security institution can better address complex transnational threats, bolster border controls, and enhance overall national security.

 

SAIT Customs Comment

The performance of the BMA within its first year sets a robust foundation for future operations and underscores the critical significance of strategic and unified approaches to border management.

 

This success story not only showcases the BMA's pivotal role in safeguarding national interests but also highlights the importance of comprehensive, integrated border security measures in upholding the safety and security of South Africa.

 

PART C: SARS CUSTOMS NEWS

General Updates

April 2024

Excise

Below are some general updates to the Customs and Excise Act, 1964 (the Customs Act):

Date	Theme	Description
28 March 2024	Excise – Ad Valorem Excise Duty	The amendment refers to Ad Valorem Excise Duty payable on certain locally manufactured goods and goods imported of the same class or kind.   Ad Valorem Excise Duty is determined in terms of Schedule 1 Part 2B, which specifies the goods on which duty is levied, each with its own applicable rate of duty.   The policy and annexure have been updated to align with legislation.   SE-ADV-02 – Ad Valorem Excise Duty – External Policy SE-ADV-02-A01 – Ad Valorem Value Determination – External Annexure

 

Reference: Online: What's New at SARS | South African Revenue Service; Date: 22 April 2024

Customs

 

Date	Theme	Description
24 April 2024	Registration, Licensing and Accreditation	The amendment refers to the facility codes used in Box 30 on the Customs Clearance Declaration (CCD) have been updated to include the details of the new approved container depots, ISS Global Forwarding South Africa (Pty) Ltd. and Allport Cargo Services (Pty) Ltd. in ORTIA Johannesburg.   SC-CF-19-A02 – Facility Code List – External Annexure

 

Reference: Online: What's New at SARS | South African Revenue Service; Date: 25 April 2024

Information Technology

 

Date	Theme	Description
24 April 2024	Digital platforms upgrade on 26 to 28 April 2024	The amendment refers to the SARS aims to achieve its Vision 2024 of becoming a smart, modern organisation with high integrity by emphasising the importance of digital platforms and technology infrastructure that are highly available, robust, and secure. To ensure clarity, ease of compliance for taxpayers and traders, and to build public trust, SARS is scheduled to upgrade its digital platforms from Friday, 26 April 2024, to Sunday, 28 April 2024, potentially causing intermittent service interruptions. Stakeholders are advised to submit priority Goods Declarations by Friday, 26 April 2024, at 14:00 to minimise disruptions during the upgrade process.

 

Reference: Online: What's New at SARS | South African Revenue Service; Date: 25 April 2024

 

Draft Documents for Public Comment

April 2024

Draft Amendments to Schedules

 

Draft Amendment to the Customs Act:

Due Date for Comments	Legislation Category	Description	Send Comments To
30 April 2024	Customs and Excise Act, 1964	The draft amendments refer to the Note 8 to Schedule No. 5 comments to be recorded on the Customs & Excise Tariff Amendments Comment Sheet.   Explanatory Note Item 541.01 was inserted to provide for specific drawbacks and refunds of customs duties paid on imported fuel levy goods upon the subsequent export or removal thereof to BELN.   Note 8 to Schedule No. 5 is amended to include the reference to refund item 541.01 so that the item can also comply to the requirement of Note 8.	technicaltariff@sars.gov.za

 

Reference: Online: Draft Documents for Public Comment | South African Revenue Service (sars.gov.za); Date: 23 April 2024

 

Draft Documents for Public Comment:

 

Due Date for Comments	Legislation Category	Description	Send Comments To
10 May 2024	Customs and Excise Act, 1964	The draft amendments to rules and forms: Draft amendments to the rules under sections 21(1), 60 and 120 – Storage of imported bunker fuel in special customs and excise storage warehouses.   DA 185 – Application form – Registration or Licensing of Customs and Excise Clients.   DA 185.4B4 – Licensing Client Type 4B4 – Special storage warehouse.   DA 185.4B17 – Licensing Client Type 4B17 – Marine remover of imported bunker fuel.   Comments on rules and forms to be recorded on the Customs & Excise Rule Amendments Comment Sheet.   Draft amendments to Schedule   Draft amendment to Schedule – Additional Note 1(h) to Chapter 27 of Schedule No. 1 comments on the schedule to be recorded on Customs & Excise Tariff Amendments Comment Sheet. Explanatory Note Refer to the draft rules.   Date published: 19 April 2024	Comments on rules and forms:  C&E_Legislativecomments@sars.gov.za   Comments on Schedule:  technicaltariff@sars.gov.za

 

Legal Counsel

April 2024

Secondary Legislation

Tariff Amendments 2024:

 

 

Date	Theme	Description	Implementation Date
5 April 2024	GG and Notice Numbers GG 50431 R.4599	The amendment refers to Part 1 of Schedule No. 1, by the reduction in the AfCFTA rates of duty, with retrospective effect from 31 January 2024, being the date, the agreement was implemented. Notice R.4599	With retrospective effect from 31 January 2024

 

Reference: Online: Tariff Amendments 2024 | South African Revenue Service (sars.gov.za); Date: 23 April 2024

Date	Theme	Description	Implementation Date
5 April 2024	GG and Notice Numbers GG 50431 R.4600	The amendment refers to Part 1 of Schedule No. 1, by the reduction in the rates of duty on minced anchovies as recommended in Commission’s Report 719, with retrospective effect from 1 March 2024, being the date, the amendment was implemented. Notice R.4600	With retrospective effect from 1 March 2024

 

Reference: Online: Tariff Amendments 2024 | South African Revenue Service (sars.gov.za); Date: 23 April 2024

Date	Theme	Description	Implementation Date
5 April 2024	GG and Notice Numbers GG 50431 R.4601	The amendment refers to Part 1 of Schedule No. 1, to implement the correct AfCFTA rates of duty on various tariff subheading to align with the AfCFTA Agreement Notice R.4601	5 April 2024

 

Reference: Online: Tariff Amendments 2024 | South African Revenue Service (sars.gov.za); Date: 23 April 2024

 

SAIT Customs Comment

The agreement between the World Customs Organization (WCO) and the World Trade Organization (WTO) regarding the Trade Facilitation Agreement (TFA) is essential for enhancing trade efficiency and transparency.

 

According to Articles 1 and 2 of the TFA, customs administrations must provide timely and detailed information to the private sector about amendments to customs legislation.

 

This collaboration ensures that businesses are well-informed of regulatory changes that impact their trade processes, thus helping them to comply with the law effectively.

 

Keeping traders abreast of such changes not only fosters compliance but also spurs innovation and competitiveness in the global market. Moreover, inviting public comments on proposed changes fosters inclusive decision-making and promotes a business-friendly environment by addressing concerns and gathering valuable insights from stakeholders.

 

Reference: Online: https://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/activities-and-programmes/tf-negociations/wto-docs/tntf/2014/931-en.pdf?db=web ; Date: 23 April 2024

 

PART D – GENERAL MATTERS OF INTEREST

Customs in the Digital Age: addressing E-Commerce Revolution and the De Minimis Dilemma

April 2024

 

E-commerce has significantly transformed the landscape of international trade, introducing a deluge of small parcels being shipped across borders. However, a significant issue that arises is the de minimis threshold dilemma.

 

Many e-commerce transactions involve low-value orders that fall below the de minimis value threshold set by customs authorities.

 

This presents challenges for customs administrations in terms of efficient processing, revenue collection, and ensuring compliance with regulations.

 

To address these challenges, several remedies can be considered:

 

1. Proposed E-commerce Framework: Implementing a specific framework tailored to handle e-commerce transactions could streamline customs procedures for low-value shipments. This framework may include simplified clearance processes and reduced documentation requirements for qualifying e-commerce shipments. In June 2022, the WCO issued its framework of standards on cross-border e-commerce.

 

The characteristics of cross-border e-commerce, as defined within the context of the WCO’s Framework of Standards, include online ordering, sale, communication, and payment, involving transactions and shipments across borders. This primarily pertains to physical goods intended for consumers, both commercial and non-commercial. While the framework focuses on Business-to-Consumer (B2C) and Consumer-to-Consumer (C2C) transactions, it also encourages Members to extend similar principles and standards to Business-to-Business (B2B) transactions (reference: Online https://www.wcoomd.org/-/media/wco/public/global/pdf/topics/facilitation/activities-and-programmes/ecommerce/wco-framework-of-standards-on-crossborder-ecommerce_en.pdf?la=en; date: 29 April 2024).

 

2. Electronic Entry Solution: Introducing electronic entry systems can enhance customs efficiency by enabling the electronic submission of shipment information and customs declarations. Automated processes can facilitate quicker clearance and reduce the administrative burden on customs officers.

 

3. Focus on E-commerce Suppliers: Shifting the focus from individual consumers to e-commerce suppliers can help improve compliance and oversight. By holding suppliers accountable for ensuring accurate customs documentation and compliance with regulations, customs authorities can better manage the influx of e-commerce shipments.

 

In preparing for the ongoing growth in global online ordering, customs administrations must address several key challenges:

 

1. Capacity Building: Customs authorities should invest in training and technology to enhance their capacity to handle the increasing volume of e-commerce shipments efficiently.

 

2. Risk Management: Implementing risk-based approaches to customs clearance can help identify high-risk shipments while expediting low-risk consignments, ensuring effective customs control without unduly impeding the flow of legitimate trade.

 

3. Collaboration: Encouraging collaboration between customs agencies, e-commerce platforms, logistics providers, and other stakeholders can foster information sharing and coordination to address shared challenges in cross-border e-commerce.

 

By proactively implementing solutions such as tailored e-commerce frameworks, electronic entry systems, and improved collaboration, customs administrations can better manage the complexities of the evolving e-commerce landscape and prepare for the continued growth in global online ordering.

 

Reference: Online: : https://www.dcvelocity.com/articles/29967-curse-of-the-internet-e-commerce-creates-new-challenges-for-customs; Date: 29 April 2024

 

PART E – CONCLUSION

Navigating South Africa’s low Economic Growth Forecast: Implications for Customs Operations Amidst Infrastructure Challenges

The International Monetary Fund (IMF) forecasted South Africa's growth rate for 2024 at 0.9% citing various challenges such as poor road and rail infrastructure, inefficiencies at ports, and the impact of load shedding on industries.

 

These factors are significant impediments to economic growth and development in the country.

 

1. Poor Infrastructure: Inadequate road and rail infrastructure hinders the efficient movement of goods and services, leading to increased costs and delays in supply chains. This directly impacts businesses and reduces their competitiveness on a global scale.

 

2. Inefficiencies at Ports: Inefficiencies at South African ports lead to delays in cargo handling, increased costs of imports and exports, and a lack of capacity to handle growing trade volumes efficiently.

 

3. Load Shedding: Load shedding, or power outages, severely disrupt industrial operations, leading to decreased productivity, increased costs, and loss of revenue for businesses.

 

If the IMF forecasts a 0.9% growth rate for South Africa, it could have implications for customs operations in the country in the following ways:

 

1. Impact on Trade Volume: A lower growth rate may result in slower trade activity, both in terms of imports and exports. Customs offices may experience fluctuations in the volume of goods passing through their checkpoints, impacting their workload and revenue collection.

 

2. Budgetary Constraints: A lower growth rate may also lead to reduced government revenue overall, potentially affecting the budget allocated to customs operations. This could result in constraints on resources, such as staffing, training, and technology upgrades for customs authorities.

 

3. Risk of Illicit Activities: Economic challenges stemming from low growth rates can create incentives for illicit trade activities, such as smuggling and counterfeiting. Customs agencies may need to bolster their enforcement efforts to combat these illegal practices, which can strain their resources further.

 

4. Impact on Trade Facilitation Efforts: Lower economic growth can impact trade facilitation initiatives aimed at streamlining customs procedures, enhancing transparency, and reducing trade barriers. Customs authorities may face difficulties in implementing modernisation projects and ensuring efficient cross-border trade processes.

 

5. Collaboration with International Partners: Given the link between economic growth and trade, a slower growth rate in South Africa may also affect its international trade relationships. Customs authorities may need to strengthen collaboration with international partners to address challenges related to trade flows and security issues.

 

In response to a lower growth forecast, customs authorities may need to adapt their strategies, prioritise resource allocation, enhance risk management practices, and focus on maintaining efficient trade processes to navigate the economic challenges effectively.

 

In conclusion, customs play a critical role in managing trade flows and ensuring compliance with regulations, especially during periods of lower economic growth forecasts.

 

With the challenges posed by infrastructure deficiencies and economic uncertainties, it is our view that customs authorities should adapt to changing trade dynamics, enhance their enforcement capabilities, and optimise their resources to facilitate trade efficiently while safeguarding against illicit activities.

 

By implementing strategic measures, investing in technology and capacity building, and fostering collaboration with international partners, customs can possibly mitigate the impact of a lower growth forecast and contribute to maintaining the integrity of the trade ecosystem in South Africa.