www pwc com Customs requirements for exports October

www. pwc. com Customs requirements for exports October 2017

Customs & Excise Commissioner and his powers Importation of goods Compliance • Registration requirements • Tariff Classification and determination of duty • Customs valuation • Document completion and retention • Participation in incentive available • Free Trade Agreements / Country of Origin Pw. C Customs Training October 2017 2

Commissioner and his powers • Commissioner • Officer In its drive to ensure compliance the Commissioner of the South African Revenue Service (SARS) is determined to clean up the “Customs Industry” of all misconduct and fraudulent activities associated with it. In order to achieve this, various aspects in Customs and Excise had to be evaluated with a view to change: • The structure, which includes teaming; • The development of new procedures; and • The amendment of the Act and Rules. Customs Training Pw. C October 2017 3

Importation of goods • Deemed imported • Importer of record / registered imported • Responsibility - Provide accurate import documentation to clearing agent ü Supplier’s invoices ü Country of Origin Certificates (where applicable) ü Packing lists (if available) ü Transport documents ü Clearing instructions) - Consider Import Control (ITAC) - Consider Letters of Approval (SABS) - Correctly enter (declare) goods on importation Customs Training Pw. C October 2017 Page 4

Importation of goods Declare correct reason / purpose for import: Goods may be entered into the Republic and declared in accordance with one of the following procedures: • Home Consumption: Duty paid* / General Rebate / Industrial Rebate; • Warehousing (Bond Store): pending payment of duty or re-export • Transit / in bond movements within the country or through South Africa beyond the borders of SACU; • Temporary Admission into SACU including inward processing (for manufacturing purposes and subsequent exportation). * free is also a rate of duty Customs Training Pw. C October 2017 5

Registration requirements • All importers and exporters in South Africa are required to register with customs at the South African Revenue Service (SARS). • Please note that certain goods will require an import permit, which must be produced at the time of clearance. • Application for import permits must be made to the International Trade Administration Commission (ITAC). Customs Training Pw. C June 2016 6

Customs activities and registration requirements • Free Trade Agreements • Importer • Exporter ü SADC • Foreign entity (importer / exporter) ü EU / EFTA • Incentive schemes ü AGOA ü Bond Stores • Clearing and Forwarding Agent ü Rebate ü Import / Export incentives ü Deferment accounts Customs Training Pw. C October 2017 7

Tariff Classification and determination of duty • Classify commodities on Customs declarations according to an appropriate tariff heading. • Tariff classification code directly linked to the rate of duty • Classification operates as part of the International Harmonised Commodity and Coding System VAT & Customs Training Pw. C June 2016 8

Tariff Classification Document requirements • Import invoice considered to be a declaration of goods shipped Contravention of the Act (i. e. costs normally not recoverable) • Penalties – between 10% and 300% • Description of goods - import invoice must be accurate and correct • forfeiture – between 25% and 100% • Declare correct Tariff Heading on declaration at time of importation • Interest • Vat Penalty of 10% Importance of classification • Rate of Duty • Import/Export Permit • Prohibited and restricted imports/exports • Free Trade Agreements Pw. C 9

Customs Valuation • Customs Valuation in South Africa is based on the GATT Valuation Agreement • The GATT Valuation Agreement is implemented by the Customs and Excise Act No. 91 of 1964. • Sections 65 and 66 of the Act relate to the transaction value of goods • Section 67 of the Act relate to cost elements that may influence the value for customs purposes • The primary basis for Customs Value is the “transaction value” • The transaction value is based on the total price paid or payable Customs Training Pw. C October 2017 10

Elements influencing the value for customs purposes at time of importation Transfer Pricing Policy Export Transaction Seller Shipper Royalties / Licensing Distribution Adjustments Assists Commission Related Supplier Transfer Pricing fees Agreements Buyer Proceeds Advertising IP Agent Importer Packaging Customs Training Pw. C Marketing Consignee TM Consignor Exporter Import Transaction Warranty Transport October 2017 11

Customs Valuation Document requirements • Import invoice considered to be a declaration of value • Price of goods and related costs shown on the invoice must be accurate and correct • Declare correct value for customs purposes at time of importation Transfer Pricing Adjustments • Retrospective TP Adjustments • True up / true down adjustments require disclosure to SARS • VAT penalty of 10% and interest Contravention of the Act (i. e. costs normally not recoverable) • Penalties – between 10% and 300% Importance of Valuation • forfeiture – between 25% and 100% • Calculate correct duty and VAT • VAT Penalty of 10% • Interest Pw. C 12

Document completion and retention – Sea and Air In terms of the Customs Act, Rules and Policies the following critical documents are required: - SAD 500; - SARS release notification; - Customs Worksheet; - Supplier’s Invoice/Invoices; - Packing List/Lists; - Transport Document (Airway bill/Bill of lading); and - Other relevant documents i. e. permits and, origin certificates where applicable. - Supplying vendor is in possession of the zero-rated tax invoice, proof of payment and the trading licence of the qualifying purchaser. Customs Training Pw. C October 2017 13

Document completion – Road Freight Exports Same documents as required for Sea & Air Exports; and Every vehicle must be accompanied with the following key document set: • A single Road Freight Manifest (RFM) listing all goods on board must accompany the vehicle at all times; • Bonded cargo, including International transit must also be accompanied by the DA 187 manifest and SAD 502 or SAD 505, respectively; • SAD 500 export declaration; and • CN 1 and CN 2 documents (strongly recommended to keep on record) VAT & Customs Training Pw. C October 2017 14

Document Retention Every client must keep for record purposes for a period of five (5) years: • Books, accounts and documents in respect of all transactions relating to the Rules for the purpose of any acquittal procedure; and • Any data related to such documents created by means of a computer. The five (5) year period is calculated from the end of the calendar year in which the document was created, lodged or required. (Sections 101 and 101 A) Every client must produce such books, accounts and documents on demand. Customs Training Pw. C October 2017 15

Voucher of Correction (VOC) In terms of section 40 an exporter must adjust the Customs declaration on discovering that the declaration submitted to Customs: • • • Does not comply with section 39; or • Is invalid in terms of Section 40(1). The Customs declaration must be adjusted by: • Voucher of Correction (Vo. C); • The cancelation of the Customs declaration and the replacement or substitution of a new declaration; • Such manner as Customs may prescribe. When submitting a VOC that relates to a drawback the correct rebate item and Customs Procedural Code (CPC) must be referenced before the goods are exported from South Africa. Customs Training Pw. C October 2017 16

Participation in Incentives • Bond Warehouses Contravention of the Act (i. e. costs normally not recoverable) • Rebate Stores • Rebates • Penalties – between 10% and 300% • Drawbacks • Forfeiture – between 25% and 100% • Refunds • VAT Penalty of 10% • Export Incentives • Interest • FTAs Importance of Incentives • Deferment of import duty and VAT • Rebate of import duties and VAT • Goods must be treated in terms of the provisions of the Act Pw. C 17

Hot Topics SARS Accreditation Initiative IT 14 SD reconciliations Transfer Pricing Adjustments Compliance relating to incentive schemes – Refunds Drawbacks FTA’s Rebates Bond Stores Proof of export (CN 1 and CN 2) Pw. C 18

Introduction to Customs and Excise The Pw. C Customs Compliance Framework Analysis and review of surety and guarantee limits Determination of registration, licensing and surety requirements Registration, licensing and surety management Monitoring of registrations and licences Align information and records management strategy with tax compliance requirements Review and manage effective retention and maintenance of records Information and Records Management Assess and evaluate supplier relationships Assess and evaluate supplier costs, charges and expenses Assess and evaluate supplier or agent’s contracts Customs Training Pw. C The Pw. C Customs Compliance Framework Valuation and supplier contract management Tariff Classification and determination of duty liability Inward, outward and other relief or deferment facilities Determine classification of goods in Harmonised System Determine customs or excise duty liability Assess and determine non-tariff barriers, duties, levies or controls Determination of Relief Mechanisms available Assess compliance requirements for relief mechanisms Manage and monitor use and compliance with relief mechanisms October 2017 19

Questions? Thank you “The information contained in this publication by Pw. C is provided for discussion purposes only and is intended to provide the reader or his/her entity with general information of interest. The information is supplied on an “as is” basis and has not been compiled to meet the reader’s or his/her entity’s individual requirements. It is the reader’s responsibility to satisfy him or her that the content meets the individual or his/ her entity’s requirements. The information should not be regarded as professional or legal advice or the official opinion of Pw. C. No action should be taken on the strength of the information without obtaining professional advice. Although Pw. C take all reasonable steps to ensure the quality and accuracy of the information, accuracy is not guaranteed. Pw. C, shall not be liable for any damage, loss or liability of any nature incurred directly or indirectly by whomever and resulting from any cause in connection with the information contained herein. ” © Pw. C Inc. [Registration number 1998/012055/21](“Pw. C”). All rights reserved. Pw. C refers to the South African member firm, and may sometimes refer to the Pw. C network. Each member firm is a separate legal entity. Please see www. pwc. co. za for further details.