South Africa’s financial, trade and customs infrastructure is the most sophisticated in Africa and probably as advanced as most first world countries. And the laws are being updated.
The South African economy relies significantly on exports of raw materials and imports of most consumer and commercial goods. It also acts as a gateway into Southern Africa for imports and exports. As a result the trade and customs infrastructure plays an important part in the economy.
Customs Legislation and Potential for Change
South Africa is a member of the World Trade Organisation and is a signatory of the Harmonised Commodity Description and Loading System Convention. Its primary customs legislation, a law that is nearly 50 years old which has been added to and amended for decades, has become difficult for traders and the fiscal authorities to use. The new Customs Act and a Customs Control Act, which were approved by Parliament in 2015 but which have not yet come into effect, mark a significant development.
These laws are designed to recognise the significant logistical changes of the past 30 years and the rise in containerisation. They will fight a rising tide of customs fraud with much higher penalties. They will also include a refusal to allow the import of goods to inland ports unless full details are declared at the first place of entry.
The International Trade Administration Commission (ITAC) and the South African Revenue Service (SARS) will act as the monitoring and enforcement bodies. SARS’ role in generating revenue for the fiscus ensures its access to efficient and uncorrupted resources. Both ITAC and SARS are staffed and run by efficient and well qualified managers.
What SARS has done
The level of trade and customs disputes has risen but no faster than the rise in trade activity generally. SARS, in its new sophisticated and commercially minded form, has designed a number of programmes to avoid disputes while increasing compliance. A network of preferred traders, companies that exhibit high levels of training and compliance, has been set up with direct access to SARS teams that can assist them with any queries. SARS have also embarked on training exercises in a number of sectors of the economy to promote awareness of their obligations under the legislation.
An internal administrative appeal process for companies that dispute penalties raised by SARS has also been set up. Decisions are routinely overturned in favour of the importer or exporter and penalties only levied where there has been deliberate rather than inadvertent failure to comply with regulations. Common issues usually relate to the declaration of goods under the wrong tariff or failure to comply with bonded warehouse licence conditions.
See Part 2 of this blog post for more.