Ronnie van Rooyen, associate director for Customs & Global Trade at Deloitte. Picture: SUPPLIED
Ronnie van Rooyen, associate director for Customs & Global Trade at Deloitte. Picture: SUPPLIED

Exporters face many of the same complex legal challenges as importers as well as a documentary process that is not always conducive to encouraging cross-border trade, says Ronnie van Rooyen, associate director for Customs & Global Trade at Deloitte.

He uses the example of a trader who has to prepare a customs declaration based on a sales transaction and invoice before export. “In practice, most traders only finalise the transaction and issue the invoice after the goods have been handed over to the carrier who is responsible to export the goods. As a result, traders are burdened by customs paperwork given that customs legislation requires vouchers of correction need to be done should the customs export value change.”

For a trader to zero-rate a supply of goods, using for example, an “F” Incoterm, the goods must be exported by the foreign buyer or its represented SA agent. Even though the foreign buyer is not located in SA, the Customs Act requires the foreign buyer register as an exporter and also be represented by a registered SA agent.

This, says Van Rooyen, does little to encourage trade, given foreign buyers may be reluctant to do business with an SA trader if they need to register with the customs authority to buy the goods on a VAT zero-rating basis.

A process of reviewing SA’s customs regulations has been under way since 2003. To date there has been significant revision of the Customs Control and Duty Acts — changes which have yet to be implemented — while the Excise Duty Bill is being completed.

The new legislation, explains Van Rooyen, is part of the World Customs Organisation’s drive to modernise customs while improving customs supply chain visibility to include requirements such as the implementation of advance cargo reporting.

Whether this will further complicate compliance and operational requirements remains to be seen

Encouragingly, the new legislation has been written in plain language with an improved structure to create a logical flow of topics. The challenge, however, is that the new legislation has not been implemented and the 1964 legislation continues to govern customs procedures.

One of the most significant impacts of the new Customs Act is traders will have to become accustomed to dealing with three acts: the Customs Control Act, the Customs Duty Act and the Excise Duty Act.

“Whether this will further complicate compliance and operational requirements remains to be seen,” says Van Rooyen.

There is a global shift, he adds, to hold the trader accountable for customs processes and the customs broker role will be limited to acting only as an agent. Though long overdue, this change may further challenge traders with the net result that traders will employ and set up in-house customs centres of excellence. Added to this, a new penalty regime suggests levels of penalties may noticeably increase for repeat offences.

Pointing out that authorities around the world are increasingly relying on indirect taxes to, for example, increase tax revenues, Van Rooyen says traders need to be aware of the main trends in indirect taxation and their impact on the customs supply chain.

“Broadly, recent changes in SA include the levy on sugary beverages and the environmental levy on carbon emissions. As a result, traders have no option but to effectively manage their indirect taxes to support and grow cross-border trade business while focusing on reducing the customs cost and risk.”

This article is part of a special Business Day feature titled Insight: Imports and Exports, published in November 2020. Read the other articles in the series:

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