Picture: 123RF/ENANUCHIT
Picture: 123RF/ENANUCHIT

One of the biggest challenges facing importers is navigating their way through numerous legal provisions found in the Customs and Excise Act, says Ronnie van Rooyen, associate director for Customs & Global Trade at Deloitte.

To comply, he explains, a trader has to classify the goods correctly, assess the correct customs value and consider the origin criteria to pay the
correct duties.

“This process can be challenging, especially given the fact that classifying goods requires the trader to make a classification decision based on six interpretative rules which will either mean the correct duty liability is determined or not.”

Another challenge, says Van Rooyen, is to resist the temptation to minimise the importance of the customs cost portion as part of the overall landed cost of the imported goods.

A 20% customs duty is a significant add-on supply chain cost. This cost can be reduced by, for example, reviewing the tariff classification, applying preferential rates of duty based on a particular trade agreement and looking beyond import to confirm whether the imported goods are subject to manufacture and/or subsequent export.

Further are important considerations around the impact of other taxes on imports including, for example, VAT and transfer pricing. The imported goods may also be on a restricted goods list or require an import permit.

View holistically

Van Rooyen says viewing the customs supply chain holistically — in other words, making a decision at the time of the import customs clearance based on what happens post import — could reduce the customs cost element.

Yet another challenge is taking ownership of the customs element within the supply chain and to, for example, manage the customs broker to ensure the decisions made with regard to the customs supply chain is in line with the overall strategy of the trader’s business, he says.

Though the customs import sea and air process creates sufficient certainty within the business environment to allow for a healthy flow of cross-border trade by sea and air, Van Rooyen says problems arise with potential seaport congestions, red tape and unnecessary delays at the land border posts.

In 2016, the Cross-Border Road Transport Agency stipulated that drivers carrying goods across SA’s borders require about 1,600 physical documents to meet the reporting requirements necessary to complete the South-North-South Customs Corridor route, he reveals. The World Customs Organisation, however, is hard at work to roll out a trade facilitation concept entitled “single window”.

“The single window concept allows the trader or transporter to submit all the customs data needed for determining admissibility of the goods in a standardised format only once to the authorities involved in border controls and at a single portal,” explains Van Rooyen.

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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