Changes to the import customs system

TSHWANE.– The South African Revenue Service (SARS) has announced that it intends to introduce changes to its customs import system.

SARS assures that it will continue to strive to provide clarity and certainty in the implementation of its mandate to promote legal trade for the country’s economic development in an era of rapidly growing e-commerce.

This objective will be achieved by facilitating and streamlining the increased flow of goods.

Pursuant to the above order, SARS noted the substantiated concerns expressed regarding the importation of a number of goods, particularly garments, via e-commerce by a number of importers who were not paying the mandatory duties and VAT on such imports, resulting in unfair competition with other operators in the industry.

The concerns stem from the fact that, due to the huge scale of e-commerce, the SARS Customs Service introduced a “concession” for goods worth less than R500, under which importers paid a flat rate of 20% in lieu of duty and no VAT.

To address these concerns and provide clarity to traders importing goods via e-commerce, SARS will be implementing a series of changes in line with the World Customs Organization (WCO) framework to cope with the already changing trade situation.

By the early 1990s, cross-border shipments of large volumes of small or low value goods via courier and express services had already seen significant growth worldwide, leading to the development by the World Customs Organisation (WCO) of a set of customs release/clearance procedures – known as the ‘WCO Immediate Release Guidelines’.

The purpose of these Guidelines is to assist Customs Authorities of WCO Member States in standardizing the processing of e-commerce goods based on the principle of pre-arrival information provided by the operator to Customs Authorities and the universal categorization of goods into four (4) distinct categories:

Category 1 – Correspondence and documents – No commercial value, free from duties and taxes, immediate release on the basis of a consolidated declaration, which may be oral or written (manifest, bill of lading or list of such items).

Category 2 – Low value shipments below a specified de minimis threshold on which no duties or taxes are levied and immediate clearance and release is permitted on the basis of a manifest, waybill, freight forwarder’s waybill, cargo declaration or item list.

Category 3 – Low Value Dutiable Consignments (Simplified Goods Declaration) – Goods above the de minimis but below the full declaration value threshold, dutiable and requiring the use of a simplified declaration or manifest exemption with subsequent simplified customs clearance, etc.

Category 4 – High Value Shipments (Full Declaration of Goods) – Shipments not covered by the three categories described above, including shipments containing restricted goods. Normal release and clearance procedures apply, including payment of duties and taxes.

Changes that will be introduced:

• Introduction of VAT on top of the current 20% flat-rate duty from 1 September 2024 as an immediate temporary measure.
• Transformation of the current 20% flat rate into a WCO system for the first 3 broadband Internet access categories with applicable tariffs by 1 November 2024.

SARS Commissioner Edward Kieswetter said SARS will work with the Department of Trade, Industry and Competition (DTIC), as the country’s gatekeeper of trade policy and development, and other industry stakeholders to build public confidence by seeking to level the playing field to protect local industries and create business opportunities for economic growth. He said SARS will resort to “greater use of data, artificial intelligence, machine learning and algorithms to better facilitate trade while minimizing risks to the economy.”