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Customs and excise provisions for the automotive production and development programme

22 December 2012   (0 Comments)
Posted by: SAIT Technical
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By Andre Erasmus (ENS Tax Ensight)

Executive summary

Draft legislation for the APDP was published on 23 November 2012.A new rebate item 317.03 will be inserted into Schedule 3 :Industrial Rebates of Customs Dutiesto the Customs and Excise Act to allow for the importation of original equipment components for the manufacture of several automotive items.

Full article

A new rebate item 317.03 will be inserted into Schedule 3:Industrial Rebates of Customs Dutiesto the Customs and Excise Act (Act 91 of 1964) ("the Act”) to allow for the importation of original equipment components for the manufacture of:

  • road tractors for semi-trailers
  • motor vehicles for the transport of ten or more persons, including the driver
  • motor cars (including station wagons)
  • motor vehicles for the transport of goods
  • chassis fitted with engines of the above vehicles

The original equipment components imported will receive a rebate of full duty less the duty payable on the value calculated as follows:


The customs value and imported component value of imported original equipment components sold as part of vehicles sold in the Southern African Customs Union (SACU)

+ The Volume Assembly Allowance (‘VAA’) on exported vehicles

- The VAA on vehicles sold in the SACU


- The value of production rebate credit certificates (PRCC)to the point that the value is reduced to nil.

The value for Volume Assembly Allowance will be calculated as follows:

  1. in the case of specified motor vehicles manufactured for the SACU market, the recommended retail list price (including options), (exclusive of VAT, excise duty and environmental levy)
  2. in the case of specified motor vehicles exported outside the SACU, the "price free on board”
  3. less a company specific percentage (CSP) on a quarterly basis.

The value of the PRCC’s will be based on the production incentive (PI), that is basically a percentage (PI factor) of the difference between the selling price and material (value-added or VA), earned by the final manufacturer in South Africa of eligible products. For purposes of the APDP, 25% of certain material, also referred to as standard material, will qualify for the PI.

The existing rebate item 317.06 that allows for a full rebate on automotive components for use in the manufacture of original equipment components for supply to a motor vehicle manufacturer will be amended to allow for rebate item 317.03 and for aspecified motor vehicle manufactureras defined in rebate item 317.06.

The existing rebate item 460.17 that allows for a rebate of duty on imported automotive components, on the vehicles listed above and their chassis, against import rebate credit certificates (IRCC) earned by the motor industry will be retained and changes will be made to allow for a rebate of duty against PRCCs earned by the motor industry under the APDP.

A new drawback item to allow for rebate item 317.03 will be inserted under drawback item 536 that allows for a full refund of duty on automotive components on which duty has been paid and which have been supplied to a motor vehicle manufacturer for use as original equipment components in the manufacture of specified motor vehicles or which have been incorporated in original equipment components supplied to motor vehicle manufacturers. Under the new provision the imported component value has to be declared on a From C1 and it must be produced on request to qualify for the refund.

The existing drawback items 537.03 and 538.00 provides for a refund of duty on imported vehicles and components qualifying under the Motor Industry Development Programme against IRCCs earned by the motor industry. The existing provisions of drawback items 537.03 and 538.00 will be retained and a new provision inserted to provide for a refund of duty on imported vehicles and components qualifying under the APDP against PRCCs earned by the motor industry under the APDP.

SARS has also published copies of the APDP Quarterly accounts and an APDP Information document published by the International Trade Administration Commission.

Comments on the draft legislation were due by 7 December 2012.




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