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Importers, exporters need to be on top of new customs tariffs effective 1 Jan 2012

10 January 2012   (0 Comments)
Posted by: SAIT Technical
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Importers, exporters need to be on top of new customs tariffs effective 1 Jan 2012
Tax Talk - Grant Thornton

It is critical for importers and exporters, from a cost and competitiveness perspective, to be fully aware of the 2012 customs tariff amendments and how these will affect their businesses.
That’s the view of Wian de Bruyn, new associate director, Tax Consulting at Grant Thornton Johannesburg.

Every five years the South African Revenue Services (SARS) updates tariff amendments according to the World Customs Organisation. These amendments will result in changes to the Schedules of the Customs and Excise Act and is effective from 1 January 2012.

Even though importers might be aware of the coming changes, de Bruyn urges them to ensure that they fully understand the effect it will have on them. "Importers and exporters need to establish what the impact will be on their business from both a compliance point of view, as well as the effect of the current tariff subheadings used versus new tariff subheadings amendments.”

According to SARS, the main reasons for the update are:

· The changes to the environment and social issues highlighting food security and the early warning data system of the United Nations’s Food and Agriculture Organisation (FAO);

· Additional tariff subheadings have been created for specific identification of certain edible vegetables, roots, tubers, fruit, nuts and cereals;

· In terms of the chemical industry, new tariff subheadings have been created under the Rotterdam Convention and ozone-depleting substances controlled under the Montreal Protocol; and

· Amendments have been implemented due to changes in international trade patterns. These changes include the deletion of 40 tariff subheadings due to the low trade volumes in these items, separate identification of certain commodities in either existing or new headings, technology changes and amendments aimed at the clarification of text to ensure uniform application of the HSN.

"The effect of the amendments of the tariff subheadings will also have a direct effect on specific rebate provisions used,” says de Bruyn. "An importer might have qualified for a specific rebate provision driven by a specific tariff subheading and now find that the specific tariff subheading or the rebate provision has been deleted.”

He also points out that, in the light of changing environmental standards, eight-digit tariff subheadings have been created for certain green goods like wind turbine generators, fuel cells and electric vehicles (the electric vehicles will also be subjected to ad valorem duties).

As part of the tariff structure amendments, the following phase-down of duties in terms of trade agreements and requests from the International Trade Administration Commission (ITAC) will also be affected:

· The phase-down of customs duties of the free trade agreement with the EU and EFTA ;

· The reduction of the customs duty on light motor vehicles and original equipment components of Chapter 98 in terms of the Motor Industry Development Programme (MIDP);

· Reduction in the customs duty rates on paper and paperboard of Chapter 48;

· Reduction in the rates of duties on aluminium products classifiable under tariff headings 76.06 and 76.07; and

· Reduction in the general rate of duty on organic surface – active agents and primary plastic polymers.

These changes might sound intimidating, but de Bruyn encourages importers and exporters to do everything in their power to familiarise themselves with the changes lest it has adverse effects on their business.


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