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Changes Impacting Cross-Border Trade

Sunday, 08 July 2012   (0 Comments)
Posted by: Author: Ronnie van Rooyen
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Changes Impacting Cross-Border Trade
The role of South Africa’s customs administration has evolved over recent years due to the increase in international trade and modern trade expectations.Customs modernisation essentially means a broad strategy and goal to improve the effectiveness, efficiency, transparency and predictability of a customs administration’s operations so that it can better meet the demand of modern times.
The Mordenisation Journey

The South African Revenue Service (SARS) modernisation initiative was launched in 2009 and has gained significant momentum in the past two years in particular.The initiative has resulted in changes which have been introduced in a phased and orderly approach, starting with changes implemented at the four biggest customs offices, namely OR Tambo International Airport, Alberton (Johannesburg), Durban and Cape Town.The remaining offices in South Africa and the BLNS countries will follow in due course.The Modernisation Journey involves five phases.Chief among these is phase three, the assistance from SARS to facilitate and develop a regional Southern African Customs Union (SACU) Preferred Trader Programme. 
This phase will see the SARS working with its neighbouring partners to establish both interim and long-term solutions to improve the cross border customs experience. SARS is aware that many of its neighbours do not have a full electronic and paperless trading environment.It believes that the exchange of electronic clearance information between itself and its African neighbours will result in a significant improvement in the cross-border movement of goods, the clearance turnaround times and the efficiency of customs formalities at the borders.

Over the last two years, SARS has made numerous changes to its operations. The key changes which have had a positive impact on cross border trade are as follows:
•Electronic submission of supplementary documents.
•The new Customs Clearance Codes,i.e. CPC.
•Electronic release system.
•Measures to enhance the flow of trucks through South Africa’s borders.In line with this change will be the review of the VAT treatment of indirect exports of goods by road to ensure that exporters are not prejudiced and that the fiscus continues to be protected against potential abuses. SARS will review the VAT treatment of temporary imports to promote local processing and beneficiation, while protecting the fiscus. 
The Mechanics of Mordenisation

The SARS customs modernisation initiative is designed with the objective of establishing a balance between duty collection and the inspection of each shipment on the one hand, and trade facilitation with limited screening and inspection on the other.The World Customs Organisation (WCO) suggests that effective risk management based on a balanced approach may result in high controls and high facilitation. 

It is our understanding that the modernisation programme is designed to make use of risk management tools that will carefully consider self-declarations regarding classification, valuation and rules of origin.High risk cargo will be identified and inspected.There is also a likelihood of more post-clearance inspection audits being conducted by SARS.The SARS customs risk engine will therefore provide the basis around which import/export transactions are identified for detailed checking by customs. 

New legislation has been drafted to enable SARS to implement its strategic objectives and SARS has launched a new integrated technology solution to achieve the following:

•Simplification and harmonisation of customs procedures. 
•Standardisation of customs procedures across all modes of trade modalities. 
•Automation of key customs processes –import/export customs clearance, advance electronic notification of impending goods arrival/departure, and secure recording of goods movements. 
•Expedited clearance formalities for specific classes of goods according to an importer/exporter’s standing (risk profile) with SARS.
Each of the above is designed to streamline the end-to-end customs clearance process and offer  an improved experience and service to the trader. 

Gateway to Africa

It is anticipated that a modernised customs administration will lead to increased trade being channelled through South Africa to other African countries.In a competitive environment where traders are seeking efficiencies and certainty, traders should be entitled to rely on SARS taking steps to facilitate trade and making full and timeous communication about all customs procedures impacting on the cross-border movement of goods.

It is encouraging to see that National Treasury is relooking at the VAT rules for the zero-rating of exports from South Africa by road as well as the rules for the temporary importation of goods into South Africa. The rationale for these reviews is to seek ways to make South Africa more attractive as a beneficiation and distribution hub.
Source: By Ronnie van Rooyen (TaxTALK)



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