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BPL Inform July 2017

July 2017

APPLICATIONS FOR CHANGES IN CUSTOMS DUTIES

The following applications for changes in rates of customs duty were published in the past month. Interested parties must submit comments to ITAC within 4 (four) weeks of the date the notice was first published unless otherwise stipulated.

Increases

Government Gazette 40919 – 2017.06.15

  1. Self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of biaxially oriented polymers of propylene (excluding that which is self-adhesive on both sides), in rolls of a width exceeding 25mm and of a value for duty purposes exceeding 1300c/m2, classifiable in tariff subheading 1919.10.41.
  2. Biaxially oriented polymers of propylene (excluding that which is self-adhesive on both sides), in rolls of a width not exceeding 200mm, classifiable in tariff subheadings 3919.10.43 and 3919.10.47.

 

Note: This is a revised version of a previous application.

TARIFF ADJUSTMENTS

Clients are reminded that all Bidvest Panalpina Logistics service, cartage and documentation charges have been increased from 1st July.

CONTAINER SHORTAGES

A world-wide shortage of containers is particularly apparent in Europe at present. Europe has experienced a recent upswing in freight volumes and transporters are struggling to deliver, collect and reposition empties fast enough. This has been worsened by the onset of the summer holidays as well as ongoing strikes and delays at Spanish ports.

Containers are owned or leased by individual shipping lines and thus cannot be interchanged between them; some are also restricted to specific routes or regions.

SARS PAYMENT RULES PROPOSALS

SARS - Customs recently published for information and comment draft rules proposing that the consolidated tax payment system used by the customs clearing industry in South Africa be restricted to prime duty paid declarations only. All other transactions, including amendments to prime clearances (VOCs) and withdrawals from bonded warehouses would require cash payments to the customs authority at the time the declaration is made.

Apart from the additional work that this change would require, it would have a direct and immediate impact on cash flows and finance costs both to clearing agents and their clients.

EUROPE ON HOLIDAY

Summer holiday season in Europe begins in July and continues till the end of August. During this time, many businesses and service providers either have their annual shut-down or operate with reduced staffing. Also, increased holiday traffic extends delivery and collection times for cargo in many areas; airlines experience reduced cargo capacity due to higher passenger volumes and other factors.

Clients should factor these circumstances into their logistics planning over the coming months.

YOUR DUTY TO PAY!

Theft of goods whilst in transit does not relieve the owner (importer) from liability for duties and taxes on those goods. Only if there is prima facie evidence that the loss occurred before the goods in question arrived in South Africa does the importer have a possibility of being refunded prepaid duties/taxes or being exempted from payment.

Where goods have arrived in the country and the loss is after arrival the importer/owner's liability for duties and taxes remains undiminished: these must be paid to SARS even if the goods were unclear at the time of the theft, since the goods are deemed to have been entered into home consumption in South Africa, with or without the active participation of the importer.

SARS can also impose penalties on importers who fail to bring such duties to account timeously.

3 MAJOR LINES MERGE

The proposed merger of the container shipping businesses of Japan's three big shipping lines is set to go ahead on 1st April 2018. The joint venture of KKK (Kawasaki Kisen Kaisha), MOL (Mitsui OSK Lines) and NYK Line (Nippon Yusen Kabushiki Kaisha) will from that date trade under the name Ocean Network Express under an operating company to be registered for the purpose in Singapore.

The new entity will control about 7% of world container capacity.

SARS' PLANS for 2017

SARS' Annual Performance Plan for 2017/8 published last month offers some insights into the challenges facing the tax authority and how it intends dealing with these. In its strategic overview SARS says:

"SARS will continue with the design and development of the necessary processes, policies, procedures and systems in preparation for the implementation of the provisions of the new Customs Acts. The focus of SARS activities during 2017/18 will be on ensuring an effective and efficient process for Registration, Licensing and Accreditation, and Reporting Conveyance and Goods."

In terms of the effect on importers and exporters it should be remembered that existing legislation allows SARS to "adapt any existing power, duty or function contemplated in this Act (Act 91 of 1964) for purposes of establishing alternative or revised administrative policies and procedures that will give effect to the modernisation program"

In other words, the operational requirements of the new Act can already be applied in advance of its formal implementation. This has already been done in many areas of activity by revising the applicable rules, external policies or other guidelines. An example of this is the revised clearing instruction requirement. More changes along these lines are likely to be implemented as the year progresses.

The plan goes on to state that SARS has "noted an increase in the abuse of rules of origin, valuation regime and tariff classification" and will continue to build capacity to target these challenges.

SARS says that it intends targeting a minimum of 13% of imported goods for valuation compliance.

The plan also notes the risk created by prevailing global and local economic uncertainties and the increasing pressure placed on SARS' ability to collect revenue. Among measures proposed to meet this challenge and meet budget the plan says that SARS will:

  • Increase compliance activities through increased and targeted audit and enforcement activities, as well as enhanced debt management
  • Continue to Invest in improving risk and compliance management capabilities
  • Increase the use of administrative penalties

The new Customs Control Act makes fixed amount penalties mandatory for a wide variety of breaches of the legislation. It is quite likely that the proposed increase in the use of administrative penalties will be aimed at bringing current practice into line with those laid down in the new Act to raise compliance levels and to also increase revenue collected.

Importers must ensure that their supplier's invoices are correct and contain all the information required for correct declaration to the authorities; they must ensure any revised or additional invoices received are declared to the authorities on receipt.

One of the policy changes introduced by SARS is that both importers and exporters are now required by law to provide detailed clearing instructions, including a detailed list of mandatory information, to their clearing agents for all transactions. These requirements are all covered by the standard instruction form provided by Bidvest Panalpina Logistics. Questions 14 and 15 on the Bidvest Panalpina Logistics clearing instruction must be carefully considered and correctly answered for each shipment to be cleared. SARS must be notified if the status of a relationship with any foreign supplier or customer changes at any time.

BORDER MANAGEMENT AGENCY APPROVED

South Africa's proposed Border Management Agency took a step closer to becoming reality when the enabling legislation was passed by parliament on 8th June. Passage of the bill had been blocked twice previously by opposition Members of Parliament staging walkouts, effectively leaving parliament without a quorum with which to vote.

Critics of the new agency say that it could cost up to R22-billion to implement and creates opportunities for inflated pricing and illegal tendering practices. A major concern is that it may create an additional agency collecting taxes at the country's borders and wrest sole control of this function away from SARS.

EUROPEAN DOCK STRIKES

Protests by Spanish dockworkers in the form of work stoppages, go slows and stayaways are continuing. The protests are against an European Union directive to liberalise labour hiring practices in the sector.

In addition to being regular ports of call for carriers serving the South African market, Spanish ports are also service hubs for traffic to and from other centres in Europe and the Mediterranean basin. Some delays/disruptions in most seafreight services to/from the region are being experienced. Unions at many other European ports have announced work stoppages in sympathy with their Spanish colleagues during July. Although these are nominally just for an hour or two they do raise the possibility of escalating levels of disruption.

MAERSK

Maersk Lines computer systems worldwide are among those to have fallen victim to the Petya cyber-attack during the last week in June. The virus has affected many of the company's container terminals around the globe with some having to either shut down or to revert to manual operations. Some delays in the loading/discharge of cargoes at affected ports seems to be inevitable.

The company's ability to take cargo bookings and quote freight rates has also been affected.

While Bidvest Panalpina Logistics may in some instances be able to divert urgent cargo to other carriers at client's request until all systems have been recovered, clients should be aware that such diversions, if possible, may result in higher freight costs to them.

 

This communication is published for general information and is not intended as professional advice of any kind. While every reasonable care has been taken to ensure the integrity and accuracy of the information contained herein, no liability or responsibility is accepted by Bidvest Panalpina Logistics or its employees for any damage or loss of any nature whatsoever resulting from the use or reliance upon this information.