New customs legislation

Balancing control with trade facilitation

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One of the biggest projects in the history of the South African Revenue Service (SARS) is the implementation of new customs legislation, which was promulgated in 2014

The journey started more than 15 years ago and is expected to end in about 2025 when the new legislation comes into effect. Once fully implemented, the project will fundamentally change the way customs operates.

The implementation of the Acts will occur when SARS and all relevant stakeholders are ready, and systems and processes are in place. The President of South Africa will then announce the date when they will come into effect.

The impact of the new legislation, its incorporation into current automated systems, policies and procedures, as well as the necessary re-adjustments to be made by every entity engaged in business with SARS Customs is no small feat.

There has therefore been extensive engagement with trade, including nationwide roadshows in 2017, sector-specific engagements relating to specific releases, and regular engagements with industry bodies and other government agencies (OGAs). These engagements are expected to continue, as SARS is committed to working with trade in a spirit of co-creation.

The new systems, policies and procedures are being developed in phases; the first three are Reporting of Conveyances and Goods (RCG), Registration, Licensing and Accreditation (RLA), as well as Declaration Processing (DPS).

Recent milestones

Since the last South African Association of Freight Forwarders (SAAFF) conference, the New Customs Acts Programme (NCAP) team has made progress in a number of areas. Some of the milestones reached include finalising rules for the Customs Control Act (CCA) and Customs Duty Act (CDA). SARS also held a separate workshop with trade in order to finalise the deferment rules. The new business case for a multi-year (eight-year) programme, enabling SARS to bring forward RCG for implementation under the current 1964 Act, was approved towards the end of 2017.

The following key milestones involving the three main phases were met this year:

Registration, Licensing and Accreditation (RLA)

A Customs Sufficient Knowledge (CSK) assessment is a prerequisite for the registration and licensing of certain client types. The system was finalised in 2017, and successfully tested with trade through a pilot project in November 2017. CSK ensures that trade entities have the required competence within their organisations to ensure compliance with customs legislation, policies and procedures. CSK was opened to RCG clients from 11 May 2018. However, a decision was made in July to put it on hold until the CCA becomes operational.

After the system was finalised, SARS invited trade to participate, in order to test its capability and stability. Writing CSK is not yet a legal requirement, so SARS requested clients to voluntarily write it. SARS is now happy with the system and has confirmed its stability. As a result, CSK has now been put on hold and will be opened up closer to the new Act becoming operational.

The first phase of RLA will see the introduction of electronic platforms (including eFiling) for the submission of registration/licensing applications, for selected types of customs clients.

Reporting of Conveyances and Goods (RCG)

The first phase of RCG includes reporting, goods accounting and basic case management. The system was developed in 2017, and was implemented on 20 April 2018. This system is aimed at significantly improving risk management, through matching declarations to a variety of supply chain reports and third party data; ensuring that all goods are accounted for, and improving the outputs of customs inspections.

The rollout initially focused on land clients and then moved on to sea and air modalities. Clients are now expected to submit various cargo reports to SARS in electronic format along the entire supply chain. By November 2018, SARS will start penalising non-compliance with the mandatory electronic submission requirement.

Release 2 of RCG is earmarked for implementation before the end of 2018. This will involve the addition of certain rail-specific reports, part-shipment reports (for the road modality), as well as the implementation of goods accounting for rail cargo.

Declaration Processing (DPS)

DPS Tactical Release 1 is expected to be implemented before the end of 2018. It comprises requirements regarding the processing of an incomplete or provisional clearance declaration, which must be completed by submitting a supplementary declaration within a prescribed time period, making it a regular clearance under the 1964 Customs and Excise Act. The use of the two-step procedure will be limited to certain customs procedure codes and certain commodities.

A new “declaration type” field is also being introduced to identify whether a submission is a complete, incomplete, provisional or supplementary declaration.

The normal duties and VAT payable on a complete declaration, will not be payable on an incomplete/provisional declaration, even though release is granted. Duties and VAT will only be brought to account on a supplementary declaration.

The rules that will enable the implementation of the “two-step-procedure” were published for a comment period that closed on 21 February 2018. SARS is in the process of finalising the adjustments to the system, and thereafter, trade can start experiencing the benefit of this declaration type.

Article courtesy of the SARS Communication Unit

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