Inland ports can stay – South African Revenue Service
The South African Revenue Service (SARS) on Tuesday extended an olive branch to the freight and logistics industry by guaranteeing that inland ports, including Johannesburg’s City Deep, can continue.
The industry had been up in arms over proposals in the draft Customs Control Bill, saying the new requirement for a full clearance certificate at ports of entry would cause congestion and disrupt the legal contracts of sale and carriage between importers and sellers. This would have eliminated City Deep’s status as an inland port just as Johannesburg plans to spend R100m over the next three years to upgrade it, and Transnet R800m.
Goods currently travel to City Deep — and other inland ports — on a manifest. SARS’s problem with manifests is that they are a general summary of all cargo on board a vessel and do not provide sufficient information of the goods to determine risk.
Cargo information is also provided by foreigners who cannot be held accountable domestically for fraudulent statements.
SAPS chief officer of legal and policy Kosie Louw told Parliament’s standing committee on finance on Tuesday that to overcome the impasse and in a spirit of compromise, SARS was proposing a mandatory advance customs clearance of the goods three days before their arrival at the first port of entry. Goods consigned to inland terminals such as City Deep would be released conditionally.
Mr Louw said SAPS supported this proposal since 70% of importers made advance customs clearances. Shipping carriers also supported the proposal, which would not be implemented until 2015 to allow business to prepare for the change.
The system would be tested for the whole of next year to iron out any problems.
An alternative option would be for the goods to undergo a lesser form of clearance at the first point of entry. This would still entail providing customs authorities with the same level of information on the tariff, value and origin of goods, which would be submitted by electronic data interchange. The importer would be held accountable for the information that was provided.
Mr Louw said that because this document would not have the formal status of a clearance certificate, it would not disrupt existing legal contractual arrangements, as claimed. The goods would still move CIF (cost insurance and freight) from the port to City Deep.
SARS has also proposed softening the penalty provisions so that errors not resulting in any prejudice to customs revenue will be subject to penalties only after three warnings. These penalties will be discretionary and will be applied leniently in the first 12 months of the bill coming into force to allow business to properly prepare for the change. An appeal process has been included.
The bill only establishes maximum penalties. Once promulgated, the Treasury would have to publish a notice outlining the customs defaults and the range of penalties up to the maximum.
Mr Louw dismissed allegations by the South African Association of Freight Forwarders that SARS had failed to consult on this. He outlined an extensive consultation process since 2007, noting that the proposals had been tabled in the National Economic Development and Labour Council.
The association had participated in these deliberations and SARS had made changes to accommodate concerns.
Mr Louw said SARS had benchmarked its proposals against the customs legislation of other jurisdictions to ensure they were in line with best practice.
“The inland terminal issue should be considered against the balance we try to achieve between control versus trade facilitation,” he said. “The policy rationale for exchanging existing policy is based on the fact that SARS can only effectively control the movement of goods across our borders (and the risk that this poses) if it has the necessary information.”
The committee will meet again on Wednesday to discuss the matter.