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And so it begins

18th January 2019

By: Riaan de Lange

     

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The title of this piece is a phrase used by King Théoden, South African-born JRR Tolkien’s fictional character in The Lord of the Rings trilogy, just before the major battle at Helms Deep, as depicted in the movie The Two Towers.

And here we are at the start of 2019, mulling South Africa’s own impending battle, which is part of the ongoing economic war and, depending on your persuasion, might well already have been lost. Make no mistake, the South African economy is in dire straits. There are simply too many challenges facing the South African economy on far too many fronts. Quite frankly, the situation in which the South African economy finds itself is on the fringe of being unimaginable – again, this depends on your persuasion.

There is just too much that needs to be done. Who exactly should be doing it is, of course, the ultimate question. Just before you are blinded by future prospects – that is, if you subscribe to the philosophy that the future is so bright you have to wear shades – ponder it carefully. To borrow from Yogi Berra, “the future is not what it used to be”. The promise of the future might well be overestimated. But then it is human nature to believe that the future will be better – so much better – than the present. This is no better reflected than during New Year’s Day celebrations, when, for no apparent rational reason, an improvement in the present situation and circumstances is anticipated and expected.

In times of economic adversity, businesses could quite easily confuse their influence, or perceived influence, on their external business environment. The external environment is something that, of course, businesses have very little influence and control over. In times like these, businesses should remind themselves of the serenity prayer: “God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.”

So, what can a business change? More particularly, what can a business change in its internal business environment? I am, of course, referring to the customs and excise environment.

Businesses can do much more than they think, particularly in reducing and managing their customs duty liability. If your business is involved in the import, directly or indirectly, of any primary, intermediary or final products, then there are three things that you need to do. If you do nothing else, please, pay attention to just three things: the tariff classification of the products, the customs valuation of the products and the origin of the products. The danger of getting these three things wrong is that your customs duty liability will be impacted on. The thing with customs duty is that, once it has been paid, you cannot recover it. So, you need to make sure that what you have paid is the correct amount.

If your product is subject to a customs duty, because of its tariff classification and its origin, then you may apply for a reduction in the rate of customs duty. This is done by lodging a simple application with the International Trade Administration Commission of South Africa. You can easily do this yourself – you do not need to engage a consultant to do this on your behalf. In instances where a reduction in the rate of customs duty is not possible, you could consider applying for the creation of a rebate of the customs duty, for which you also do not require outside assistance. Since this column does not allow for each to be explored in any detail, should you wish to learn more, simply let it be known. These are but two considerations – there are many, many more. For instance, you could consider the customs valuation of your products, where real savings could be realised, as in the instance of the drawback of the customs duty.

You may be looking beyond 2019 already, pondering what 2020 holds for the South African economy. Well, if you ask that of me, I have no idea; I simply do not have a 2020 vision.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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