On September 10, the South African Revenue Service (Sars) invited comments on draft amendments to both the Customs and Excise Act and the Value-added Tax Act, to be submitted by September 30.

The draft amendments relate to goods imported or cleared from a customs and excise warehouse for exploration for petroleum or the production of petroleum. (A warehouse or customs storage warehouse is a licensed facility approved by Customs for the storage of dutiable imported goods or domestically produced dutiable goods, with a delay of the payment of duty. It also allows for the storage of imported goods liable to value-added tax, or Vat.)

According to the ‘explanatory note’, the proposed draft amendments make a distinction between imported goods that are free of customs duty free and not subject to an International Trade Administration Commission of South Africa (Itac) permit and those that attract a customs duty and are subject to an Itac permit. Secondly, they allow for temporary imports, provided the conditions stipulated in the rebate item ‘notes’ are complied with. Thirdly, they provide for an exemption from Vat on the goods imported, which must be solely for use in petroleum exploration. The draft amendments are intended to be implemented from January 1, 2014.

The substitution of the ‘notes’ of rebate item 460.23 (goods imported or cleared from a customs and excise warehouse for the exploration for petroleum or production of petroleum as certified by the director-general: Mineral Resources): “1. Goods imported or cleared from a customs and excise warehouse by a person who is certified by the director-general: Mineral Resources (or the CEO of the agency designated in terms of Section 70 of the Mineral and Petroleum Resources Development Act, 2002 [Act No 28 of 2002]) – (a) to be a person who, in the Republic, including the territorial waters and the continental shelf of the Republic, (i) explores for petroleum in terms of an exploration right issued in terms of Section 80 of the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002); (ii) produces petroleum in terms of a production right issued in terms of Section 84 of the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002); or (iii) is a contractor of any person referred to in paragraph (a)(i) or (a)(ii); (b) subject to the approval of the said director-general [or the CEO of the agency designated in terms of Section 70 of the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002)], is a person (including, if a company, any subsidiary of such company) referred to in paragraph (a)(i) or (a)(iii) who supplies such goods directly to any person or to any contractor or any person referred to in paragraph (a)(ii), for use in the manufacture of any equipment, installation or device, for use solely in operations in connection with the exploration for, or production of, petroleum, and except for the purposes of item 02.00, in such quantities and at such times as the International Trade Administration Commission may allow by specific permit, excluding (i) distillate fuels, residual fuel oil and biodiesel; (ii) goods for the personal use of any person; and (iii) goods for use in the exploration or processing of any product other than petroleum as defined in the Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002). Provided that – for the purposes of paragraph (b), the person entering such goods under rebate of duty shall be liable for the duty rebated, unless he or she proves that such goods – (aa) have been supplied and used in the manufacture of the equipment, installation or device which has been delivered to the person referred to in paragraph (a)(ii); or (bb) have been exported within a period of six months from the date the operations contemplated in Note 1(b) have been completed; or (cc) on request by the importer, and subject to the permission of the Commissioner, have been entered for home consumption and payment of duty or have been abandoned or destroyed in terms of item 412.07 of this Schedule. 2. Notwithstanding the Notes to Schedules No’s 3 and 4, “full duty” where it appears in the “Extent of Rebate” column opposite rebate item 460.23 means goods free of duty as contemplated in section 75A”.

The proposed substitution of Rebate Item 460.23/00.00/01.00: “Goods (excluding goods free of duty as contemplated in section 75A) imported or cleared from a customs and excise warehouse for the exploration for or production of petroleum as contemplated in the notes to this item”. The extent of rebate is full duty less the duty in Section B of Part 2 of Schedule No 1. (Schedule 1 Part 2B reads: “Ad valorem excise duties on locally manufactured goods or on imported goods of the same class or kind, also known as luxury duties.” The products expected to be rebated are transport vehicles.

The insertion of rebate item 460.23/00.00/02.00: “Goods free of duty, imported or cleared from a customs and excise warehouse for the exploration for or production of petroleum as contemplated in the notes to this item”. The extent of the rebate is full duty.

The draft amendment of paragraph 8 of Schedule 1 of the Value-added Tax Act serves to provide for an exemption from Vat on the importation of dutiable goods, subject to an Itac permit and duty-free goods not subject to the Itac permit.