Tax advisory firm welcomes proposed overhaul of Customs Act

2nd November 2009 By: Creamer Media Reporter

A proposed overhaul of the Customs and Excise Act by the South African Revenue Service (Sars) was under way, a move advisory firm Deloitte welcomes, saying this was long overdue.

Sars on October 30 presented the proposed replacement of the 45-year-old Act, which it would table for Parliament in the near future.

Deloitte highlighted that the most noticeable change to the Act was the creation of two bills, the Customs Control Bill and the Customs Duty Bill, while an Excise Bill was also being developed.

“South Africa’s current Act lags behind the rest of the world and we hope that this will bring our customs and excise laws into international alignment,” Deloitte Tax director Jed Michaletos commented.

The overhaul would allow for the modernisation of some aspects, such as the introduction of eclearances.

The 128 sections under the old Act would grow to more than 800 sections and would provide “much needed clarification” on the various customs and excise laws, said the advisory firm.

While a few new concepts have been introduced, many of the changes see familiar concepts being revised, with new terminologies added to ensure that the Acts and their guidelines are in line with international law.

Deloitte associate tax director Andre Erasmus pointed out that the revised Act would allow for penalties to be a fixed amount, rather than a percentage, depending on the severity of the transgression and the number of transgressions committed.

The provisions for the classification and valuation of goods have also been expanded upon, while advanced rulings for both private and class ruling had been formalised, which would limit Sars’ ability to withdraw rulings.

Further, goods now had to be cleared within three, and not seven, days; duty liability had been lengthened from two to three years, which would make potential exposures much bigger than in the past; accredited status holders had to renew this status every three years; companies registered with Sars would have to renew their registration every three years; and the administration procedures have been clarified, including which forms are necessary and what the timeframes are, Erasmus stated.

Sars would also have greater powers to recover debt owed to the State, including powers to arrest, being able to use a certain level of force, and being able to carry firearms.

The public could comment on the new Acts until February 2010.

“We recommend that importers, exporters and clearing agents review the changes to the Customs and Excise Act, as there may be long-lasting ramifications if they are not up to speed with the new Acts,” Erasmus warned.

He added that the new Acts would also have a knock-on effect on other tax acts.