Archives For Customs Statutory Requirements

Hamburg Sud_1

Durban-based Hamburg Süd is the first shipping line – and the first South African Revenue Service (Sars) client – to be granted exemption from the requirement to submit paper manifests to local customs branches, thus becoming the first fully electronic cargo reporter.

While the electronic reporting of pre-arrival manifests to Sars has been a requirement since August 2009, shipping lines are, to date, still required to present pre- and post-arrival paper manifests to local customs branches in order to account for cargo. This was also because the data accuracy of electronic submissions varied significantly between different reporters.

Sars’ implementation of the new Manifest Processing (MPR) system in June 2016, provided industry with the mechanism to also report acquittal manifests electronically. Additionally, the system is able to match customs clearances to their corresponding cargo reports (manifests) in order to identify instances of non-reporting.

Three months after MPR was introduced, the facility for full paperless cargo reporting was made available to shipping lines and airlines who submit both pre-arrival and post-arrival manifests to Sars electronically; submit complete sets of manifests without any omissions; achieve a reporting data accuracy rate of 90% or higher in respect of both their pre-arrival and acquittal manifests reported for each of the three months preceding any application for exemption from paper reporting requirements; and can maintain that level consistently.

A significant benefit to carriers reporting electronically is the cost-saving of hundreds of thousands of rands spent per year in the paper and administrative costs associated with submitting paper manifests to Sars offices. The process is now more efficient allowing for improved risk management, security and confidentiality.

“Hamburg Süd’s core business strategy is to deliver a premium service to our customer, and to achieve this, compliance is a core driver. SARS paperless reporting is in line with our compliance and sustainability strategy,” said Jose Jardim, general manager of Hamburg Süd South Africa.

For Customs, the mandatory submission of cargo reports forms a significant part of the new Customs Control Act (CCA) in order to secure and facilitate the international supply chain.

With the impending implementation of Reporting of Conveyances and Goods (RCG) under the CCA – targeted for 2018 – carriers of internal goods in the sea and air modalities are urged to follow Hamburg Süd’s example and ensure that they become compliant in good time so that they can enjoy a smooth transition to the new legal dispensation.

Paperless cargo reporting would bring an end to one of the last remaining paper-based processes in customs while further contributing to the expedited processing of legitimate trade through an enhanced and integrated risk management environment.

According to a Sars spokesman technical stakeholder sessions to implement the reporting requirements introduced by the new Customs Control Act are due to commence soon and carriers and other supply chain cargo reporters are urged to attend in order to ensure they adapt their systems in good time.

Source: adapted from FTW Online, Venter. L, “German shipping line first Sars client to become fully electronic reporter”, September 14, 2017.

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AEO-LogoHere follows an appreciation of AEO within the context of the EU. According to KGH customs consultancy services, being an Authorised Economic Operator (AEO) already entails advantages for companies that have invested in doing the work to gain the AEO certification. With the new Union Customs Code (UCC), companies with an AEO permit will be able to gain additional advantages leading to more predictable and efficient logistics flows as well as an increased competitive edge.

Centralised clearance (being able to clear all customs declarations from one central location in the EU) and self-assessment (self-declaration of custom fees, similar to VAT reporting) are two new possibilities under UCC that will be implemented towards the end of the initial UCC implementation period from 1 May 2016 to 31 December 2020. To take advantage of these, AEO will be a prerequisite. AEO-ready businesses will therefore be well positioned to take advantage of these new possibilities when they become available.

Direct AEO benefits, including fewer physical and document-based controls, pre-notification in case of controls, easier access to customs simplifications and other customs authorisations, as well as access to mutual recognition with third countries, will continue to apply under UCC. The same is true of the soft benefits, such as better cross-functional communication and cooperation, improved customs knowledge and better risk management, which often outweigh the direct benefits as detailed by customs authorities.

With the UCC, AEO becomes a permit (authorisation) and all AEO certifications will have to be reviewed in line with the new UCC guidelines. Much is recognisable from before, but there is an additional competency requirement that is realised through either experience and/or professional qualifications. There is also likely to be more focus on ensuring that AEO applicants have robust routines that reflect their business, and that those routines are known in the business and used on a day-to-day basis.

Ever since the Authorised Economic Operator (AEO) certification was launched in 2008, many companies have been trying to evaluate whether to go for AEO or not. What are the benefits? How long does it take to become certified? Can we do it ourselves or do we need some help? What do we really gain by being AEO? This has sometimes stopped companies taking active steps to get ready for AEO.

Furthermore, some AEO-certified companies have felt that they have been exposed to more controls after AEO certification than before. In other instances the initial certification was fairly easy to achieve, but it then proved much harder to retain at a subsequent audit because routines were not being kept up to date or there had been insufficient internal controls and reviews performed in the business.

Our experience shows that companies that did a thorough job at the time of certification and that also afterwards had a genuine focus on maintaining knowledge, following routines and updating documentation as and when appropriate, have been able to benefit from improved customs management to a greater extent than they first envisaged.

KGH opines there are six situations where being AEO could be beneficial for a company:

  • Freight forwarder serving customers with logistics flows to and from the EU.
  • Strong business links with countries where the EU either has mutual recognition or is likely to have it in the not too distant future.
  • Businesses with many permits that will be reconsidered as part of the transition to UCC, where being AEO may facilitate the reconsideration process for other customs permits.
  • Large customs guarantee, which may be able to be reduced as a result of being an AEO.
  • Interested in centralised clearance and self-assessment that will be introduced towards the end of the UCC implementation period.
  • Interested in raising customs knowledge in a business, in order to better manage risks and be able to take advantage of business opportunities connected with international trade.

Here AEO can also be seen as a seal of quality. Source: kghcustoms.com

WCO - Technical Guidelines on Advance Rulings for Classification, Origin and ValuationThe World Customs Organization (WCO) has made the “Technical Guidelines on Advance Rulings for Classification, Origin and Valuation” publicly available. These guidelines were developed in order to support the implementation of Article 3 (Advance rulings) of the Bali Ministerial Decision on the Agreement on Trade Facilitation (TFA) and shared only among the WCO Members.

The purpose of publishing this document is to further enhance the transparency of the WCO’s work in this area as well as to provide additional information to any interested party. The Technical Guidelines are available here. Source: WCO

Trade policy - a balancing actA draft Notice for the rules under section 21A relating to Special Economic Zones has been made available for public comment. The draft rule amendments proposed under section 21A refer to the substitution of Industrial Development Zone (IDZ) for Special Economic Zone (SEZ). The draft rules can be accessed on the SARS website. Stakeholders have until 28 November 2014 to lodge any comments. Source: SARS

Customs Duty ActThe Customs Control Act, 2014 (Act No. 31 of 2014) and the Customs & Excise Amendment Act, 2014 (Act No. 32 of 2014) were published in the Government Gazette on 23 July 2014. For copies of these documents lease click here!

The first batch of draft rules has also been circulated in terms of the Customs Control Act, 2014 for comment with the deadline for comments looming – 29 July 2014. The ‘draft rules’ can be located by clicking here.The rest of the rules will follow in due course. Source: SARS

All stakeholders – doing business with SARS Customs – are collectively urged to take the time and opportunity to review the draft rules as they provide further detail to the future requirements and obligations for transacting Customs business when the Customs Duty and Control Acts come into operation.

New feature on SARS website – Customs Bills History

For those interested or concerned with the status of the Customs Bills from their first circulation until now, a ‘new’ SARS webpage contains all the official copies of the Draft Bills released for public comment in 2009 and in 2010 up until they were introduced in Parliament in October 2013. All the versions of the Bills after their introduction in Parliament are available as well, up to the final versions after publication in the Government gazette as Acts of Parliament.

These Acts, when they come into operation, will replace the current Customs and Excise Act, 1964 and provide for new modernised customs legislation. The Customs and Excise Amendment Act, 2014 will amend the 1964 Act to the extent that only the excise provisions will still be in force.

Zimbabwe-emblem11To curb rampant corruption and smuggling through Zimbabwe’s borders the government is introducing new import and export licences with special security features.

Mike Bimha, Zimbabwean Industry and Commerce Minister says the local industry was being negatively affected by cheap imports into the country, some of which were being smuggled through the country’s borders.

“There are a number of fake import and export permits in the country, which is affecting our industry.As a consequence, my ministry has given a directive that all import and export licenses have to be renewed so that new ones can be issued that have special security features.”

“We are also working on a number of interventions to protect local industry.”

“We are looking at removing duty on raw materials as well as reviewing tariffs and duties with a view to restricting some imports coming into the country.”

“The reviewing of duties is not a once-off exercise but will continue in consultation with local industry.”

“We meet with industry on a regular basis where we discuss tariffs and we make the policy recommendations based on these meetings.

Zimbabwe’s trade deficit is expected to widen this year with statistics showing that the import bill so far this year is now $8,3 billion against exports of $5 billion while imports for last year were $7,6 billion against exports of $4,43 billion. Source: TransportWorldAfrica

Senior WCO Management welcoming former South African President Thabo Mbeki, who is Chair of the High Level Panel on Illicit Financial Flows from Africa (WCO)

Senior WCO Management welcoming former South African President Thabo Mbeki, who is Chair of the High Level Panel on Illicit Financial Flows from Africa (WCO)

Members of the High Level Panel on Illicit Financial Flows from Africa, headed by former South African President Thabo Mbeki, visited WCO Headquarters on 11 February 2014 to obtain input for their report and recommendations to African countries in order to harness Africa’s hidden resources for development.

Secretary General Kunio Mikuriya explained the problems posed by cash couriers and trade-based money laundering (under-invoicing, over-invoicing, etc.) which had become major risk factors in Africa over the past decade as the continent had experienced economic growth largely based on the mining of its abundant natural resources. The Secretary General also referred to the need for countries to prioritize their policy regarding illicit financial flows and to provide adequate resources and a legal framework for Customs to establish controls in respect of free trade zones, thus enabling the Customs community to combat illicit trade and financial flows.

The discussion also covered, more broadly, the contribution of Customs to economic and social development in Africa, including regional economic integration. Mr. Mbeki and the High Level Panel members acknowledged the crucial part that Customs plays in improving the business climate by ensuring connectivity at borders, evidenced by the recent WTO Agreement on Trade Facilitation, as well as the role of Customs in ensuring transparency and security of the supply chain. They also appreciated the WCO approach of ownership-based capacity building which needed to be backed up by high-level political commitment. Source: WCO

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warehousingThere is growing evidence that HM Revenue & Customs (HMRC) has begun a campaign to target warehouse keepers and hauliers who may unknowingly be handling excise goods on which the duty has yet to be paid.

And the United Kingdom Warehousing Association (UKWA) is warning that any company found guilty of storing goods on which duty is outstanding could face ‘financial ruin’ – even if the storage company was unaware that duty had not been paid.

“While HMRC has had the authority to assess anyone for duty on goods illegally diverted from bonded movements who was ‘aware or should reasonably have been aware’ of the diversion at any point in the supply chain since 2010, action has been spasmodic,” says Alan Powell of Alan Powell Associates, UKWA’s honorary adviser on Customs & Excise Matters.

“However,” he continues, “HMRC is deploying more officers to investigate excise goods supply chains. As a result, we are now increasingly seeing third party service providers, including hauliers, warehouse keepers and lessors of property, such as barns and outbuildings, being penalised by HMRC as a result of their involvement with businesses that have evaded duty on alcohol and have absconded – so called ‘missing traders’.”

Anyone found to have held or dealt in duty-unpaid excise goods, can be fined up to 100% of the duty evaded, as Alan Powell explains: “HMRC had been slow to apply what are called ‘excise wrong-doing penalties’ but are now vigorously applying them.  As a result, many small and medium companies are facing unexpected bills and penalties from HMRC of hundreds of thousands of pounds.”

Allan Powell continues: “In simple terms, if an organisation has been involved at any stage in the supply of goods that have been illicitly diverted from a bonded supply chain, that  organisation could be liable for duty – even if that organisation is not directly responsible for the diversion.

“Essentially, anyone handling duty-unpaid product is classed as being ‘contaminated’ within the supply chain and assessed for the duty.”

In one particular instance, a storage company is facing a duty bill alone for nearly £100,000 after HMRC inspectors found duty-unpaid alcohol stored at the company’s site.

“The storage company was simply unaware about the risks involved in handling loads of duty un-paid alcohol and the director of the company to whom they leased the space has disappeared,” says UKWA’s chief executive officer, Roger Williams.

The message from Alan Powell and UKWA is that if you offer third party logistical services of any kind, you must check what is being handled or stored – do not take storage requirements on face value.

Alan Powell says: “Always be wary and query the business need, checking out with HMRC if possible.  If in any doubt, do NOT become involved – it could end very badly.” Source: www.ukwa.org.uk.

Read a followup article by – UKWA :Don’t be fazed by HMRC move (Lloyds List)

English: Ngozi Okonjo-Iweala, Managing Directo...

English: Ngozi Okonjo-Iweala, Managing Director, World Bank, Washington DC; Global Agenda Council on Corruption, is captured during the session ‘Zero Option for Corruption’ in the Congress Centre of the Annual Meeting 2010 of the World Economic Forum in Davos, Switzerland. (Photo credit: Wikipedia)

Not a few people raised eyebrows at one session of a senate committee when the Minister of Finance, Dr Ngozi Okonjo-Iweala, intervened during proceedings. Unlike most public hearings in the National Assembly, the particular one conducted by the Finance Committee of the Senate on the new Customs Bill was historic. Everyone agreed that the bill, which seeks to repeal the pre-independence Act, was timely. The dominant argument was that the roles and responsibilities of the Department of Customs and Excise have changed and required legislation to accommodate those changes.

From a modest outfit collecting taxes and royalties on coastal trading activities, the Department has evolved to become a large organisation employing over 20,000 Nigerians, with responsibilities cutting across revenue collection, border protection, public health and trade facilitation. The new law is to take account of the realities of the 21st century. Provisions were therefore made for electronic processes of Customs clearance, use of non-intrusive intervention methods to enforce controls and adherence with global best practice in customs operations.

However, Dr Okonjo-Iweala , who by virtue of her position is the Chairman of the Nigeria Customs Service Board raised dust when she expressed concerns over the powers of Mr President and the Minister of Finance as contained in the new Bill. Committee members were astonished when she appeared to labour to sound modest in kicking against the provisions which she complained ‘whittled down the powers of Mr President and the Minister over Customs’.

Another dissenting voice came from the Director of Budget in the Ministry, Dr Bright Okogwu, who argued that Customs should not be funded up to the tune of 2.5 % of Value on Board (FOB)’ as provided under Section 18 of the new Bill, although his earlier view appeared to support to the canvassed by Central Bank of Nigeria on the matter.

It is a fact that many Nigerians were not opportune to read the bill before the hearing. My interest in it followed claim of the possibility of creating a Customs outfit that would be too powerful to be under the thumb of the president or the minister of finance.

On the contrary, the bill does seek a stronger Board capable of enunciating policies devoid of bureaucratic bottlenecks. The bill still allows the minister enormous powers as chairman of the Board with the power to appoint some of its members.

But the notion that the bill strips the president of certain powers gave added impetus to the public hearing; Mrs Okonjo-Iweala was clearly agitated. But try as they could, no one could pinpoint the sections which allegedly render the President powerless over Customs matters.

The major omission in the existing legislations put up for repeal is the Customs, Excise Tariff, etc. (Consolidation) Act Cap C.49 of 1995. Perhaps the hullabaloo about the powers of Mr President stems from the erroneous impression that all the previous Acts relating to Customs matters were being repealed. Section 13of this Act is emphatic about the powers on the much-hyped waivers and concessions. The section vested on the president the power to impose, vary or remove any import or excise duty on goods that are liable to payment of such charges. This provision is still extant.

Opposition to Sections 42 and 43 which sought to prohibit by law the future use of Pre-shipment and Destination Inspection service providers was a source of disappointment to most Nigerians. Leading the pack of opposition was the Central Bank of Nigeria with the argument that the provision ‘ties government hands ‘, if such service is found necessary in the future.

Customs position throughout the hearing was to express readiness to take over its statutory roles. If there was any doubt about Customs ability, the CBN and the Finance Ministry, both supervisory organs of the destination Inspection should be held responsible for the orchestrated effort to perpetrate or institutionalise self-gratifying contracts.

All said and done, Nigerians are patiently waiting for the senators to do what is right and ignore sentiments associated with the various positions canvassed during the hearing. It should not be about muscle flexing of who wields what powers as was witnessed during the hearing. Nor should it be about the office holders, since the Service will outlive the current actors involved. It is about building a strong institution that can stand the test of time. Source: The Daily Trust (Nigeria)

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Below is a situation which might have been avoided if trader registration/licensing was properly addressed by the Namibian Authorities. With the likes of SADC and COMESA encouraging the implementation of regional transit guarantees, trade operators need to clearly address their obligations and liabilities. Moreover, any suggestion of authorised economic operator (AEO) programme in the Southern African region needs to fully align its requirements with the standards being applied by other countries across the globe. It is therefore clear that no preferred trader scheme can be implemented across the Trans-Kalahari Corridor or across SACU if such disparities of knowledge and practice exist. While one might have compassion for possible job redundancies and the pleas expressed by certain clearing agents, they evidently do not understand the game they are playing in and will drastically need to redress their understanding of the role they play in the supply chain. International clearing and forwarding is not a game for sissies, or people who want to try their hand at a quick buck. A bold stance by the Ministry of Finance.

The Namibian Ministry of Finance’s decision to ban clearing agents from using guarantees and bonds from third parties as security to move goods has caused an uproar among clearing agents. The Deputy Minister of Finance, Calle Schlettwein, explained that the decision that became effective on July 26 was taken to protect the taxpayer. Clearing agents aren’t closed down, and neither are they stopped from using their own security to move these goods, he said. As from July 26, the agents are simply not allowed to use a bond or guarantee issued to another clearing agent as security for their goods in transit, the ministry said.

Before the clampdown, clearing agent A used to ‘borrow’ guarantees or bonds, backed by financial or other institutions from clearing agent B to clear any goods coming through Namport and destined for landlocked countries such as Botswana, Zambia and Zimbabwe. However, should a problem develop with agent A’s consignment, the guarantee or bond would be worthless to Government, as the financial institution agreed to back only agent B’s guarantee or bond. “We don’t know how or when the practice started, but it is illegal,” a ministry spokesperson said.,

Schlettwein said Government stood to lose out on duties and customs through the practice, and the taxpayers would have ended up having to pick up the tab. The ministry’s announcement was met with considerable protest from the smaller clearing agencies, claiming that they didn’t have the money or financial backing to secure the necessary bonds or guarantees. Nampa reported that 76 small and medium enterprises (SMEs) operating as clearing agencies at the coast have been affected. At the Oshikango border post and at Helao Nafidi in the North, 30 agencies with more than 100 employees are affected.

Regina Amupolo of Pride Clearing and Forwarding Agent has called on the ministry to urgently look into this matter, because many trucks with goods and containers are stuck at the Oshikango border post, Walvis Bay harbour or at other border posts. Their customers have already complained that they are losing business because of this, Amupolo said. Amupolo said most SMEs don’t have the money to obtain bonds or guarantees. She said ministry officials said anyone who wants a bond must have collateral of N$1,6 million. “We are small business people, trying to employ ourselves and some of our fellow men and women in our societies, but now the Government, the Ministry of Finance, is making things difficult for us. How are we going to make a living if the ministry is cutting off our jobs in this way?” she asked.

In a letter written to all clearing agents at Oshikango, the controller customs and excise officer, Festus Shidute, said the practice of using third-party bonds or guarantees posed a serious challenge to customs administration and control of guarantees in the event of liabilities by third parties. Amupolo and Rejoice Nangolo from Flora Clearing Agent said they have already paid N$20 000 to obtain a clearing licence, while they have to pay Namport another N$20 000. She said they are losing thousands of dollars as a result of this unexpected prohibition by the ministry and are demanding an extension to allow them to take the matter up with the ministry.

Nangolo said her business has branches at other border posts like Omahenene, Katwitwi, Ngoma, Wenela, Trans-Kalahari, Ariamsvlei, Noordoewer, Walvis Bay, Hosea Kutako International Airport and Oshikango. Her Angolan customers have threatened to stop moving their goods through Namibia and only to use their own ports, she said. At Oshikango there are only two big companies, Piramund and CRN, that can guarantee bonds and assist them as SMEs clearing their work effectively. According to Amupolo and Nangolo, they started with their clearing business in Oshikango in 2000 and were doing well until the ministry imposed the ban.

Speaking to Nampa, Lunomukumo Taanyanda of Oluvanda Clearing and Forwarding Close Corporation (OCFCC) said his company has been operational for two years and deals mostly with car consignments from countries such as the United Kingdom (UK) and Dubai.Before clearing the consignments, OCFCC has to declare the consignment at the Namport customs desk. However, before they can fill in a customs declaration form to clear the transit goods, the goods need to be secured and this is where the company (OCFCC) requires the assistance of third parties such as Wesbank Transport, Transworld Cargo and Woker Freight Services.

These smaller companies acquire assistance from bigger companies (the third parties) as they experience problems when trying to obtain their own bonds and guarantees. According to Taanyanda, it is a very costly and time-consuming process. “We agents do not have enough collateral for bonds, which start at N$350 000, and now the ministry has stopped us from borrowing bonds from third parties,” he said. Source: The Namibian

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http://www.namibian.com.na/news/marketplace/full-story/archive/2012/august/article/clearing-agents-want-answers-today/

What with increased automation and the plethora of services becoming available to brokers, traders and specialist duty/tax recovery consultants, it would seem that the virtual nature of business has overlooked some key criteria which is cardinal for trader compliance with Customs. Lets deal with one of these – customs clearance (goods declaration) and cargo reporting (cargo manifest) information. Before I forget, as of June 2011, this also includes supporting documents. South African Customs law prescribes an obligation on traders to maintain documents (which includes any electronic transcription/version thereof)  for a statutory period of 5 years. This applies to all customs’ registrants and licensees.

While service providers (computer bureaus) provide a vital service in the provision and maintenance of software, hardware and communication services to the trade, site should not be lost of the fact that at any point in time, the trader may need to access, produce or submit documentation to support a claim or proof of their compliance in any customs matter. As one ‘provider’ recently exclaimed – since the inception of SARS’ electronic supporting document facility E@syScan, ‘gigabytes’ are now being transmitted over the internet. No doubt SARS endeavours have (or are) making service providers more profitable, but these also require a fair measure of support and ongoing maintenance to ensure such facility work at optimum performance. But, I’m digressing somewhat.

My point is that traders must have full rights, access and ownership of such data, including so-called product libraries. SARS has not imposed any view or directive on this matter, and has left it to the terms and conditions of the commercial agreement between the trader, broker and the service provider. Should a broker/trader wish to terminate his/her relationship with a service provider, the agreement should provide for a transfer of ‘customs transactional data’ from the service provider to the trade entity. There are no doubt instances of breach of contract which may cause either or both parties to sever the commercial relationship under a cloud. Nonetheless, my advice to the trader/broker is to ensure that their contractual agreement includes a clause which provides for the availability or transfer of ‘data’ to the trading entity in the event of a termination of the agreement. A ‘can’ of worms? Speak to me!