Davis Tax Committee pronounces on BMA

DTCRecent speculation concerning the Border Management Agency Bill have brought about reaction from both within government and industry. While there appears widespread support for a unified agency to administer South Africa’s borders, the challenge lies in the perceived administration of such agency given the specific mandates of the various border entities.

The Davis Tax Committee (DTC) was requested to provide a view on the affect of the proposed bill insofar as it impacts upon revenue (taxes and customs and excise) collection for the fiscus of South Africa.

The purpose of the Bill is to provide for the establishment, organisation, regulation and control of the Border Management Agency (BMA); to provide for the transfer, assignment, and designation of law enforcement border related functions to the BMA; and to provide for matters connected thereto. The functions of the BMA are (a) to perform border law enforcement functions within the borderline and at ports of entry; (b) to coordinate the implementation of its border law enforcement functions with the principal organs of state and may enter into protocols with those organs of state to do so; and (c) to provide an enabling environment to facilitate legitimate trade.

In short the DTC recommends that the functions and powers of SARS and the BMA be kept separate and that the Agency should not be assigned any of the current functions and powers of SARS with regard to revenue (taxes and customs and excise) collection and the control of goods that is associated with such collection functions. Of particular concern is the extraordinarily poor timing of the Bill. According to the 2014 Tax Statistics issued by SARS, the total of customs duties, import VAT, and ad valorem import duties collected amounted to R176.9 billion for the 2013-14 fiscal year. This was approximately 19% of the total revenue collected.

The DTC is of the view that to put so significant a contribution to the fiscus in a position of uncertainty, if the Bill were to be  implemented, is fiscally imprudent at this critical juncture for the South African economy. Follow this link to access the full report on the DTC website. Source: www.taxcom.org.za

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Border Management Agency (BMA) Bill introduced into Parliment

The BMA Bill No.39058Cabinet [has] approved the introduction of the Border Management Agency (BMA) Bill, 2015 into Parliament. The Bill aims to establish the BMA, which will balance secure cross-border travel, trade facilitation and national security imperatives within the context of South Africa’s regional, African and international obligations. This single authority for border law enforcement provides the potential for more cost-effective services, enhanced security and better management of the border environment. Source: Statement on the Cabinet meeting of 23 September 2015 (SA Government)

The BMA Bill – a little more for stakeholders to ponder over

The BMA Bill No.39058In recent months ‘Joe Public’ has witnessed developments relating to new visa requirements regarding international travel to and from South Africa. Tourism and the hospitality industry have been impacted in no small way while government has now established a committee to investigate the claims to the effect that the country’s tourism industry has been severely impacted.

It is now commercial trade’s time to consider the next set of legal requirements emanating from the Department of Home Affairs which, in the main, affect legislation under other departments and organ’s of state – in particular SARS Customs. Interested parties can find/download the document by clicking the link http://www.gpwonline.co.za/ and searching for eGazette No.39058.

In essence function of the Border Management Agency (BMA) Bill is – To provide for the establishment, organisation, regulation and control of the Border Management Agency; to provide for the transfer, assignment, and designation of law enforcement border related functions to the Border Management Agency; and to provide for matters connected thereto.

Be sure to digest the content of the Schedules to the Bill which contain the extent of the ‘meat’ and authority which the proposed Border Management Agency will exert if, or once approved. The Department of Home Affairs (DHA) invites comments to the draft Bill which must reach DHA no later than 14 September 2015.

BMA – This one is not implementable!

[Picture Credit: John Moore - Getty Images]

Border between South Africa and Zimbabwe [Picture Credit: John Moore – Getty Images]

The SA government is forging ahead with plans for a border management agency to handle all aspects of border control, from security to customs and plant and animal inspection – but MPs have said it can’t be done.

Home Affairs Minister Malusi Gigaba and his defence counterpart Nosiviwe Mapisa-Nqakula launched Operation Pyramid – a transitional arrangement to improve interdepartmental co-ordination – on Friday, while a draft bill to create the legal framework for the agency was tabled at a workshop in Pretoria earlier in the week.

But there are serious concerns about the ability of one entity to manage the diverse requirements of border control, which would require a huge single body that may prove unwieldy, while it would also need to assume some of the functions of the police and defence force. This would put it in conflict with the constitution, which provides for a single police service and defence force.

Section 199.2 of the constitution states the defence force is the “only lawful military force in the Republic”. Establishing a border management agency performing security functions in parallel with the police and SANDF would thus require a constitutional amendment, but this is just one among many challenges.

The need for such an agency arose in the first place because numerous national intelligence estimates had said the lack of co-ordination in the border environment resulted in “significant weaknesses, threats and challenges”.

Briefing Parliament’s police oversight committee this week, Brigadier David Chilembe, head of border policing, outlined steps that had been taken to get the agency off the ground, six years after President Jacob Zuma ordered it to be done.

The Department of Home Affairs, the lead agent in the project, had established a project office to oversee implementation, heads of affected departments had signed a multiparty agreement and sat on a committee together to co-ordinate their efforts, while an interministerial committee ironed out the policy questions.

The Government Technical Advisory Centre in the Treasury was working on the business case for the agency, Chilembe said.
The plan was to set up the agency in stages and identify the legal and operational implications at each stage so they could be addressed.

But a follow-up briefing on concerns raised by MPs after an oversight visit to the Lebombo border post near Komatipoort in Mpumalanga opened a window into the difficulties the agency will face.

The committee wrote a damning report on the Lebombo border post after a visit earlier this year, when MPs found the ceiling was collapsing because air-conditioning ducts dripped on to it, the door was shattered and the gate jammed, meaning it was possible to drive or walk through it without stopping.

Police complained they had to stand unprotected in the sun or rain and had to make their own travel arrangements from town.
Lieutenant-General Kehla Sithole said the problems originated in a 1998 agreement between Mozambique and South Africa for the post to be established as a “one-stop” facility, with officials sitting back-to-back under one roof.

Mozambique later said it had expected South Africa to pay for its construction, but the Treasury balked at this.The resulting limbo meant new facilities could not be built and neither could the existing ones be refurbished because the Public Works Department refused to upgrade buildings earmarked for demolition.

There were perceptions that the SA Revenue Service, which was the lead agency in the Border Control Operational Co-ordinating Committee – the body charged with harmonising the environment since 2001 – looked after its own interests first, leaving the SAPS short-changed in accommodation and office space.

MPs were shocked to hear an 80-room residential complex for SAPS personnel stood empty because police were expected to pay for it themselves but, unlike SARS officials, did not receive an accommodation allowance. As a result, they preferred to rent a shack in town and travel to the border post daily.

There was also no scanner at the border post, meaning truck cargos, for instance, could only be inspected manually. Opposition DA spokeswoman on police Dianne Kohler Barnard said this almost certainly meant the majority of vehicles went through the post unchecked, meaning it could easily be used for child trafficking, for example.

Sithole said the lack of a scanner was the result of a Treasury instruction for departments represented at the post to make a joint proposal for one to be procured, instead of each asking for their own – at a cost of millions a unit.

A “scanner committee” had been established in the late 1990s but, because one was provided for in the plans for the one-stop concept, it had yet to be bought.

Committee chairman Francois Beukman said MPs weren’t interested in the history of the problem, but rather in what would be done to get a scanner in place.

ANC MP Jerome Maake, supported by Leonard Ramatlakane, said after the presentation it was clear the border management agency couldn’t work. If it was established as a government department – one of three options on the table – this would create a “super department” that would reach into the functions of the others. This would confuse lines of accountability.

If it was established as a government component under an executive authority, or as a public entity, the other two options, it would run into the constitutional challenges related to the police and defence functions.

“All I see here is problems and I don’t see how they can be solved,” Maake said.

“Maybe you’re just afraid of telling the president, this animal can’t be implemented and you’re moving around it, on the periphery, afraid to just say, no – can we come up with something new?

“This one is not implementable.”

Source: Independant On Line (IOL)

Latest SA Cabinet decisions affecting Customs

Coat_of_arms_of_South_Africa_svgGovernment Communication and Information (GCIS) has published a statement on Cabinet’s recent meeting (26 June 2013) revealing at least three key aspects affecting SARS as well as external stakeholders involved in or impacted by Customs business. An excerpt of the statement follows below.

Cabinet approved the submission of the Southern African Development Community (SADC) Protocol on Trade in Services to Parliament for ratification, in accordance with section 231 of the Constitution. The objectives of the Protocol are to liberalise intra-regional trade in services on the basis of equity, balance and mutual benefit. This Protocol also sets out a framework for the liberalisation of trade in services between SADC member states and serves as a basis for negotiations.

Cabinet approved the implementation steps proposed for the establishment of a Border Management Agency (BMA).  The BMA would manage migration, customs and land border line control services and efficiently coordinate the service of all departments in ports of entry. The Department of Home Affairs will be the lead Department in establishing the BMA.

Finally, and for some a contentious issue, Cabinet also approved the Customs Control Bill (CCB), the Customs Duty Bill, 2013 (CDB) and the Customs and Excise Amendment Act, 2013 (CEAA) for submission to Parliment.  The Bills provide a foundation for the facilitation of international trade and protection of the economy and society, thereby creating a balance between customs control and trade facilitation. Source: GCIS

Enhancing South Africa’s and Africa’s development through Regional and Continental Integration

Hardly a week goes by without some or other African politician waxing lyrical about continental integration, continental trade diversification, and a wholesome analysis of the ‘barriers’ which prevent the African continent  from reaching its full economic potential. No doubt I’m a bit biased in relaying the recent ‘public lecture’ of our deputy President Kgalema Motlanthe at the University of Finlandread the full speech here! Plenty of insight clearly delineating a plethora of barriers; yet, are we African’s so naive not to have identified these barriers before? Evidently yes.

In recent weeks, on the local front, we have learnt that One Stop Border Posts (OSBPs) is the solution to non-tariff barriers. This topic was drilled amongst the press till it got boring. The focus soon thereafter shifted to the implementation of a border management agency (BMA) – all of government under one roof – so simple. The reality is that there is no silver-bullet solution to African continental integration. Of this, affected business, Customs administrations and the international donor community is acutely aware. While the WTO and the multitude of trade lawyers will ‘yadder’ on about ‘diversification’ in trade, the reality is that Africa’s raw materials are even more sought after today than at an any time before. Certainly those countries which contain vast resources of oil and strategic minerals are about to reap the benefits. So why would African countries be concerned about diversification when the petro-dollars are rolling in? Perhaps greed or lack of foresight for the medium to long-term well-being of countries and their citizens? The fact remains, without homegrown industries producing goods from raw materials, most of  Africa’s eligible working class will continue to be employed by foreign mineral moguls or the public service.

Several customs and infrastructure solutions have over the last few years emerged with the usual credential of “WCO or WTO compliant”. Africa has been a guinea pig for many of these solutions – ‘experiments’ if you prefer. Literally millions of dollars are being spent every year trying out so-called ‘best-of-breed’ technology which users unfortunately accept without much questioning. The cart is being placed before the horse. Why? because the underlying route cause/s are not being identified, understood (sufficiently) and prioritized. Insofar as there exists no silver bullet solution, neither is there a single route cause in most cases. Unfortunately, donor aid often comes with its own pre-conceived outcomes which don’t necessarily tie in with those of the target country or the well-being of the continent.

While governments like to tout the ‘big-hitting’ projects, there are several ‘less exciting’ (technical) areas which countries can address to kick-start the process. One of these has even been recognised by the likes of the World Bank and OECD notwithstanding capital-intensive programs which promised much and have not delivered fully on their promise.  The issue at hand is the harmonisation of customs data. It might at first sound irrelevant or trivial, yet it is the key enabler for most Customs Modernisation initiatives. While there is still much anticipation in regard to the forthcoming deliberation and outcome of the WCO’s Globally Networked Customs (GNC) initiative at June’s WCO Policy Commission session in Brussels, there is significant support for this approach on the African continent. The momentum needs to be maintained.

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