Information gathering by revenue authorities – What about the cost?

The powers of the South African Revenue Service (SARS) to gather information were extended significantly in Chapters 4 and 5 of the Tax Administration Act, No 28 of 2011 (TAA) that took effect on 1 October 2012.

Greater powers were deemed necessary because “… too many requests for information by SARS result in protracted debates as to SARS’s entitlement to certain information.” (SARS Short Guide to the TAA, at p23)

Clearly information is central to the SARS business model: “By increasing and integrating data from multiple sources, SARS will increasingly be able to gain a complete economic understanding of the taxpayer and trader across all tax types and all areas of economic activity.” (SARS Strategic Plan 2013/14 – 2017/18, at p25) Information-gathering under the applicable TAA provisions is a costly exercise for SARS, taxpayers (both corporate and individuals) as well as for advisers. The cost-aspect is usually not addressed in legislation empowering information-gathering by revenue authorities.

Despite this there is a strong need for ‘cost-consciousness’ relating to information requests – simply because of the compliance cost impact.

The SARS Strategic Plan specifically states, in order to achieve the objectives of the National Development Plan, SARS will promote effective government by “Reducing the cost of compliance and the cost of doing business in South Africa” (at p13). Hence, one of SARS’s future initiatives would be to “Continue to implement the principles of a cooperative compliance approach to reduce compliance costs…” (at p34). SARS also acknowledges under “Small business and Cost of Compliance” that the “relatively high cost of compliance” might be a reason for non-compliance by small business (see at p43).

So how does a revenue authority inculcate a culture of “cost-consciousness” when it comes to information-requests by its officials? The Australian Tax Office (ATO) has gone down this road in its Access and Information Gathering Manual: Said Manual explains the law relating to the ATO’s statutory information-gathering powers and indicates how ATO officials should exercise such powers. [The Manual is available on the ATO website].

 The following reflects the ATO’s philosophy on information gathering (as communicated by the then Commissioner): “These guidelines are to assist my staff and ensure we apply a professional and, as far as possible, open approach to the exercise of our access and notice powers. These powers must be used with the utmost care and we aim only to fulfil my obligations under the legislation. A consultative approach to obtaining the information should be the norm. Consultation generally involves advance notice and flexibility in meeting reasonable requests.”

It is, furthermore, important to the ATO that costs associated with information-gathering should be curtailed: “In deciding whether to seek access, and in determining how much detail to seek, officers should always try to minimise the cost to the recipient of meeting access requests. Particularly in cases of seeking bulk data, request should be made only if there is a reasonable chance that there will be a substantial compliance impact relative to cost. On occasions sampling may be required to determine the benefits of obtaining bulk data. Also where bulk data is requested, officers should try to fit in with the custodian’s circumstances (for example seeking information from the custodian’s IT systems at times when it will not disrupt operations) and recognise the time and cost of obtaining such information.” (emphasis added)

The ATO then provides practical guidance to its officials considering an information request, alternatively where they intend accessing premises to obtain information/documentation. The ATO official is instructed to ask certain questions before requesting the information/accessing any premises. [The following is a summary of the guidance from the ATO Manual]:

For what purpose and under which law do you require information?

The access provisions can only be used for the purposes of the Act. You must be clear on your reasons for seeking particular documents. You should be able to show a clear connection between the use of the access power and one of the purposes of the Acts. Like all statutory powers, you must exercise the right of access in good faith for the purposes for which it was conferred.

What information do you already have?

You should ensure that the taxpayer or the third party has not already provided the documents to the ATO, eg in support of a request for a private ruling.

What information do you need?

You should establish, as far as possible, what particular books, documents and papers are needed and whether the information they might contain is necessary for the purposes for which you are seeking access. Is it likely that the information will be located at the premises you propose to access or from the person you propose to give a notice to?

Can you obtain relevant information from another source?

Before using access powers, be reasonably sure that you are approaching the right person. If the information is available from more than one source, you should consider the cost to each party and who might be the appropriate party to bear the cost. In the majority of cases, tax officers should try and obtain the information and documents from the taxpayer prior to contacting third parties, such as advisers and banks. The cost to the ATO, and whether the exercise if cost-effective, should also be considered.

Are you authorised to seek access?

You must be properly authorised to exercise access powers.

Can you obtain access to the relevant information on an informal/cooperative basis?

If you think you can obtain the information by making telephone contact, sending an informal letter or searching other sources, the access powers should not be used. However, it is not necessary for all other avenues of enquiry to have been exhausted or to have used the notice powers before resorting to the access powers. You should be able to conclude that the occasion is one that reasonably requires you to enter premises and inspect documents.

Is it necessary to exercise formal access powers?

In circumstances in which privacy or confidentiality require that the formal access powers are used, consultation beforehand should encourage cooperation. Consultative procedures may include: giving the custodian reasonable notice of your intention to obtain access; liaising with the custodian about a convenient time to seek access, taking into account the workflow demands on the custodian; giving adequate information to ensure that custodians are fully aware of their rights and obligations in relation to access requests and so on.

Minister Gordhan, in his foreword to the SARS Strategic Plan (at p6), anticipates that over the next four years “… the demands on revenue collection growth will be between 10% and 11% per annum”. For example, SARS would need to collect R1.09 trillion in revenue by 2015/16. To achieve those kinds of revenue targets probably means increasing levels of information-gathering. Seeking to reduce the cost of compliance requires that locally ‘cost-consciousness’ must become part of the information-gathering equation – and that a way is found to limit, and hopefully reduce, the costs associated with information-gathering under the TAA. Source: Written by Johan van der Walt, Director, Tax, Cliffe Dekker Hofmeyr – sourced from www.polity.org.

Parliament Postpones Customs Bills

Thaba Mufamadi, chairman of Parliament’s finance committee. Picture - Financial Mail

Thaba Mufamadi, chairman of Parliament’s finance committee. Picture – Financial Mail

Parliment’s standing committee on finance (SCoF) has decided to postpone its deliberations on two draft customs-related bills until next year to allow importers and the freight-forwarding industry more time to comment on the proposals which threaten the status of City Deep as an inland port. This followed an appeal by the South African Association of Freight Forwarders that it had had insufficient time to consider the substantially revised draft Customs Control Bill and Customs Duty Bill, which required that imported goods would have to be cleared at the first point of entry.

The association, supported by a range of other business organisations, including the Johannesburg Chamber of Commerce and Industry, warned that the bills could be challenged on constitutional grounds if the process of consultation was deficient. All political parties supported the proposal by finance committee chairman Thaba Mufamadi on Wednesday that the deliberations on the bills be postponed until next year. He instructed stakeholders to make their submissions to the South African Revenue Service (SARS) by December 15.

Mr Mufamadi also took cognisance of concerns raised by Business Unity South Africa that parliamentary processes did not allow sufficient time to comment, for example, on the medium-term budget policy statement. Industry has warned of port delays and trade disruption if the proposals were to be adopted. The Customs Control Bill proposes that goods be cleared at the first port of entry into South Africa. This will mean that inland ports such as City Deep in Johannesburg would no longer be designated places of entry or exit for customs purposes. In the past, containerised cargo could move directly to inland ports on arrival in the country under cover of a manifest. A new declaration — of the nature, value, origin and duty payable on the goods — would replace the manifests.

SARS said these did not provide sufficient information to undertake a risk assessment. Another bone of contention for industry was the “extremely severe” penalties proposed in the draft Customs Duty Bill. Following the uproar about the proposals SARS offered a compromise earlier this week as a way out of the impasse. Instead of a clearance at the port of entry, a mandatory advance customs clearance of the goods three days before their arrival at the first port of entry would be required. Goods consigned to inland terminals such as City Deep would be released conditionally. The system would be tested for the whole of next year to iron out any problems.

An alternative option would be for the goods to undergo a lesser form of clearance at the first point of entry. This would still entail providing customs authorities with the same level of information on the tariff, value and origin of goods, which would be submitted by electronic data interchange. The importer would be held accountable for the information that was provided. SARS official Kosie Louw said that because this document would not have the formal status of a clearance certificate, it would not disrupt existing legal contractual arrangements, as claimed. The goods would still move CIF (cost insurance and freight) from the port to City Deep. SARS has also proposed softening the penalty provisions so that errors not resulting in any prejudice to customs revenue will be subject to penalties only after three warnings. These penalties will be discretionary and applied leniently in the first 12 months of the bill coming into force to allow business time to properly prepare for the change. An appeal process has been included. Source: Business Day Live. 

SARS to address Stakeholders on Customs Control proposals

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

SARS chief officer of legal and policy Kosie Louw (Picture: Robert Botha/Business Day Live)

The South African Revenue Service (SARS) has committed itself to further engagements with importers of all sizes in a bid to improve its proposals to transform the customs control regime.

Consultations have already taken place with organised business on the proposed Customs Duty Bill and the Customs Control Bill, and the process would now be taken to the level of traders to find out whether the proposals presented them with any problems. Amendments have also been proposed to the Customs and Excise Act to provide for the transition to the new system.

“We want to understand the situation at a micro level. We will sit around the table until we find a solution which will guarantee to us that we get the information we require but which will also facilitate trade.

“We do not want to clog up the ports,” SARS chief officer of legal and policy Kosie Louw said in an informal briefing on the proposals to Parliament’s standing committee on finance on Wednesday.

The customs bills are mainly concerned with improving the information about imported and exported goods so that customs officials can exercise greater control.

Business has expressed concern that the requirement of the Customs Control Bill that they submit a national in-transit declaration of goods at the first port of entry before they are sent to internal terminals, or depots such as City Deep, would cause delays.

The new declaration — of the nature, value, origin and duty payable on the goods — would replace the limited manifest used to declare goods and would include information on the tariff, value and origin of goods.

Business has argued that the manifest allowed goods to move seamlessly from the exporting country to the inland port or depot, and would change the contractual relationships between exporter and importer in terms of when duty is paid.

However, Mr Louw did not believe the provision would cause delays and had obtained legal advice that the contractual relationships and method of payment of duties would not change. The problem with manifests, he said, was that they provided very limited information and did not allow SARS to prevent the inflow of unwanted goods. Nevertheless, he said that SARS would discuss the matter with traders.

Mr Louw said the proposed system would “improve SARS’s ability to perform risk assessment and intervene in respect of potentially high risk, prohibited and restricted consignments at the ports”.

The bills have been in the pipeline for about four years and have been extensively canvassed with the Southern African Customs Union and business. They were needed, Mr Louw said, so that South Africa kept pace with global trends in trade, international conventions and advances in technology.

Anti-avoidance provisions have also been introduced into the bill which sets out the offences and associated penalties for noncompliance and attempts to avoid paying customs duties.

SARS group executive for legislative research and development Franz Tomasek said the Customs Control Bill would introduce a new advance cargo loading notice for containerised cargo to prevent the loading of prohibited or restricted goods on board vessels bound for South Africa. However, to reduce the administrative burden on carriers, information submitted in advance will no longer be required on arrival or prior to departure. Source: Business Day Live

 

South Africa’s New Integrated Customs Border Management Solution

Amidst diverse expectations and feelings of excitement, anxiety and anticipation, the South African Revenue Service (SARS) migrated to its new integrated Customs and Border Management solution over the weekend of 17 August 2013. A new modern electronic solution Interfront can now rightfully claim some success even if it is an unseen component within a multi-layered, multi-technology solution of which South African Customs is now the proud owner. After 9 months of rigorous parallel testing between old and new, and a period of dedicated external testing with Service Providers of the customs business community, the decision to implement was formally agreed with trade a fortnight ago.

Interfront Customs and Border Solution (iCBS) replaces several key legacy systems, one of which has served South Africa for more than 30 years. The vast business and technical competence and skills which faithfully maintained and supported the old systems are to some extent in the wilderness now, but will hopefully find place within the new technology environment. While technology nowadays is particularly agile, and human physical placement at the coal face is under threat, organisations like SARS will always require customs technical business and policy competence to maintain the cutting edge.

There still remains an enormous amount of work to do regarding the alignment of the new clearance system with the specific guidelines, standards and principles of the WCO. With regional integration becoming more prominent on the sub-Saharan African agenda, the matter of ‘facilitation’ and ‘non-tariff barriers’ will inevitably become more prominent discussion points. Other salient features of the SAFE Framework of Standards such as Authorised Economic Operators and IT connectivity have already emerged as key developmental goals of a number of regional customs and border authorities. The timely introduction of Interfront places SARS in a pivotal position to influence and enable the required electronic linkages, crucial for the establishment of bi-lateral and multilateral trade agreements, transport corridors, and, support for ‘seamless’ multi-modal movement of cargo from port of discharged to its place of manifestation with limited intervention, based on the principles of risk management. Enjoy the Interfront video feature.

 

Mozambique Customs gets a new DG

Guilherma Mambo presenting the Mozambique Single Electronic Window at the SADC ICT Conference, in Mauritius, 2012.

Guilherma Mambo presenting the Mozambique Single Electronic Window at the SADC ICT Conference, in Mauritius, 2012.

Guilherme Mambo has just been appointed Director General Mozambique Customs on the 10th May 2013. Until then he was Board Director of MCNet – Mozambique Community Network the PPP responsibly for implementation of Electronic Single Window for customs clearance in Mozambique where he were responsible for implementation and operations. In recent months he has lead Mozambique’s bi-lateral engagement on IT-Connectivity and Data Exchange with his counterparts at the South African Revenue Service (SARS).

For the past 10 years Mambo served as director IT Mozambique Customs and then for Mozambique Revenue Authority. On this role he participated in various modernization projects aimed at improving the business environment in Mozambique through improvement of public services particularly the complete organizational transformation of customs and internal tax areas.

Prior to working with customs and MRA, he worked in aviation industry and a UN lead project in Chechnya, Liberia, Angola were he was exposed multifaceted international experience.

As Director General – Mozambique Customs his responsibility is to manage the General Directorate of Customs (DGA) a paramilitary organization with around 2000 staff, one of the two major collectors of government revenue derived from external trade largely from customs duty, excise duty and the Value Added Tax (IVA).  DGA is also a law enforcement agency that undertakes the control of imports and exports for the protection of revenue to prevent evasion of duties and taxes and assists in the promotion of the community’s well-being to prevent the smuggling of controlled, prohibited and restricted goods (such as illicit narcotic drugs and firearms). The Director General heads the DGA and his assisted by three Deputy Director General each of one have a specific area of responsibility.

Importing and Exporting in the absence of Customs Registration

Import exportAs of May 10 2013 an amendment to the South African Customs and Excise Act (91/1964) published in Government Gazette 36433, concerns an increase to the threshold for importation and exportation in the absence of customs registration.

General Registration Code 70707070 may be used by a party that is not registered as an importer or exporter with the South African Revenue Service, but wishes to import or export goods, provided that the following requirements are met:

  • The goods have a value of less than R 50,000 per consignment, subject to a limitation of three such consignments per calendar year;
  • The goods are declared for home consumption (ie, consumption or use in South Africa) or temporary import or export;
  • The importer or exporter is a natural person located in South Africa; and
  • The importer or exporter states its identity number or taxpayer reference number on the customs declaration form.

Traders should not confuse the above with the withdrawal of the General Registration Code from use by importers and exporters at land borders, which occurred during the course of 2012. In this regard refer to Rule Amendment Government Gazette No. 35178

Corruption at Durban Harbour – the plot thickens

With reference to an earlier post “Trade costs and corruption in Ports of Durban and Maputo” (March 2012) the following article ‘Hawks probe Khulubuse Zuma’s pal’ published by the Daily News (Durban) suggests more sinister individuals involved in the scam which saw a policeman being gunned down at his home and no less than 10 SARS officials placed on suspension. A web of intrigue indeed.

A wealthy South Africa-based Taiwanese businessman and former business associate of Khulubuse Zuma, a nephew of President Zuma, is being probed for alleged links to a multibillion-rand racket at Durban Harbour. In June the Hawks in KwaZulu-Natal secured a warrant of arrest for Jen Chih “Robert” Huang, CEO of Johannesburg-based company, Mpisi 74, when investigators from the elite unit also raided Huang’s business in Bedfordview, and his home.

Huang, a convicted murderer, was in Hong Kong on business when the warrant was issued, and it has not been executed after he side-stepped the Hawks by directly approaching the National Prosecuting Authority (NPA) to make representations as to why he should not be arrested. The businessman, part of a delegation that accompanied President Zuma on a state visit to China in 2010, is wanted on multiple counts of alleged corruption.

According to Daily News, Huang denied having any links to alleged illegal activity at the harbour, and referred all queries to his attorney. “I have been out of the country. “Speak to my attorney in Durban. He is handling all matters related to my company.” His attorney, Quintus van der Merwe, confirmed representations had been made to the State, but declined to comment further.

The warrant for Huang’s arrest came weeks after a former South African Revenue Service (Sars) anti-corruption task team member, Etienne Kellerman, was arrested on 80 counts of alleged corruption. Kellerman, 42, is suspected of receiving substantial benefits for allegedly allowing contraband through the harbour. The Daily News broke the story when Kellerman was arrested in April this year after a three-year covert investigation. An international syndicate that was allegedly bribing customs and police officials to allow in container-loads of contraband, was also exposed by the Hawks.

Sars spokesman, Adrian Lackay, told the Daily News that following the joint investigation with police over several months into the existence of a criminal syndicate operating at Durban Harbour, 10 Sars employees had been suspended. “Their suspensions follow the arrests of other suspects outside of Sars. These employees were suspended over a three-week period following the arrest of Kellerman on charges related to fraud, theft and misconduct,” he said.

“The 10 employees remain suspended pending the outcome of an internal investigation into alleged involvement with clearing agents.” Over the past two years, during this investigation, police seized more than R1 billion worth of counterfeit goods and contraband. The alleged corrupt Sars and police officials are believed to be working in teams between KZN and Gauteng. They are allegedly paid bribes of up to R30 000 for each container allowed to pass through customs undetected. Big name international companies, mainly from China, are also being investigated. Kellerman has pleaded not guilty and is on R100 000 bail.

According to its website – before it was removedMpisi 74 is a massive concern, offering a range of services, including import, export, forwarding, warehousing, cellphone telecommunication and machinery, as well as vehicle manufacturing. Just days after Huang was contacted by the Daily News, the website was taken down.It had even boasted pictures of the president’s nephew, Khulubuse Zuma, with the Taiwanese businessman at the company’s headquarters in Bedfordview, on December 9, 2009. The Mail and Guardian, in January, described Huang as the influential middleman in deals between Chinese companies and Khulubuse Zuma. It said Huang was also instrumental in introducing Chinese vehicle manufacturer, Dong Feng Motor Corp, to Khulubuse Zuma, who at one point was the “chairman” of Mpisi.The report said that in 2010, Dong Feng announced a joint venture with Khulubuse Zuma and Huang to distribute its products in South Africa and the rest of the continent.In 1998, Huang was convicted of the murder of a Taiwanese businessman, Ching-Ho Kao, who was found shot dead in March 1996, in the Free State. His body was set alight. The trial began in the Bloemfontein High Court in November 1997. The indictment claimed the motive for the murder was that Kao’s family owed Huang money. Huang was sentenced to an effective 12 years in prison. But, through remission of sentence, he was released in 2003 and set up Mpisi 74.

Source: Daily News (Durban)

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New Tax law to give SARS upper hand

Taxes

News24.com reports that legislation allowing the SA Revenue Service (Sars) to search business premises without a warrant is expected to come into operation within the next three months. The Tax Administration Bill was promulgated into law on Wednesday in the Government Gazette, Sars said in a statement on Thursday.

The act will come into operation on a date to be determined by the President  by proclamation in the gazette.

“Sars’s preparations for the implementation of the act are at an advanced stage and it is anticipated that it will come into operation within the next three months,” it said.

The act was intended to simplify and provide greater coherence in South African tax administration law. It eliminated duplication, removed redundant requirements, and aligned existing disparate requirements in different tax acts ranging in age from four to 63 years old. It created a single, modern framework for the common administrative provisions of the tax acts.

“Most taxpayers are compliant, and the act should ensure better service and a lower compliance cost for them,” Sars said. “Sars is, however, duty-bound to actively pursue tax evaders in order to maintain compliant taxpayers’ confidence in the integrity of the tax system.”

Key features of the act include:

  • A move to a single registration process and number across taxes to reduce red-tape and streamline the system, and self-assessment of taxes so taxpayers need not wait for a Sars assessment;
  • Greater access to third-party data to underpin Sars initiatives, such as the pre-population of individual tax returns;
  • Clearer rules on Sars access to information, so tax liabilities can be determined more quickly and accurately;
  • The ability to search business premises without a warrant in narrowly-defined situations, where the general requirement for a warrant will defeat the object of the search, so Sars can act when tax is at serious risk and time is of the essence;
  • Clear requirements and timelines for issuing tax clearance certificates to provide greater certainty and responsiveness to business;
  • Feedback on audit progress and findings to engage more fully with taxpayers and ensure they understand the reasons for any adjustments;
  • Specific timeframes for decisions of the Tax Board (a “small claims court” for tax) and wider reporting of Tax Court decisions to improve access to justice; and
  • The appointment of a Tax Ombud, informed by international experience, to provide taxpayers with a low-cost mechanism to address administrative issues that cannot be resolved through Sars’s normal channels.

Although the act provided for a year from its commencement for the appointment of the Tax Ombud, Finance Minister Pravin Gordhan announced in his 2012 Budget speech that the ombud would be appointed this year. Source: News24.com

“Sars is, however, duty-bound to actively pursue tax evaders in order to maintain compliant taxpayers’ confidence in the integrity of the tax system.” 

Who is going to pursue corruption and wasteful expenditure in order to maintain the citizens confidence in paying tax in the first place?

Revisiting the national transit procedure – Part 1

FTW Online last week ran an interesting article in response to a proposed change in Customs’ policy concerning the national transit movement of containers from coastal ports to inland container terminals and depots. In February 2011, I ran an article Customs Bill – Poser for Cargo Carriers, Handlers and Reporters alluding to some of the challenges posed by this approach. The following article goes a step further, providing a trade reaction which prompts a valid question concerning the practicality and viability of the proposed change given logistical concerns. I believe that there is sufficient merit in the issues being raised which must prompt closer collaboration between the South African Revenue Service and trade entities. For now it is sufficient to present the context of the argument – for which purpose the full text of the FTW article is presented below. In Part 2, I will follow-up with SARS’ response (published in this week’s edition of the FTW) and elaborate on both view points; as well as consider the matter  on ‘raw’ analysis of the ‘cargo’ and ‘goods declaration’ elements which influence this matter. Furthermore, one needs to consider in more detail what the Revised Kyoto Convention has to say on the matter, as well as how other global agencies are dealing and treating the matter of ‘security versus facilitation’.

Customs’ determination to have all goods cleared at the coast does not bode well for the South African trade environment, Pat Corbin, past president of the Johannesburg Chamber of Commerce and Industry (JCCI), said. Speaking at the Transport forum in Johannesburg Corbin said the Customs Bills have been on the cards for several years now and while consensus had been reached on most issues in the Nedlac process, the determination of Customs to not allow for any clearing to take place at inland ports will only add more pressure to the already overburdened ports in the country. “Customs maintains that despite the changes they propose it will be business as usual. We disagree. We have severe reservations about their intention to terminate vessel manifests at the coastal ports in all cases and have called for further research to be undertaken in this regard,” said Corbin. “By terminating the manifest at the coast it has severe ramifications for moving goods from road to rail. International experience has shown when you have an inland port and you have an adequate rail service where the vessel manifest only terminates at the inland port, up to 80% of the boxes for inland regions are put on rail while only 12% land on rail if the manifest terminates at the coastal port.” Corbin said the congestion at both the port and on the road would continue and have an adverse impact on quick trade flows. “It also raises issues around the levels of custom security and control at inland ports and then the general implications on the modernisation project.” According to Corbin, government’s continued response has been that no provision exists for inland ports and that goods must be cleared at the first port of entry. “They maintain that it is about controlling goods moving across our borders and thus the requirement that all goods must be cleared at the first port of entry. The security of the supply chain plays an important role to avoid diversion or smuggling of goods,” said Corbin. “Government says that the policy change will not clog up the ports or prohibit the seamless movement of trade. Labour organizations and unions seem to agree with them.” But, Corbin said, the Johannesburg Chamber of Commerce differs and is worried about the ramifications of this dramatic change to the 35-year-old option of clearing goods at an inland port or terminal. “With this policy change all containers will have to be reconsigned after not only Customs clearance on copy documents but also critically, completion of shipping lines’ requirements ie, payment of freight, original bill of lading presentation and receiving delivery instructions prior to their issuing a delivery order.” Corbin said the issue had been addressed directly with Transnet CEO Brian Molefe on two occasions, but that he had said he accepted Customs’ assurance that nothing would change and the boxes would still be able to move seamlessly once cleared. “It is not understood that the manifest will terminate at the coast where all boxes will dwell until they can be reconsigned,” said Corbin. Source: FTW Online – “New Customs Bill ruling will put pressure on port efficiency.”

Countdown to D-Day

In little over 2 weeks from now, the South African Revenue Service together with its business partners in South African commercial trade will usher in a new customs clearance dispensation. Notwithstanding many trials and tribulations on both sides, there is a steady commitment and determination to successfully introduce the single biggest change to impact the country’s import / export community. It is only right that there should be anxiety, trepidation, and cautious optimism. Modernisation in the Customs domain is not new, internationally, and most definitely not in South Africa. Obvious too are those who wish to detract from the hard work already accomplished, to the point of seeking any fracture, shortcoming or delay as reason to doubt the ability of this country to implement a modern electronic trading environment.

True, there is a lot of reputation at stake…surely all the more reason to toil tirelessly over the last remaining weeks to best prepare ourselves for this event. In reality it is my wish that this event be a ‘non-event’ – to the extent that it provide as seamless as possible a transition for internal and external users. However, that is wishful thinking since the sheer scope of this programme necessitates ‘challenges’ to both 3rd party service provider, trader, trade practitioner, and customs policy makers alike. Over the last 2 months, not a day has gone by without one or other procedure, policy or IT technical issue being raised which necessitates a rethink or alternative consideration.

Modernisation programmes have a transitional element which poses difficulties in terms of timing and coordination. In the South African context the first phase is about putting Customs and the trading community in the right space to migrate from dated legacy clearance practices to principles of a new customs legal dispensation – to be introduced sometime in 2011. Information Technology is undoubtedly the key enabler here, which is the reason SARS chose the migration from clearance by ‘purpose code’ to ‘customs procedure code’ as the catalyst to kickstart its longer term modernisation strategy. Phase 1 is the most critical delivery in that its outcome not only determines the collective ability of Customs and Trade to modernise, but the ‘apetite’ to continue the journey over the next phases of this programme to bring into being a true fully automated end-to-end supply chain.