Surge in Car Imports at ZIM/RSA Border as Dealers Panic

The Herald - Surge in new car imports between ZIM-RSAThere is a drastic increase in motor vehicle imports through Beitbridge border post as dealers are rushing to buy cars before the proposed 20 percent customs duty increase on imported motor vehicles comes into effect on November 1.

Finance and Economic Development Minister Patrick Chinamasa announced recently the Government intendeds to increase duty of motor vehicles which he said contributed 10 percent of the import bill in the first half of this year.

He proposed an increase in customs duty on single cab of a payload more than 800kgs from 20% to 40%, buses of carrying capacity of 26 passengers and above from 0% to 40%, double cab trucks from 40% to 60%, and passenger motor vehicles of engine capacity below 1500cc from 25% to 40%.

Customs duty for vehicles with engines above 1500cc has not been changed from 86 percent inclusive of VAT and Surtax. The development has raised anxiety among most Zimbabweans who are now rushing to buy second hand cars from Japan some of which come through South Africa.

Zimbabwe Revenue Authority (Zimra) is processing an average of 170 car imports at the border post per day since the beginning of October. Prior to the announcement Zimra used to process between 60 and 70 car imports per day. ZIMRA officers at the border said in separate interview yesterday that they were battling to clear the vehicles at Manica Transit Shed where 300 new cars arrive per day.

“We used to get 100 to 150 cars per day , but now the number has doubled and is ever increasing,” said one of the officers.

A sales manager at Wright Cars on the South African border, Mr Clemence Mabidi said the demand of cars with small engines such as Nissan March, Honda Fit, Toyota Vitz, Toyota Corolla, Toyota Raum and Fun Cargo had increased.

“We used to sell around 20 cars per day but now the number has increased to 40 and we have a backlog in deliveries to Zimbabwe.

“We are now hiring other car carriers to take the vehicles across the border,” he said.

Mr Mabidi said even the small car dealers who used to sell between 5 and 10 cars per day were now selling up to 20 vehicles. Some dealers have also reduced prices while others are increasing the prices because of the demand. A modest vehicle costs between $2500 and $3000 at these dealerships. Source: The Herald

Operation “Warehouse” – Joint Customs Operation prevents losses to the EU States

OLAFAlmost 45 million smuggled cigarettes, nearly 140.000 litres of diesel fuel and about 14.000 litres of vodka were seized during a major Joint Customs Operation (JCO). The Operation code-named “Warehouse” was carried-out in October 2013 by the Lithuanian Customs Service and the Lithuanian Tax Inspectorate in close cooperation with the European Anti-Fraud Office (OLAF), and with the participation of all 28 EU member states. As a result of Operation “Warehouse”, a significant potential loss to the budgets of the European Union and its Member States was prevented. According to preliminary estimates, this would have amounted to about € 9 million in the form of evaded customs duties and taxes. The final results of the Operation were discussed by the participants last week at a debriefing meeting in Vilnius and were made public today across Europe.

Algirdas Šemeta, Commissioner for taxation, customs, anti-fraud and audit, welcomed the very good results of the operation. “The fight against the smuggling of excise goods is one of our political priorities and we have launched a number of initiatives to better equip Europe against such harmful practices being run by organised criminal networks. JCO Warehouse is a good example of how the EU and Member States’ authorities can cooperate effectively to protect their revenue. Joint Customs Operations safeguard the EU’s financial interests and also protect our citizens and legitimate businesses”, he said. “Such Operations also highlight the added-value of OLAF in helping facilitate the exchange of information between our partners across Europe and in providing effective operational support.”

Operation “Warehouse” focused on cargo movement by road transport. It targeted the smuggling and other forms of illegal trade of excise goods such as mineral oil, tobacco products and alcohol throughout Europe. By using several complex scenarios in multiple EU Member States, fraudsters lawfully import goods into the EU but request a VAT and excise exemption by declaring the goods as subject to tax and duty exemption regimes (e.g. declaring the goods to be in transit). The trace of the goods is then lost through the fictitious disappearance of the traders or through a fictitious export. Fraudsters avoid paying VAT and excise duties, but the goods remain in the internal market, causing a substantial loss to the EU’s and Member States’ revenues.

JCO “Warehouse” was the first Operation carried-out in close cooperation with tax authorities to target excise and VAT fraud specifically, besides customs fraud. For the first time, customs and tax authorities cooperated on a European scale in a JCO. This is a significant achievement since the different competences and legal regimes applicable at national and EU level make it difficult to address complex fraud schemes with uniform measures. In this Operation, customs and tax authorities joined their expertise, resources and shared intelligence to prevent losses to the EU’s and Member States’ budget.

Eight seizures were made during the Operation. Among these, authorities seized 6.617.400 cigarettes in Sweden and Lithuania; 135.831 litres of diesel in Poland and the United Kingdom, and 14.025,6 litres of vodka in United Kingdom alone. Overall, 44.957.160 cigarettes were seized.

During the entire Operation “Warehouse”, OLAF provided organisational, logistical, financial and technical support to allow for an exchange of information and intelligence in real-time. This was coordinated from the Physical Operational Coordination Unit (P-OCU) at the OLAF premises in Brussels which facilitated direct communication with the national contact points. A group of liaison officers from some Member States representing all the participating 28 EU countries, worked from here during the Operation and experts from the Commission’s Directorate-General for Taxation and Customs Union provided support.

EUROPOL participated as an observer in the Operation. A representative of the office was present at the P-OCU during the operational phase of the operation. It was also possible to make direct cross-checks of suspect individuals and companies appearing during the JCO with EUROPOL via a secure internet connection. Source: EU Commission

China ‘VAT’ Syndrome – Uncertainty for International Forwarders

VAT-TAXGreg Knowler, of maritimeprofessional.com reports, “Whenever there is uncertainty in a particular trade, the container lines resolutely stick with the “shipper pays” principle. That’s understandable considering the state of the industry, but not exactly fair on their customers”.

For the last couple of decades shippers have been complaining that the host of extras they are charged – more than 100, according to the HK Shippers’ Council – should be built into the freight rates that are negotiated between them and the lines.

From this month [August 2013] there will be another charge levied – a six percent VAT charge on top of all charges payable in China, according to Lloyd’s List. Many of the major carriers have informed their customers, but the news has not been received with much enthusiasm.

China is changing its tax system from a turnover tax on companies’ gross revenue to a VAT, which is levied on the difference between a commodity’s pre-tax price and its cost of production.

Beijing rolled out a VAT pilot programme to test the market and iron out the bumps, starting in Shanghai in January last year. In September Beijing was included followed by a gradual nationwide rollout before the new system kicks in tomorrow.

But there is still major uncertainty in this new tax regime, and that is providing great consternation for shippers and the carriers. International shipping is not liable for VAT, so why should carriers impose a six percent VAT levy on customers, asks Sunny Ho of the HK Shippers’ Council.

The problem is that international container lines are not sure whether they are exempt from VAT or not. All the carriers have China offices and as that is where the billing of mainland shippers originates, so they fear Beijing may treat them as agents instead of international shipping services, which means their business will be eligible for the tax.

Maersk Line has decided to wait until mid-August before levying the six percent VAT on mainland charges to see how the situation unfolds. That is a welcome gesture and one that should be followed by all the international shipping lines.

With so much uncertainty surrounding the nationwide rollout of the new tax regime, how can carriers justify slapping customers with a VAT levy before the actual impact of that VAT can be measured?

It is a grasping approach that the lines instinctively default to when faced with the possibility of rising costs. It may serve to protect the bottom line, but it continues to reinforce the traditional unhealthy and antagonistic relationship between them and their customers.

The lines should wait until the costs of China’s VAT have been established and those costs should then be built into the freight rates. Surely that is the only reasonable approach. Source: www.maritimeprofessional.com

Draft Taxation Laws Amendment Bill, 2011 – Impact on Customs

As if the myriad of changes affecting the Customs industry are not enough, there’s some more important considerations for customs traders and practitioners, soon, posed by the Draft Taxation Laws Amendment Bill [2011].

Goods Sold in Bond. For the purposes of the VAT Act, the Bill proposes that ‘the value to be placed on the importation of goods into the Republic which have been imported and entered for storage in a licensed Customs and Excise storage warehouse but have not been entered for home consumption shall be deemed to be the greater of the value determined in terms of subsection (2)(a) or the value of acquisition determined under section 10(3) if those goods while stored in that storage warehouse are supplied to any person before being entered for home consumption.’

Duty free goods imported on a temporary basis. Goods imported in terms of Rebate Item 470.03, which are duty free, will in future have to be declared under a specific rebate sub-item for duty free goods. In addition, provision is also to be made for the importer of duty free goods, where the importer is contractually entitled to keep a portion of the goods manufactured, processed, finished, equipped or packed in lieu of payment for the operations carried out, that importer must:
a) export those goods within the 12 month period, or
b) process a goods declaration for payment of the VAT on the goods retained and pass a voucher of correction amending the quantity and value of the original declaration.

New tax incentives for Industrial Development Zones. Government is seeking to renew its efforts to enhance the Industrial Development Zone (IDZ) regime to encourage industrial development within certain geographical areas. The main focus of the incentive is to promote capital expenditure. Greenfield projects receive an additional 55% allowance and brownfield projects receive a further 35% additional allowance. The additional allowance for greenfield projects located in IDZ’s will be increased to 100% (instead of the current 55%) and to 75% for brownfield projects (instead of the current 35%).This change will be welcomed by IDZ Operators that are constantly looking for ways to make IDZ’s more attractive. In terms of the Customs and Excise Act, it should be noted that duty rebate and VAT dispensations ONLY apply to entities establishing licensed premises within the customs controlled area of an IDZ.

For more information on the above please click here!

The Draft Taxation Laws Amendment Bill, 2011 is available on the SARS website.