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ELECTRONIC MONITORING OF EXPORTS – PHASE 2 OF THE PILOT PROJECT

ELECTRONIC MONITORING OF EXPORTS – PHASE 2 OF THE PILOT PROJECT. INTRODUCTION - AIMS. Electronic matching and monitoring of exports. Replace the present paper-based and manual system of Form F178s with an electronic system.

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ELECTRONIC MONITORING OF EXPORTS – PHASE 2 OF THE PILOT PROJECT

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  1. ELECTRONIC MONITORING OF EXPORTS – PHASE 2 OF THE PILOT PROJECT Updated 2006-10-01

  2. INTRODUCTION -AIMS • Electronic matching and monitoring of exports. • Replace the present paper-based and manual system of Form F178s with an electronic system. • Attesting and acquitting of Form F178 by AD/bank fall away. • Streamline the export procedures – no Form F178. Updated 2006-10-01

  3. INTRODUCTION -REGULATORY REQUIREMENTS • In terms of Regulation 6, Treasury prescribes a declaration to be completedin respect of goods exported. • Form F178 format prescribed in terms of Section 5 of the Order and Rules under the Exchange Control Regulations. • Presently Forms F178 administered by the Authorised Dealers (“ADs”). • ADs monitor repatriation of export proceeds within the prescribed time limits. Updated 2006-10-01

  4. 5 4 RESIDENT EXPORTER AD reports export proceeds SAD 500 data to SARB 2 3 Goods SARB INTRODUCTION-PROPOSAL NON-RESIDENT IMPORTER 1 CUSTOMS SAD 500 Only Updated 2006-10-01

  5. INTRODUCTION -BACKGROUND TO THE PROJECT • An alternative system became possible with the implementation of the BoP System. • Planning and co-operation with Customs (SARS). • Necessary changes in legislation introduced. • Discussions with role players involved with exports. Updated 2006-10-01

  6. INTRODUCTION - PILOT PROJECT MAIN IDEAS • Basis of proposed solution is to replace the F178 with an amended DA 550/SAD 500. • Pertinent information on the Form F178 to be captured on the DA 550/SAD 500. • Fouradditional features on the DA550/SAD 500: • Unique Consignment Reference (“UCR”) number • Transaction Value & Swift currency code • Receiving Bank & Bank Code • Credit Terms Updated 2006-10-01

  7. INTRODUCTION - PHASE ONE • Testing of system with a random group of exporters. • Lessons learnt from Phase 1: • Training in big groups not effective • Concerns of banks, e.g. interest claims • Other matters such as compliance, communication • Report to National Treasury with recommendations. • Approval to go ahead with Phase 2. Updated 2006-10-01

  8. PHASE 2 -EXPORTERS INCLUDED • A target group of selected exporters +/- 200; • They consist of: • Exporters from Phase 1 that can match their exports; • The biggest exporters in value terms; • Others based on defined criteria. • Closed Phase 1 and started Phase 2. Updated 2006-10-01

  9. PHASE 2 - OTHER PARTICIPANTS • Freight agents: • Any Freight Agent that is EDI accredited with SARS. • Banks: • All Banks that are Authorised Dealers in South Africa. Updated 2006-10-01

  10. PHASE 2 -HOW ? • By using a unique number as a link. • The unique number is used when exporting and at customs. • The same unique number is supplied to the bankby the exporter when receiving payment. • The SARB uses the unique number to tie up exports with receipts. Updated 2006-10-01

  11. Export proceeds with ECN or UCR pre-clearance & post- clearance Export data post-clearance with ECN & UCR Nos. CUSTOMS SA BANKS SARB PHASE 2 -HOW IS IT POSSIBLE? • SARB receives two streams of data. • Customs provide SARB with export data. • Banks report to SARB on cross-border transactions. ECN & UCR Updated 2006-10-01

  12. EXPORTING -WHAT IS THE UNIQUE NUMBER? • There are two types of unique numbers which can be used for matching purposes. • The general one is called the Export Control • Number (ECN). • The other one is called the Unique Consignment Reference Number (UCR). Updated 2006-10-01

  13. EXPORTING - WHAT IS AN EXPORT CONTROL NUMBER (1)? • The ECN is generated by Customs. • It is available only post-clearance. • It is on the Customs Release Notification. Updated 2006-10-01

  14. EXPORTING - WHAT IS AN EXPORT CONTROL NUMBER (2)? • It consists of three parts: • The Final Date – must be 8 digits, e.g., 20051129; • The District Office – must be 3 digits, e.g., PTA, DBN; • The Final Number – must be 7 digits, e.g.,0002566. • The three parts combined make up the 18 digits: - 20051129PTA0002566. Updated 2006-10-01

  15. EXPORTING -WHAT IS UCR NUMBER? • The UCR is created by the exporter / his agent and is available to exporters both pre and post-clearance. • A UCR is created for every export consignment. • It’s minimum length is 12 and maximum is 21 digits. • The UCR field is alpha-numeric and must not contain any special characters such as “/, \, -, *,” etc. Updated 2006-10-01

  16. EXPORTING – THE FOUR PARTS OF A UCR (1) • Part 1 = the 1st digit: • it is the last digit of the year of the export – i.e., ‘5’ for 2005. • Part 2 = the next 2 digits: • it is the SWIFT code of the country of export , i.e. ‘ZA’ for S.A • Part 3 = is the next 8 digits: • it is the exporter’s customs client code , e.g., ‘00011111’ . • Note! If the customs client code is less than 8 digits, then zeroes (0’s) must be added in front to make up 8 digits. 5 ZA 00011111 454 Updated 2006-10-01

  17. EXPORTING – THE FOUR PARTS OF A UCR (2) • Part 4 = next 10 digits: • Last digits must reflect the unique number of the document that the exporter will use to link export proceeds with a specific export consignment. It can be an invoice, quotation, order, shipment no., etc. - e.g., ‘454’ if that invoice is the link. • The four parts combined make up the UCR - 5ZA00011111454. • It is on the SAD 500 & CRN. 5ZA00011111454 Updated 2006-10-01

  18. EXPORTING - THE DA550 Updated 2006-10-01

  19. EXPORTING - THE NEW SAD 500 Updated 2006-10-01

  20. EXPORTING - THE NEW SAD 500 BOX 28. FINANCIAL DATA UCR 5ZA00011111454 TRANS VALUE 12,000,000 ZAR 000 RECEIVING BANK STANDARD 016 CREDIT TERMS VAT CLAIM NEP ADV 030 FROM 001 UP TO 180 Updated 2006-10-01

  21. RESIDENT EXPORTER RESIDENT EXPORTER Payment advice SARB EXPORTING -SUMMARY FOR EXPORTS ON CREDIT 1stleg: Physical Export 2nd leg: Payment for goods 1 3 5ZA00011111454 5ZA00011111454 R 1,000,000.00 R 1,000,000.00 2 4 Non SA NON-RESIDENT IMPORTER Updated 2006-10-01

  22. GOODS AND DOCUMENTS PAYMENT - TRANSACTIONS FLOW Advice of payment TT or... Auth’ Payment EXPORTER S A BANK FOREIGN BANK IMPORTER Drawing under LC / Rand Drafts Updated 2006-10-01

  23. PAYMENTS - TYPES OF EXPORT PAYMENTS • Payment per export (1 to 1). • Advance, pre-payments, progress payments, etc. • Partial payments. • Bulk Payments. • They are not mutually exclusive. Updated 2006-10-01

  24. PAYMENT - BANK & CLIENT EXPORTER MATCH PAYMENTS AGAINST ORIGINAL SAD 500 DETAILS AND ECN OR UCR REF NO. INSTRUCTION TO CREDIT CFC OR CONVERT TO ZAR & CREDIT CURRENT A/C, ETC. MUST PROVIDE ECN / UCR REF NO AND/OR CUSTOMS NO ADVICE OF PAYMENT AD BANK SARB BOP REPORTING WITH ECN / UCR NO Updated 2006-10-01

  25. PAYMENT -WHEN TO REPORT UCR NUMBERS TO YOUR BANK! • Before the money is credited into your account. • When you complete the integrated form (andprovide ECN/UCR details for Rand drafts.) • Telephonic instructions to your bank, etc. • Desk-top systems of communications with banks. Updated 2006-10-01

  26. e.g. e.g. ExportControlNumber Customs client number PAYMENT - INFO EXPORTERS MUST REPORT TO THE BANK • The ECN/UCR number: 5ZA00011111454 • Customs Client number / exporter’s code; 11111 Updated 2006-10-01

  27. ExportControlNumber Ad Hoc Requirement Subject Export Proceeds Description 11111 PAYMENT - INFORMATION BANKS MUST REPORT TO THE SARB • The ECN/UCR number: 5ZA00011111454 • Customs client number/exporter’s code: EXPORTPROCEEDS 11111 Updated 2006-10-01

  28. COMPLEX SCENARIOS - ADVANCE PAYMENTS • The order-shipment-payment cycle, applicable to exports on credit terms, is changed. • Payment is received prior to Customs clearance, when no export documentation is available. • Not possible to use the ECN as a matching number because it is not available when funds are received. • Must use the UCR for matching purposes.

  29. RESIDENT EXPORTER RESIDENT EXPORTER Payment advice Goods SARB COMPLEX SCENARIOS-SUMMARY OF ADVANCE PAYMENT AND EXPORTS 2nd leg: Physical Export 1st leg: Payment for goods 3 1 Same UCR Number when exporting UCR Number 4 2 CUSTOMS SA BANK Non SA NON-RESIDENT IMPORTER Updated 2006-10-01

  30. COMPLEX SCENARIOS -PARTIAL PAYMENTS • Partial Payments involve a many-to-one relationship (many payments to one export). • System accommodates partial payments. • Any number of payments within credit period or 180 days. • Ensure that the same UCR number is reported for all relevant partial payments. Updated 2006-10-01

  31. ADVICE OF PAYMENT INSTRUCTIONS TO CREDIT CFC OR CONVERT TO ZAR and CREDIT CURRENT A/C etc. MUST PROVIDE ECN/UCR REF No./CUSTOMS NO 1st QUERY DIRECTED TOWARDS BANKS AS PER SAD 500 BOP REPORTING WITH ECN/ UCR No. 2nd QUERY DIRECTED TOWARDS EXPORTERS COMPLEX SCENARIOS - VARIANCES & THE QUERY CYCLE BANK EXPORTER SARB MATCH PAYMENT AGAINST ORIGINAL SAD 500 DETAILS and ECN/UCR REF NO Updated 2006-10-01

  32. FINAL MATTERS –EXPORTERS & THEIR RESPONSIBILITIES • Decide how by whom UCR numbers will be created. • Departments / divisions must communicate. • Meet with your bank & freight forwarderregarding your participation in Phase 2 of this pilot project. • When you receive export proceeds, you must report your UCR & Customs numbers to your bank SARB. Updated 2006-10-01

  33. FINAL MATTERS –CHALLENGES EXPORTERS MAY FACE • System Issues: • Will the choice of UCR numbers be system-driven or created manually? • Training & Information: • Information gaps in companies; • Adequate training and continuity plans. • Compliance: • Incorrect, incomplete or multiple UCR nos on the SAD 550; • Incorrect capturing of UCR nos on BOP system. Updated 2006-10-01

  34. CONDITIONS -FOR PARTICIPATION • Commitment to comply. • An agreement has to be entered into. • Interview with exporter, their bankers and freight agents. • SARB to monitor. Updated 2006-10-01

  35. CONDITIONS – MAIN FEATURES OF THE AGREEMENT (1) • Legal document modelled on the export undertaking. • Formal approval to substitute the F178 with the SAD 500. • Duty of the AD to attest Form F178 suspended. • Funds to be credited to the exporter’s accounts subject to exporters providing bank with a valid ECN/UCR and/or Customs client number. Updated 2006-10-01

  36. CONDITIONS -MAIN FEATURES OF AGREEMENT (2) • The SARB may, when the need arises, call for: • Additional information from your bank; • Periodic export schedule from the exporter; • An auditor’s report on your exports. • Hedging is not covered. Updated 2006-10-01

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