Introduction

1. Customs Legislative Amendments 2008 / 2009Presentation to External StakeholdersNovember 2008Marina Van Twisk, Andre Landman,Roedolf Mostert

2. Introduction • The aim of this information session is to – • Explain the legislative process briefly. • Highlight some of the more significant proposed amendments to the Customs and Excise Act, 1964 (Act No. 91 of 1964), announced by the Minister of Finance and introduced via the – • Revenue Laws Amendment Bill, 2008 (Money Bill); and • Revenue Laws Second Amendment Bill, 2008 (Admin Bill). • Provide feedback concerning the new draft Customs Bill.

3. Legislative process • Customs Legislative Policy (Research & Drafting) receives requests for amendments to the Act during the course of the year • Deadline 31 October each year. • Originates from National Treasury, internal stakeholders (Customs Litigation, Operations, Policy) and external stakeholders. • Proposed amendments are announced by the Minister of Finance in the February Budget (published in Chapter 4 and Annex C of the annual Budget Review).

4. Legislative process • Legislation is drafted in consultation with internal stakeholders. • Draft legislation is circulated both internally and externally for comment before the commencement of the Parliamentary process (October – December). • Once approved by Parliament the Bill is submitted to the President for signature before promulgation.

5. Chapter 4 • Strengthening and Streamlining Border Protection: • ”Increased trade requires a visible and effective enforcement capability. The Customs Border Control Unit was established in 2006 to provide an enforcement function…. Amendments to the Customs and Excise Act (1964) will be considered to further support customs enforcement at the border….”

6. Chapter 4 • Strengthening and Streamlining Border Protection: • Powers of Arrest • Insertion of new section 4A “ Powers of Arrest”- comes into operation 31 March 2009. • The Commissioner may determine a category of officers who have the power to carry out an arrest for the purpose of enforcing this Act. • In exercising powers of arrest, an officer will be deemed to be a peace officer as defined in section 1 of the Criminal • Procedure Act (CPA).

7. Chapter 4 • Strengthening and Streamlining Border Protection: • Powers of Arrest • Such an officer shall be subject to any relevant provision of Chapter 5 (Arrest) of the CPA applicable to a peace officer e.g. section 49 that deals arrest by peace officer without warrant. • Any person arrested by an officer must as soon as possible be brought to a police station or, in the case of an arrest by warrant, to any other place expressly mentioned in the warrant and further dealt with in the manner contemplated in section 50 and other provisions of the CPA.

8. Chapter 4 • Strengthening and Streamlining Border Protection: • Possession and use of Firearms • Insertion of new section 4B “Possession and use of firearms”-comes into operation 31 March 2009. • SARS is accredited in terms of the Firearms Control Act as an Official Institution by the South African Police Service to possess official firearms. • The Commissioner may determine a category of officers authorised to possess firearms for the purposes of enforcing • the Act.

9. Chapter 4 • Strengthening and Streamlining Border Protection: • Possession and use of Firearms • The possession and use of firearms by officers shall be subject to the provisions of sections 95 to 101 of the Firearms Control Act and regulations made thereunder, to the extent that those provisions relate to an Official Institution. • An officer to whom the Commissioner issues a permit to possess a firearm, must carry such permit on his or her person when he or she is in possession of a firearm.

10. Chapter 4 • Strengthening and Streamlining Border Protection: • Possession and use of Firearms • The Commissioner may make rules inter alia concerning, inter alia- • the acquisition, record keeping, issuing of permits, carrying, possession, use , safe keeping transport, theft, loss and disposal of firearms and ammunition; • the manner of reporting the firing of an official firearm and the procedures to be followed in respect thereto.

11. Chapter 4 • Strengthening and Streamlining Border Protection: • Possession and use of Firearms • The Commissioner may authorise the use of non-lethal weapons by officers in such circumstances and such manner as may be prescribed by rule.

12. Chapter 4 • Strengthening and Streamlining Border Protection: Border Patrol • Insertion of new section 4C “Border Patrol”- comes into operation on 31 March 2009. • The Commissioner may patrol the borders of the Republic and acquire any equipment for patrolling the land and sea borders of the Republic, including any- • patrol boats, aircraft and other vehicles; and • arms and ammunition required to equip or supply any customs patrol boat, aircraft or other vehicle.

13. Chapter 4 • Strengthening and Streamlining Border Protection: Border Patrol • The customs officer commanding any customs patrol boat may pursue any vessel where- • the vessel does not come to a stop when signalled, ordered or required to do so; or • theoperator of the vessel refuses to permit the vessel to be boarded.

14. Chapter 4 • Strengthening and Streamlining Border Protection: Border Patrol • The customs officer commanding any customs patrol boat pursuing a vessel may, as a last resort and after having fired a warning, fire at or into the vessel to compel it to come to a stop. • Customs patrol boats, aircrafts and vehicles are exempted from inter alia fees or charges, e.g. toll fees and mooring fees.

15. Chapter 4 • Implementation of the General Annex to the Revised Kyoto Convention:. • Incomplete or provisional declarations - RKC Standard 3.13 • Insertion of new section 39B. • Provision has been made for the use of incomplete, provisional and supplementary bills of entry. • Incomplete bill of entry – some information initially omitted. • Provisional bill of entry – some information provisionally provided (e.g. quantity in the case of bulk goods).

16. Chapter 4 • This simplified clearance method may be used for goods entered for home consumption, as well as for the RIB, warehousing and export procedures. • Legislation specifies the minimum information to be supplied. • Commissioner may specify minimum supporting documentation required. • Application for an incomplete or provisional bill of entry shall be within the normal periods for making entry (s.38(1)(a) or (3)(a)), unless the Commissioner grants extension.

17. Chapter 4 • Delivery of incomplete or provisional bill of entry is the required application and the release by the Commissioner is the required authorization. • Security may be required to cover duty pending delivery of Supplementary bill of entry and payment of duty. • Supplementary bill of entry required within 7 days from date of delivery of incomplete or provisional bill of entry (import) or before export, unless extended by the Commissioner. • Supplementary bill of entry must contain reference to the preceding incomplete / provisional bill of entry & must be • delivered to same office.

18. Chapter 4 • Incomplete and provisional bills of entry and subsequent supplementary bill of entry is deemed to be a single indivisible bill of entry taking effect on the date of delivery of the incomplete or provisional bill of entry. • Rules – • Designate customs offices authorised for this clearance procedure. • Exclude certain classes of goods from this clearance procedure. • Prescribe the manner of release of goods so entered, etc. • Date fixed by President.

19. Chapter 4 • Special Procedures for authorised persons – RKC Trans Standard 3.32 • Section 39C. • Applicable to accredited importers and exporters. • Provisions of section 39B regarding incomplete bills of entry applies mutatis mutandis • Delivery of supplementary bill of entry is periodic– i.e. 7 days from the last day of the preceding month in respect of each incomplete bill of entry delivered during that month. • Date fixed by President.

20. Chapter 4 • Prior permission for release of goods – RKC Standard 3.41 • Section 39D (3) and (4). • For use in exceptional circumstances when declarant is not able to make a declaration. • Commissioner must be satisfied that the importer will make subsequent entry and may ask for security. • Essential information required for release (e.g. invoice or transport document) to be prescribed by rule.

21. Chapter 4 • Must make due entry within normal periods (unless extended) and that bill of entry is deemed to be effective from the date the release was granted. • Date of promulgation.

22. Annexure C • Submission of Advance Passenger Information (API): • ”API is collected by the carrier at departure and electronically sent to the destination border control authorities. Empowering provisions to make compulsory the electronic furnishing of API to SARS will be considered.” • Insertion of new section 7A “Special Provisions relating to Advance Passenger Information” • Mandatory electronic communication of API.

23. Annexure C • Submission of Advance Passenger Information (API):. • Operator may apply to the Commissioner for extension regarding the obligation to communicate API electronically. • Protection of personal information afforded under section 101B “Special provisions relating to the processing and protection of personal information.” • Comes into operation on promulgation of the Revenue Laws Second Amendment Act, 2008.

24. Annexure C • Alignment of Exports and Imports: • Section 15 has been amended to require a person leaving the Republic to declare certain goods as is the case when a person enters the Republic. • Section 38 has been amended to provide for a similar treatment for exports as is provided for certain goods enumerated in the said section on importation e.g. human remains

25. Annexure C • Periodic Clearance and electronic warehouse management system: • “Amendments to the Customs and Excise Act will be considered to provide for the periodic clearance of goods imported into a licensed customs and excise warehouse.” • Addition of subsection (10) in section 19 - use of licensee computer system subject to certain conditions (e.g. accreditation, security of information and availability for audit purposes).

26. Annexure C • Periodic Clearance and electronic warehouse management system: • Additional subsection (5) in section 38 – • Permit removal of imported goods from warehouse on certificate, invoice, etc. • Invoice deemed due entry from time of removal of goods. • Licensee and importer must both be accredited. • Comply with prescribed conditions and keep removal / receipt records. • Subsequent validating entry and payment of duty – • section 39 (2A). • Date fixed by President.

27. Annexure C • Administration over bulk goods: “The Customs procedures relating to the storage and movement of bulk goods will be simplified. These changes will reduce industry compliance costs while easing SARS administration” • Section 19 (10) – Use of licensee electronic warehouse record system. • Sections 38 (5) & 39 (2A) – removal of goods from warehouse on basis of commercial documents and later validating entry (both parties accredited).

28. Annexure C • Section 38(6)(a) – Deduction of actual losses arising from the storage in or removal of goods from that warehouse. Minister to determine the maximum percentage loss allowance by notice in the Gazette. • Section 40(3)(a)(ii)(bb) – Substitution on good cause shown. • Section 39B – Use of provisional bills of entry (quantity). See slides under Kyoto compliance. • Consequential rules to section 21(3) – licensing SOS, commingling, re-packing, etc.

29. Annexure C • State Warehouse Rent: • Prior to the amendment, the client could conceivably be liable for both state warehouse rent charged by the Commissioner and storage charges charged by the facility deemed to be a state warehouse. • The amendment rectifies this problem by removing the deemed state warehouse’s entitlement to state warehouse rent, thereby providing a more equitable dispensation for the client.

30. Annexure C • Alignment with the WTO Valuation Agreement: Buying Commission • The amendment to the definition of “buying commission” aligns it to the definition contained in the WTO (World Trade Organisation) Agreement • A buying commission is paid to an agent, not the seller of the goods, and therefore cannot be reflected on the seller’s invoice. The amendment therefore deletes the specific provision for deduction of the buying commission, as previously contemplated in section 67(2) (b) (v).

31. Annexure C • Alignment with the W TO Valuation Agreement: • Inland Freight Charges • The Agreement does not discriminate between containerised and break bulk cargo in respect of inland freight charges. • The effect of the amendment is that full cost of transporting the goods from the exporter’s premises to the port or place where they are to loaded on board a ship or any vehicle (inland freight) will be dutiable, thereby bringing it into line with break bulk cargo.

32. Annexure C • Waste and Scrap remaining after destruction: • "After goods are destroyed, some waste or scrap could remain. The Customs and Excise Act will be amended so that any duty thereon will be assessed as if waste or scrap were imported.” • Section 75(22) - where any rebate item provides for a rebate of duty on imported goods destroyed, any scrap or waste remaining after destruction , if intended for home consumption shall be deemed to be imported at the time it entered for home consumption and shall be liable to duty in that state.

33. Annexure C • Technical corrections: • In addition to the miscellaneous amendments above, the 2008 legislation will contain technical corrections. These technical corrections will address typing and grammatical errors, etc • Occasionally include changes to legislation clearly at odds with legislative intent as well as obvious ambiguities and omissions. • These changes are not intended to have any meaningful revenue impact • or represent any change in policy, and they will be made as time permits.

34. Draft Customs Bill • The Bill was released for internal comment to government departments and SACU members in December 2007. • Comments were received until June 2008 and these comments are currently under review. • As a result of the extensive comments received substantive changes are being made to the first draft. • These changes include: • Split of the current draft in two – Customs Control Bill and a Duty Bill; and • Clear distinction between duties and taxes.

35. Draft Customs Bill • A second draft will be available early in 2009. The second draft will again be circulated for internal comment. • A third draft will be circulated for external comment. • Implementation of the Bills will be dependant on Operational readiness.

36. Conclusion • Questions?