Customs and excise legislation gets much needed overhaul

taxation1Author: Georgia Mavropoulos (EY).

New legislation will affect customs systems, processes and policies.

International conventions, best practice, globalisation, and technology have assisted in giving the South African customs legislative framework a make-over. This resulted in changes to systems, processes and policies affecting importers and service providers. The current Customs and Excise Act 91 of 1964 is over 50 years old, and is getting a long overdue overhaul. 

The new Customs and Excise Acts aim to  establish a world-class customs control system that meets international standards, best practice, and technology. The Customs and Excise Acts are aligned with the Constitution. It also takes into consideration the revised Kyoto convention, and the World Customs Organisation’s Framework of Standards to Secure and Facilitate Global Trade (SAFE Framework). Its aim is to harmonise, secure and facilitate the international trade framework.

The Customs Acts provide end supply chain visibility for Southern African revenue Services (SARS), as a result of advance cargo reporting, improved seal provisions and mandatory electronic communications and notifications.

The current customs legislation is to be replaced by following three acts:

If enacted the proposed Customs Acts will offer the following benefits:

  • Simplified customs administration and speedier processes;
  • Terminology that is clear, and in plain language which follows global terminology. This will assist multinational companies in speaking one global trade language across their business;
  • The proposed customs acts are designed in a logical and systematic way, with topic-specific chapters which can be easily followed;
  • Flexible warehousing and manufacturing options, which will enhance South Africa’s role as a distribution hub and stimulate industrialisation respectively; and
  • The acts also support the objective of the National Development Plan to promote exports and business competiveness, stimulate domestic manufacturing and support small, micro and medium sized enterprises (SMMEs).

Customs stakeholders should take note of the following:


The proposed acts require all importers, exporters and any special manufacturing warehouse (OEMs) to re-register on or before 30 days of the CCA’s effective date.

Failure to re-register within the 30 days will result in the lapse of existing customs registrations. Existing excise registrations or licenses are not affected by the enactment of the CCA. The South African Revenue Service (SARS) has given the assurance that it will have sufficient capacity to handle the process, however some has raised concerns about the practicability of this.

Permissible warehousing:

The proposed CCA differentiates between “public storage warehouses” and “private storage warehouses”.

Some of the biggest changes include:

  • Application for new licences;
  • New receipt and delivery notification requirements by  public and private warehouse licensees and licensed carriers;
  • Storage of free circulation goods with goods which are not  in free circulation;
  • Electronic inventory management system;
  • Periodic goods accounting reporting; and
  • Permissible operations in a warehouse.

General clearance and release processes:

The acts will change the timing of certain clearance procedures, and subject them to strict time constraints. There are separate import and export activities for various customs procedures with designated legislation surrounding each activity such as home use processing, inward processing, outward processing, temporary admission procedures, and warehousing procedures.

The changes will affect the following:

  • The submission period for import clearance declarations will be reduced from seven days to three days after arrival due to improvements in the electronic environment;
  • A clearance declaration is now required for transit instead of a manifest/transport document, as effective control can only be exercised when SARS has all the necessary information.

Movements within SACU are now “imports and exports”:

The new legislation will change the treatment of the movement of goods within the Southern African Customs Union (SACU), the oldest customs union in the world. Movements within SACU will now be regarded as imports and exports. This is contrary to the current customs legislation.

Other important considerations:

There will also be new compliance measures and changes for traders. It will, in particular, impact the penalties regime, voluntary disclosure process (VDP), reporting requirements, and is likely to increase the levels of responsibility and accountability that customs stakeholders need to show.

This metamorphosis of the customs legislation can have positive outcomes in the entire supply chain. However it is essential to have effective participation between stakeholders, and above all patience with “teething” problems.

The roles and responsibilities of business become more prevalent with the changes, and therefore the acts require for consultative processes. It is imperative that business speaks with one voice to SARS. We would recommend setting up a professional platform to facilitate this.

In conclusion, the new laws will align the role of customs consultants more with that of tax consultants. In this ever-changing landscape more reliance will be placed on professional customs tax practitioners.

This article first appeared on the January/February 2016 edition on Tax Talk.