Speech by the Deputy Minister of Finance Nhlanhla Nene in the debate on the Customs Duty Bill, Customs Control Bill and Customs and Excise Amendment Bill, 2014
1. Introduction
Mister Speaker, this year the Customs and Excise Act, 1964, will be 50 years old. This Act has not kept pace with the changes in the customs environment of balancing trade facilitation with control as well as the changes to the global trade environment in which business is conducted. There is a rapid and irreversible growth of the use of information technology and the exchange of electronic data.
The Customs Bills seek to provide a sound, clear and logical legislative framework to replace the 1964 Act. The Duty Bill provides for the imposition, assessment, payment and recovery of customs duties. The Control Bill creates a platform for a modern customs administration that plays a critical role within the context of international trade and tourism. Effective customs control secures revenue recovery, facilitates legitimate trade and protects society at large. Once the Customs Bills are enacted into law, the amended 1964 Act will be retained for the administration of excise duties and environmental levies until a new Excise Act comes into effect.
Traders will benefit from the alignment of the Bills to International Conventions such as the World Customs Union (WCO) Revised Kyoto Convention and standards such as the SAFE Framework of Standards to Secure and Facilitate Global Trade which aim to simplify, harmonise, secure and facilitate international trade.
Plain language drafting and topic specific chapters simplify tax legislation and provide certainty to clients. In addition, the Bills have been aligned with the Constitution.
It is also important to note that an extensive consultation process with Southern African Customs Union (SACU) members, government departments, NEDLAC, trade representative bodies and the public preceded the Parliamentary process.
I specifically want to comment on the issues raised during the public hearings. In this regard Mister Speaker, three main issues were raised.
2. The first was around Inland Terminals
I want to make it very clear that the statements made that South African Revenue Service (SARS) wants to close inland terminals, is not true. We have inland terminals today and we will have inland terminals in terms of the Control Bill. The issue at stake here is the fact that goods can move on a manifest which provides little information about the goods from the first port of entry to an inland terminal. It is this lack of information that exposes our people to safety and security risks and our economy to fiscal and economic risks. This is because the risk indicators to determine tariff, valuation and origin risk are not declared on a manifest. The information on a manifest is furthermore, based on hearsay information supplied to the carrier by a person in a foreign jurisdiction, who cannot be held accountable for the information supplied.
The Control Bill proposes that a clearance declaration with all relevant information be submitted to SARS to determine the risk the goods may pose before the goods are allowed to move inland. To ensure the seamless movement of trade the Control Bill proposes that containerised cargo be cleared 72 hours before arrival. This time period will allow all entities in the supply chain, including Transnet, to do better planning thus facilitating the flow of goods and reducing costs. The current policy dates back to the late 1970 when information was submitted manually. Today information is available instantly. The South African Association of Freight Forwarders and Transnet support these proposals.
3. Penalties
The second issue related to fixed amount penalties.
The SCoF has amended the Control Bill to reduce the values of the various categories of fixed amount penalties. Penalties for specific breaches within the ranges specified will be prescribed in a Government Notice in order to ensure consistency nationally. SCoF has further amended the Control Bill to provide that no penalty should be imposed for a breach if it was committed inadvertently, in good faith and does not result in revenue prejudice.
4. Rules
Various commentators raised the issue that they would have preferred that the Rules should have been available for comment at the same time as the Bills. The Rules are however subordinate legislation and therefore requires the main legislation which contains the principles, to be finalised first.
The Rules will however once developed be made available for public comment.
5. Conclusion
In conclusion Mister Speaker, the Bills before us today represent a reform that will transform the customs administration to the benefit of traders, SARS and South Africa as a whole. I would like to thank the broad range of stakeholders who have been involved in the development of the Bills over the last number of years. More specifically, I would like to thank the Standing Committee on Finance and Chairperson Mr. Mufamadi for their invaluable contribution. This includes the informal briefing process, the productive public hearing process and the comprehensive set of clarifications, corrections and enhancements they have set out in their detailed amendments to the Bills.
Thank you Mister Speaker
