LATEST COVID-19 UPDATES
SARS have created a new tariff code specifically for the Covid-19 vaccine (tariff code 3002.20.11), with effect from 12 February 2021. Although it came too late to catch the very first vaccine imports, all future Covid-19 vaccine imports will be cleared through this new tariff code.
This comes on the heels of a rebate being created for the payment of import VAT (if you get a permit from ITAC and you import the vaccine, you won’t have to pay the VAT, but you will still need to charge VAT on the sale.
We will see if vaccine itself will perhaps be zero-rated, like mielie meal and pilchards. I would argue this is the most important item in the country to zero rate, but that does not come without cost and we need to save our coins to get SAA back into the air, so don’t hold your breath.
ITAC are considering once again offering duty relief on critical supplies imported under rebate item 412.11. It looks like it will run from July to September. This time however with some additional requirements.
Watch this video to find out more.
ITAC will no longer issue permits under rebate item 412.11 (essential supplies for disaster relief). In this video I break down the impact of this decision and consider the SARS and ITAC audits which will begin for companies who used the rebate.
If you have used this rebate, you should give up 5 minutes of your life and watch this. Be sure to subscribe to both our blog and YouTube channel.
Here we go!
The Minister of Cooperative Governance and Traditional Affairs, Dr Nkosazana Dlamini Zuma declared a national state of disaster on March 15 2020. South Africa subsequently entered lockdown mode 11 days later, on March 26. As of 28 May 2020, 63 days after the lockdown was announced, official statistics indicate that close to 26 000 people have become infected by the COVID-19 virus in South Africa. Just more than half of these (13 451) have thankfully recovered. 552 People have unfortunately died.
Soon after the announcement by the Minister, Rebate Item 412.11 became operational. This rebate item provided for the facilitation of the full rebate of customs duties for all products listed as ‘critical supplies‘ by ITAC.
All certificates issued under the provisions of Rebate Item 412.11 are valid until 31 May 2020 and can, after that date, no longer be used for the purpose for which they were issued.
Given that certain products, such as paracetamol, are not produced locally, this will serve to add a significant cost burden to downstream pharmaceutical companies.
This programme has, since its inception, facilitated the importation of a significant quantity of critical products such as hand sanitisers, respirators and face masks required during the national state of disaster. It has been determined by ITAC that, based on the information available, there is no longer a shortage of items described in the list of critical supplies and that an extension of this programme beyond the original date specified on all certificates (31 May 2020), would not be necessary. Standard tariff rates will therefore apply after the specified date.
Should you require any further information or would like to be kept informed about subjects similar to this one, please contact us at email@example.com
Watch this video to understand the ins and outs of exporting while the country is still locked down (yes it is both legal and possible).
Payment terms on deferment accounts with SARS
When you import goods, you need to pay SARS duties and VAT. SARS provides credit terms for these taxes, known as deferment. The rules for deferment have been updated to allow the duties and taxes to be paid in instalments, as long as you have formally agreed this with SARS.
Want to get busy exporting? Send us a mail at firstname.lastname@example.org.
I think the prohibition on the sale of alcohol and tobacco is a very bad idea with very serious consequences. In this video, I move away from a technical trade topic into a chat (rant) about the economic and social consequences of criminalising a substantial portion of the population at the worst imaginable time.
The IDC has launched a bridging finance fund, either for the manufacture of critical supplies or as trade finance, if it turns out the goods have to be imported.
Find out more by watching this video.
If you are a manufacturer, put down that illicit beer. Stop watching Netflix and do the right thing.
Please do it now. It really does matter.
We are proud to announce that paracetamol has been added to the list of essential goods and may now be imported without paying duty on VAT.
Contact us to find out more about how we got this item added to the list of essential goods.
And remember to take our survey on rebate item 412.11. It is so important to help ITAC get this process working to the best extent possible.
Keep that noggin overflowing with knowledge and subscribe to our YouTube channel here
Everyone is complaining about how long it takes to get rebate item 412.11 permits issued and we want to make this process work better. ITAC are overwhelmed and everyone is just a little tense at the moment. Take 2 minutes away from your kids (this is a legitimate excuse!) and quickly complete this survey.
Find out more about this rebate item and other important COVID-19 stuff by visiting our YouTube channel.
Today I spend some time talking about important changes to the COVID-19 rules. Again. I know all you want to do is go back to binge watching Tiger King, but take out 5 minutes and have a listen. I talk about:
- Deferment accounts (no you don’t get extra time to settle up with SARS).
- Expedited registration process for companies who have never been registered to import before now
- The 621.008 alcohol rebate. There is a a large risk developing here and we will soon be running a course or webinar on using alcohol to manufacture disinfectant.
- Port congestion and how SARS are going to manage inspections
- Another update of rebate item 412.11. Importantly the new development of claiming back refunds of duties paid if the certificate is not issued on time by ITAC
Here we go. Pick up your popcorn and watch.
In this episode we look at a small, but important rule change by SARS around trade with the EU. SARS (and the EU) are relaxing the certificate of origin rules in important ways, to allow for duty preferences to still be obtained even when strict compliance with the rules of the SADC-EU Economic partnership agreement is not possible.
This may be as exciting as watching paint dry, but it is important. If you trade with the EU, give up 4 minutes and 13 seconds of your life and watch this clip.
It would be extremely unusual to use potable alcohol in the production of disinfectant, so companies who traditionally manufacture disinfectants are unlikely to be registered with SARS for excise duties. Rebate item 621.08 can be used to buy alcohol and not pay the R213 per litre excise duty on the alcohol when you make disinfectant.
If you make disinfectant and need to buy alcohol, you need to immediately do the following:
- Watch our short video on how this rebate works. Do not get this wrong or you could end up paying SARS R213 per litre of alcohol you use in this time. Click here for a link to the video.
- Contact us on email@example.com
- Subscribe to our YouTube channel and be flooded with all sorts of important information about stuff like this by the people who know all about this kinda stuff.
Do it now.
Today I talk to Christo Theron about rebate item 412.11 and VAT. Christo is a VAT expert and the founder of TradeTaxPlus. If you intend importing anything under rebate item 412.11, be sure to watch this video.
Spoiler alert! You need to charge VAT even if you import goods under rebate item 412.11 and receive VAT relief on import.
Update to rebate item 412.11 – Essential goods
You can’t apply for a rebate of duty under rebate item 412.11 on any item currently attracting an anti-dumping or safeguard duty, or which is currently under investigation by ITAC.
Update to rebate item 621.08 – Alcohol sold to manufacture disinfectant
The rebate can only be granted to companies who are registered with SARS for excise. Given that most disinfectant manufacturers are not using potable alcohol to make disinfectant, many of these companies will first need to register with SARS for excise and only then apply for the rebate.
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After receiving a ton of enquiries on rebate item 412.11, here is a video hopefully answering most of your questions.
Keep an eye out tomorrow for our interview with VAT expert Christo Theron, where we will discuss the VAT implications of rebate item 412.11.
COVID 19 #3 Rebate item 621.08
Watch this video on Youtube: https://youtu.be/uQuoLBdC2JI
Rebate item 621.08 allows the rebate of excise duty on alcohol when it is used in the manufacture of disinfectants. See also our video on rebate item 412.11, rebate of duties for items urgently required to fight COVID-19: https://youtu.be/Qx6gDgbkhY0
Rebate item 412.11 has been activated. This rebate is for use in times of disaster and allows the importation of essential items without them attracting VAT and duties.
Watch this video to better understand how this important rebate works.
Remember to email any of your COVID-19 questions to email@example.com and we will revert to you urgently.
Subscribe to our YouTube channel and be kept up to date on COVID-19 and its impact on trade.
COVID-19 #1 Introduction – COVID-19 and its implications on international trade.
The COVID-19 outbreak has turned into a global pandemic claiming the lives of more than 35 000 people. Over 700 000 people have been infected since December 2019. In Italy alone, more than 9 000 people have died. The numbers keep getting more frightening with no signs of the outbreak abating.
Countries all over the world are battling to contain the virus and flatten the curve. The major impediment is the supply of medical equipment necessary to combat the outbreak. There is a shortage of critical supplies. Governments have turned to international trade policies with a string of measures to ensure the continued flow of essential supplies.
New Measures introduced by the SA government
The South African government has acted reasonably swiftly with the introduction of import and export control measures. The fact that South Africa is dependent on international trade for access to critical medical equipment makes these provisions important. Below is a list of actions that have been taken.
1. REBATE 412.11- Temporary rebate in critical supplies during the National state of disaster
The International Trade Administration Commission (ITAC) activated rebate item 412.11, which provides a full rebate of customs duties and VAT exemption on essential supplies during the COVID-19 outbreak. ITAC has published the standard operating procedures for businesses importing critical supplies during the national disaster, which you can obtain here.
The rebate wording reads as follows:
Rebate item 412.11/00.00/01.00 of Schedule No. 4, Part 2 of the Customs and Excise Act No. 91 of 1964 (Customs and Excise Act) makes provision for rebate of the full duty on the:
“Importation of goods imported for the relief of distress of persons in cases of famine or other national disaster; under any technical assistance agreement or in terms of an obligation under any multilateral international agreement to which a Republic is a party provided that the importation of any goods under this rebate item shall be subject to a certificate issued by International Trade Administration Commission and to such other conditions as may be agreed upon by the Governments of the Republic, Botswana, Lesotho, Swaziland and Namibia; and goods imported under this item shall not be sold or disposed of to any part who is not entitled to any privileges under the rebate item, or be removed to the area of Botswana, Lesotho, Swaziland or Namibia without the permission of the Commissioner.”
ITAC has identified a list of critical supplies ranging from face masks, ventilators, medication. Please click the link below for a complete list of critical supplies.
If you intend to import medical equipment into South Africa, it is vital to ensure that you obtain all the necessary documents. You will need a rebate permit issued subject to guidelines, rules, and conditions specified by ITAC. Importers have to submit the rebate permit application forms to ITAC. ITAC will process the applications within 24-48 hours of being submitted.
For more information on whether your product falls under the critical list, please contact us directly at firstname.lastname@example.org. This email address is continuously monitored and any requests will receive urgent attention.
XA is working with BUSA to identify additional critical products that require temporary tariff relief due to shortages.
2. Rebate item 621.08 on imports of ethyl alcohol for the manufacture of disinfectant classifiable under heading 38.08
SARS has implemented a rebate of the excise duty of partially denatured or undenatured ethyl alcohol under rebate item 621.08 in Part 1D of Schedule No 6 to the Customs and Excise Act, for the manufacture of disinfectant classifiable in heading 38.08.
This provision will last for the duration of the national disaster. Manufacturers of disinfectants must apply for temporary registration in the form of a letter on an official business letterhead. The SARS commissioner may prescribe by rule the quantities supplied to recipients of partially denatured or undenatured ethyl alcohol registered in terms of the special conditions set out in the gazette.
3. Export control on certain products from South Africa
3.1. Export Controls
Although the South African government has made commendable efforts to ensure a continued supply of medical equipment, other countries have introduced a whole raft of measures to restrict exports of medical equipment. Some of the countries are traditional suppliers to South Africa. India introduced export restrictions on over 20 tariff subheadings. Please click here for a complete list of products banned from India.
The EU introduced export restrictions on protective equipment covering over 20 tariff subheadings. South Africa imports some of these products. Please click here for a complete EU list.
As of 21 March 2020, 46 export restrictions on medical supplies have been introduced by 54 governments since the beginning of the year. Some of these countries include Bulgaria, France, India, Indonesia, Saudi Arabia, the Republic of Korea, Taiwan, Thailand, Turkey, and the United Kingdom.
On top of all that, the US has temporarily exempted a range of Chinese health/medical products from section 301 duties. The US exclusions are reflected in 19 product descriptions, which cover 39 separate exclusion requests. Serbia has turned to China after certain EU members introduced export restrictions to some of its own member states.
The shifting trade patterns have implications on the supply of medical equipment to South Africa. Although China is not the only producer of medical equipment – it is one of the biggest suppliers to South Africa. The fact that Chinese suppliers are critical for many companies around the world imply that any disruption in China will also be felt outside China’s borders.
XA acting as subject matter experts are working with BUSA to assist in identifying items that are in short supply that would be eligible for a temporary rebate. We have already started the process of applying for temporary rebates to allow for duty exemptions. The most critical products are face masks, ventilators, and drugs. However, other essential products may require temporary relief, which we are in the process of identifying. To find out if any of your products are part of COVID-19 medical supplies, please click here.
In light of the export restrictions that are spreading across the globe, we have started a process of mapping export restrictions by South Africa’s trading partners onto our critical supplies list. The process will help identify alternative export markets if the major export countries are blocked.
SARS has created a temporary special provision to provide for a simplified application process for registration as a manufacturer of disinfectants from partially denatured or denatured ethyl alcohol.
The step was taken as an emergency provision to ensure an adequate supply of, amongst others, hand sanitisers that contain a minimum alcohol percentage of 70%. The process shall remain in place for the duration of the national state of disaster.
This entails that alcohol can be obtained without the payment of the hefty excise duties normally payable on alcohol. Furthermore, any inspections, screening and vetting processes not conducted prior to approval of any registration, may be conducted at any time thereafter. This means that SARS reserves the right to audit the alcohol usage afterwards and if this has not been in line with the rebate rules, impose (large) penalties.
- List of critical supplies. Click here.
- ITAC. Covid-19 News and Regulations. Click here.
- Corona Virus South Africa Resource portal. Click here.
- South African Government Corona Virus Covid-19 Regulations and Guidelines. Click here.
- Government Gazette No. 43199. Click here.
- Marine Notice No. 21 of 2020. South African ports open for cargo. Click here.
- Covid-19 South Africa Dashboard by WITS University, NRF and iThemba Labs: Click here.
- Update on the new registration, licensing and accreditation (RLA) system from SARS. Click here for the letter.
- SARS letter concerning deferment of payment of duties. Click here.
- SARS update on customs measures relating to Covid-19. Click here.