South African Revenue Services Customs Preferred Trader Accreditation Programme 2 nd Global AEO conference Madrid, Spain

Transcription

1 South African Revenue Services Customs Preferred Trader Accreditation Programme 2 nd Global AEO conference Madrid, Spain APRIL 2014

2 CUSTOMS Strategic Outcomes TRADE ADMINISTRATION Efficient trade administration Assist with compliance Provide trade policy support Collect duties and taxes lawfully Managing incentive schemes & Free Trade Agreements ECONOMIC & COMMUNITY PROTECTION Prevent harm to the community, the economy and environment Protect industry from harmful, and unfair trade practice BORDER SECURITY Prevent smuggling Ensure confidence in trade and travel channels Promote SA as secure trading partner DELIVERY STRATEGY MAKE IT AS EASY AS POSSIBLE FOR THOSE TRYING TO COMPLY Improve Service MAKE IT AS HARD AS POSSIBLE FOR THOSE TRYING TO AVOID PAYING THEIR FAIR SHARE Improve Enforcement ENHANCED COMPLIANCE Key to this approach is ensuring that taxpayers/traders understand their obligations

3 Focusing our Resources- Hub Concept VOLUMES (2013) Transaction Volume: 5,560,000 declarations STATS Border line = 4862 Kms Sea Line = 2798 Kms Seaports = 8 Airports = 10 Inland ports = 1 International Land ports = 2 SACU land borders = 17 Non-designated borders = 35 DKF HUB ALB HUB Transaction Value: R 2,494,498,978,328 DBN HUB EDI(2014) TRADERS(2014) 90% by value of declarations of all imports are submitted by 10% (4000) of traders. 80% by value of declarations of all exports are submitted by 10% (4000) of traders. CT HUB STAFF(2014) 2597 Customs Officers in total 1920 Team Members 270 Managers and Team leaders 407 Support Staff Electronic International transactions submissions have increased from 65% to 99% SACU transactions have increased from 30% to 90% Supporting documents are 100% digitised

4 Customs Modernisation Delivery Preferred Trader Customs Inspection Customs Systems Replacement Leveraging SARS Capabilities Declaration Processing

5 Resource Distribution Modernised risk-based approach for Customs: Preferred Trader Accreditation / Entity assurance audits Proactive client management Removing mandatory checks Periodic declarations & Simplifications Automated processing through integrated risk assessment Inspection Compliance audits (customs regimes) Entity based performance audits (systems & process) Post Modernisation resource distribution Current resource distribution Value-Adding Activities Registration Declaration Assessment Inspection Audit

6 Deliver A Paradigm Shift Risk Management GATE-KEEPING RISK MANAGING LEGAL One size fits all Flexible and tailored solutions ADMIN A unilateral approach Balance between regulatory control and trade facilitation MNGT Indiscriminate intervention Focus on high risk with minimal intervention in low risk areas ENABLERS Legal provisions Appropriate ICT infrastructure Consultative business process

7 Introduction of the Preferred Trader initiative - foundation for the AEO programme with Trade Segmentation of the trade allows customised service provision and risk application Focus efforts on the risky and facilitate the trusted - compliance vs. service 70% of all import declarations are submitted by only 10% (4000) of the active traders. 90% by value of declarations of all import declarations are submitted by 10% (4000) of traders. 80% of all export declarations are submitted by only 10% (4000) of the active traders. 80% by value of declarations of all export declarations are submitted by 10% (4000) of traders.

8 Operating Model alignment Technical Stops Doc Stops Client Management 80% via Pre + Post Engagement PT/AEO Integrated Audit PT Entity Based Audit Enforcement / Large bus Scanner Stops PT Assurance Audit Customs Specific CBCU Transactional Risk targeting at frontline 20% Transactional Audit Transactional inspection Customs Interventions Client segmentation Audit Types Risk Trader Management 8

9 SARS Compliance Behavioural Philosophy & Model Alignment To PT

10 SARS Strategic Plan Strategic Alignment Strategic direction Develop partnerships with all supply chain stakeholders to facilitate legitimate trade whilst combating illicit trade in order to strengthen and secure SARS s economy, & collect revenues due A seamless transition to an integrated border management model, developed with other government departments across the supply chain Key deliverables Rapid accreditation of traders qualifying for its preferred trader programme and refining the preferred trader programme An enhanced service offering (reduced paperwork, quicker processing times) to Preferred traders comprising 80% of all legal trade entering the country PT index will comprise of two measurements: Preferred trader registration effectiveness: % Trade volume (number of Preferred Traders declarations processed vs. total number of declarations processed. The objective of this factor is to measure the amount of trade covered by the preferred trader programme: Preferred trader compliance level: The objective of this factor is to measure the level of compliance among the registered preferred traders and will be measured by conducting regular compliance audits on the preferred trader pool.

11 Preferred Trader Snapshot - The Preferred Trader concept was conceived in Driven by SARS Modernisation Strategy - Its aligned to the SARS Strategy Aligned to the SARS Compliance Programme - Legislated in Customs and Excise Act Section 64; - Legislated as Level two Accreditation ito Rule 64E.13 - Legislated in the Customs Control bill - Based on the WCO Safe Framework of Standards - Revised Kyoto Convention : Risk based Approach

12 Preferred Trader approach Key Elements Risk based approach for client segmentation & volumetric SARS selection linked to Govt. priority industries & Self application approaches Self assessment & Self evaluation Audit verification Compliance improvement programmes Accreditation & benefits with relationship managers Participation in SACU PT Qualifying Criteria Appropriate record of Customs compliance Computer systems & level of automation Accounting systems & standards Logistical systems Sufficient knowledge & Customs competency Sufficient financial resources No criminal convictions Tax compliance status Governance committees (C.A.R.C & SARS Compliance Risk Committee)

13 Audit Standards for client systems and Level 2 Rules Criteria Focus Areas for PT Assurance Process 1. Risk screening 2. Audit Verification 3. Organisation vetting and compliance evaluation Customs sample test of the applicants declarations, evaluated by the Percentage error rate of the lines on all entries passed for the applicant for the preceding two (2) years for all regimes: i) Quantity; ii) Classification iii) Valuation iii) Originating status iv) Duties relief, warehousing, special import measures (permits), statistics, CITIES (industry codes), samples, Unsolicited goods (prohibited & restricted), VAT, other areas of concern. Systems based Audit Standards and test conducted : 1. Purchasing 2. Receiving 3. Internal accounting 4. Accounting to Customs 5. Exporting Determine effectiveness of client operational Systems to qualify for Accreditation for Customs control at the client: Reliability of record keeping systems Quality and consistency of track & traceability Procedures to identify errors. Procedures to self-manage & correct errors at the root cause Have appropriate information technology security measures in place to protect the applicant s computer system from unauthorised intrusion and to secure the applicant s documentation Effective control systems that manages accounting to Customs and all relevant Customs regimes.

14 PT Audit Process High level SARS Client Pre Engagement Client selection Receive Application and SA and SQ Preform Risk Profiling Accept or Reject Application Submit application in Regional office Confirms interest & commitment to following Audit process Primary Engagement Send client application acceptance confirmation letter Pre- audit engagement visit to discuss approach & process and confirmation of audit engagement date Send client on-site verification notice letter Complete and Submit Systems Questionnaire & additional information requested related to the audit Audit Engagement Conduct systems walkthrough Develop Audit Plan Select samples for the audit programme Submit samples selected to the client Correlates & submits declaration & supporting documents for verification Audit On-Site Systems Testing and Risk Testing Perform sample testing as per audit programme Audit Progress Meeting Client Hosts SARS to execute audit programme Client Provides data & information as required / as per Audit Policy / Procedures Reporting & Follow up Evaluate results vs. evaluation criteria & Standards Compile Audit Report Communicate Audit results to client Monitor compliance or compliance programme where required Submit Final Report to the Customs Accreditation Review Committee for Status Approval Hosts close out report meeting Commits to implement any Compliance improvement initiatives

15 PT Benefits for all PT clients, large & SMME s may include Appointment of a Customs Relationship Manager tasked with facilitating the relationship between the client and customs; PT clients have direct access, no need to use contact and/or walk in centres Reduction of the amount of any security required for compliance with a customs procedure; Fewer routine documentary and physical inspections; Fewer audit interventions Prioritising a request for tariff and valuation determinations; Prioritising access to non-intrusive inspection techniques when goods are stopped or detained for inspection. Qualifying for SACU PT programme. Note: In the future an extended set of benefits will be available to clients, as befit a specific Client type and Accreditation Level. Future additional benefits available to Accredited Clients will be dependent on new systems and legislative provisions ( i.e. further electronic interfaces, electronic warehousing, periodic, simplified clearances )

16 RKC alignment 6.2: Customs control shall be limited to that necessary to ensure compliance with the Customs law 6.3.In the application of Customs control, the Customs shall use risk management 6.5:The Customs shall adopt a compliance measurement strategy to support risk management. 6.6: Customs control systems shall include audit-based controls. 6.10: The Customs shall evaluate traders commercial systems where those systems have an impact on Customs operations to ensure compliance with Customs requirements 6.7. The Customs shall seek to co-operate with other Customs administrations and seek to conclude mutual administrative assistance agreements to enhance Customs control: SACU, EU, USA, BRICS 6.9. (TS) The Customs shall use information technology and electronic commerce to the greatest possible extent to enhance Customs control. 16

17 Guidelines to Accreditation & a detailed Guide developed Category 1 General discussion Category 2 - Accreditation Legislation and Audit Category 3 Tariff Classification Category 4 Customs Valuation Category 5 Rules of Origin Category 6 Prohibited and Restricted Goods and Import Control Category 7 Penal Provisions and Risk Category 8 - Appeals Category 9 Internal Controls Category 10 Integrity ACCREDITATION GUIDE Accreditation: Written test & answer database created Internal staff tested as well Client invited to sit for test Invite letters, application forms & guide to study sent to PT clients A minimum of 1-5 persons dealing with customs can write the test Open book, 2 hour- 60% pass mark ( 2 add attempts) 5 different test venues Applicants using ID s will be confirmed and company notified of progress Individual invites will be sent confirming date and venues: test programme as follows Registration Welcome and program overviews Information Session : Customs Preferred Trader (informal training 2hr) Assessment Admission Process (Preassessment Questionnaire) Lunch COMPETENCY TESTING Competency Assessment Competency certificate issued after 30 days

18 COMPETENCY ASSESSMENT RESULTS TO DATE Session Region Number of Candidates Number Passed Average Pass mark Nov 2012 All regions % 27-Feb-13 G South % 27-Feb KZN % 19/28-March-2014 WEN % Dec 2013 and Feb GN % TOTAL %

19 Preferred Trader Today AUDIT ACTIVITIES 2010/ / / /2014 Engagements: Finalised Audits Total CIP's: Totals 31 march 2014 Volumes % of trade Not Recorded 21.13% 24,42% % Revenue Collected (Audit) Not Recorded R 1,4 bn R 0,8bn R0,9bn R 3,1bn Engaged / invited 480 clients to participate in the programme 205 Audits have been finalised for confirmation of the status 156 Audit had compliance issues ranging from tariff; valuation; rebate for compliance improvement 205 traders contribute % of transactional line volumes of the total trade volume Approximately R 3,15 bn ($301bn) revenue has been collected through the PT audits and voluntary compliance from the sensitised clients

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21 IMPORTS 2012/2013 COMPARISON WORLD REGIONS IMPORTS 500,000,000, bn 450,000,000, ,000,000, ,000,000, ,000,000, ,000,000, ,000,000,000 SACU IMPORTS= R44,56bn 34.87% 385bn 250bn 299 bn 2012 Import CustomsValue 2013 Import CustomsValue 150,000,000, ,000,000,000 50,000,000, bn 119 bn 99bn 102bn 15bn 1,5bn 13bn 1,2bn Africa America Asia Europe Oceania Other Unclassified World Region 2012 Import CustomsValue 2013 Import CustomsValue % Tototal Africa (3) R 103, 95bn R 119,15bn 11.94% America (4) R 99, 89bn R 102,19bn 10.24% Asia (1) R 385, 96bn R 460, 87bn 46.17% Europe (2) R 250, 44bn R 299,45bn 30.00% Oceania R 13, 52bn R 15, 02bn 1.51% Other Unclassified R R %

22 RSA EXPORTS 2012/2013 COMPARISON WORLD REGIONS EXPORTS R 300,000,000,000 R 250,000,000, bn 265bn 252bn 298bn R 200,000,000,000 SACU EXPORTS R113,6bn 42,75% 165bn 198bn R 150,000,000, Export CustomsValue 2013 Export CustomsValue R 100,000,000,000 85bn 86bn 76bn 68bn R 50,000,000,000 R 0 Africa America Asia Europe Oceania Other Unclassified World Region 2012 Export Customs Value 2013 Export Customs Value % Total Africa (2) R 232,8 bn R 265, 9bn 28.67% America (4) R 85,02 bn R 86,6bn 9.35% Asia (1) R 252,09bn R 298, 89bn 32.23% Europe (3) R 165,4bn R 198, 52bn 21.41% Oceania R 8,35bn R 9,01bn 0.97% Other Unclassified R 76, 49bn R 68, 35bn 7.37% 8bn 9bn

23 Formal Creation of a Regional SACU Programme with reciprocal benefits through Mutual Recognition is based on Domestic PT (Step 1) STEP 1 Formal MS Domestic PT STEP 2 SACU Regional Mutual Recognition PT 1. Pilot Common PT programme 2. Solidify core team in each Member State 3. Solid infrastructures Legislation Policy Process / SOPs 4. MS have companies who meet all domestic PT standards 5. MS have Compliance Monitoring program (to Maintain PT standards) Pilot to learn by testing common SACU requirements, communication, interconnectivity, common standards verification & governance Ensure enabling IT Connectivity, data sharing & ability to Identify PT clients Formalise SACU PT through MR of domestic programmes & governance MR Terms of Reference Alignment of MS Policies, capabilities, & governance Evaluation & monitoring processes Signing of MR Agreements

24 Step 1: Work plan for MS Piloting SACU-wide infrastructure Policy workshops Training on PT processes & SOPS at SARS Venues in S Africa Finalise domestic benefits Stakeholder forum Receive SARS assistance Establish Pilot Policy & templates Prepare each MS To Pilot Kick-off Pilot Audits MS confirms PT owner, & core team MS Policy team confirms Pilot infrastructures Policies Processes SOPs & templates, Forms MS report all non implementable aspects of RSA Policies, processes, SOPs to SACU for tracking MS s Exco sign-off MS Policies & Pilot materials Deploy dedicated Pilot PT resources for Risk & Audit Identify & engage clients to include in the SACU pilot Create risk profiles Perform team training: Policy, SOPs & templates Practical field training with SARS team Amend PT team HR / KPIs MS s Exco sign-off MS Policies & Pilot materials Invite clients to Pilot kick-off mtg Initiate self-assessment process Mobilise dedicated Audit team, in preparation for Audit Arrange Audit kick-off Meeting Walk-through client systems & Self Assessment Questionnaire Perform systems Audit, evaluate & improve compliance Create Audit Reports & files Feedback to formalise MS Align SACU Policy

25 Short term Pilot vs Long term implementation: Discussion Short-term considerations Benefits testing and feasibility? Bonds Lower Risk scoring Whole of supply chain facilitation Processing of declarations / systems Exchange of information Company profiles / risks With OGA s / CBRA s Pilot SAD 500 s Identification of clients System Physical / stickers Long-term implementation Legal roadmap and programme Mutual Recognition framework, Common legal criteria and standards C2C Exchange of information Data Block Systems identification Vetting & implementation, monitoring & reciprocation Benefits: including Facilitated release exporter to importer end to end Structures to support regional PT National Pilots, then formalise National PT legislation Regional PT enablement, Legislation, Systems, Processes

26 SACU Preliminary legal context Regional Pilot considerations RSA: No Benefits testing until formal legislation Other MS: ok to test benefits prior to implementation RSA: No circumnavigation of Processing systems via s Other MS: Will consider testing benefits when ready to do so RSA: No Exchange of company specific information unless company permission is given, and or SACU protocol section E is ratified / MOU signed All: No use of stickers for Proposed regional pilot at this point - Long-term implementation MS to implement & bed-down Domestic Programmes 1 st, then seek regional pilot Further Legal meetings to expand and plan the implementation roadmap and programme Common legal criteria and standards Include vetting of standards, implementation & monitoring Alignment to C2C Exchange of information Project Data Block Systems identification Development of a Mutual Recognition framework - proposal is for RSA to develop for discussion

27 Step 2: A regional Pilot facilitates & tests the formal journey to create a Regional SACU Programme with Mutual Recognition STEP 2 SACU Regional Mutual Recognition PT MR Terms of Reference Alignment Sign SACU MR Agreements 1. Set-up SACU Joint Working Group 2. Agree TOR 3. Define Mutual Recognition 4. Agree roadmap, process & governance 5. PT Utility block Regional Pilot 1. Identify gaps between countries Policy & capability 2. Agree on shared responsibilities Technical, Joint Risk rules, Threat Assessment, Governance 3. IT and data connectivity & alignment to enable SACU PT 1. Amend Legislation in each country to enable MR 2. Political agreements 3. Terms to Include technical, policy, & evaluation parts 4. Ensure SACU level structures are in place Controlled learning by sharing / testing draft methodologies, operating requirements verification & governance for implementation of any specific regional PT features

28 Situation: Regional Capacity Building Initiatives Supported development of the SIDA funded SACU AEO program, by helping to develop a set of SACU PT policies, processes and Standard operating procedures and providing capacity building for a Preferred Trader implementation plan in joint association with the WCO. SACU PT legislative & Policy framework ; SACU PT Accreditation Policy; PT Audit Policy; PT Risk Policy SACU capacity building assistance / Training programs already hosted in RSA 2013 SACU work plan developed by SARS/WCO for SACU Assisted SACU Member States develop their own PT project plans PT approach used to build an Excise PT model and Audit unit ready to pilot. ALL SACU countries have now engaged their own clients for domestic & regional consideration. SACU legal meeting (May 2014): Provide high-level context to PT Programme and journey to full AEO. Review each MS s and SACU region s legal room for maneuvers in a legislative context. For establishing legal agreements including Mutual Recognition, Info Exchange & For Vetting the MRA Completed the scoping of AEO Safety and Security program and developed an AEO implementation plan, with the assistance of the EU, supported by the TDCA Dialogue Facility; EU AEO files and dialogue documentation: Phase 1, 2,3 and 4 SARS AEO Benchmark study and reports on EU AEO EU AEO National Treasury report Legislative requirements for AEO and Gap document

29 Challenges MS political will not cascaded Low compliance environment in Africa, requires significant initial investment Lack of Risk and Audit based technical skills & structures to support AEO Compliance & Security type programs Maintaining focus on developing a sustainable quality of Assurance audit work Providing coordinated capacity building support to multiple countries of differing maturity & competencies Maintaining, development & consistency of staff in the program PM, Audit, Risk Dependency of trade on their Agents & operators Working with 5 different operational models, in different levels of modernization Keeping scope realistic, and restricting benefits promised to achievable ones Building solid legislative framework for domestic and regional Mutual Recognition Maintaining alignment of policies and templates across domestic MS, without any shared legislative framework, oversight or direct accountability to conform Coordinating delivery and timelines across 5 countries

30 Reflections 1. Countries need to build solid, stable and reliable domestic programmes first,. 2. MR is valuable, but over focus on developing regional type activities can distract from putting the basics in place on which a regional program is dependent 3. International Benchmarks are very valuable to learn from and align to gain best practice standards 4. Benchmarks can be misleading to follow other countries programmes or approaches especially where legislation is different 5. Countries must consider their own strategic context and requirements when developing their Accreditation and AEO programmes 6. The overall tool in RSA has also been very effective in assisting valuation compliance and revenue generation 7. Pilots are very valuable to help develop competencies and for learning however they require careful handling and should not be considered a playground 1. Important to undertake a fair and transparent method for voluntary inclusion, and terms of involvement of Pilot economic operators; 2. Benefits should be carefully handled so as not give an unfair / anti-competitive advantage in an unlawful context b) not create concessions to trade that are not firm commitments from Customs 3. No WCO Mutual Recognition framework is available which makes individual country development challenging, especially for developing countries 4. SAFE requires development of Pillar 1 Exchange of Information, risk engines and advanced electronic information to support operationalization of AEO Mutual Recognition these activities require complex legal agreements, systems and data developments to identify, match and protect data security for the AEO Programme. This can ultimately restrict the long-term MR reciprocation in an operational context

31 Presented by Mohamed Ally Executive: Customs Operations Your Pic Here Thank You