Customs Modernisation

Transcription

1 Customs Modernisation Moving into the future... Trader pocket guide 1

2 This guide concerning Customs Modernisation is not meant to delve into the precise technical and legal detail associated with Customs. It should, therefore, not be used as a legal reference. Should you require any additional information, you may: Contact the SARS Call Centre on SARS (7277), or Visit the SARS website, click on Customs and then Customs Modernisation South African Revenue Service July

3 Customs Modernisation Introduction SARS Customs has begun a large-scale modernisation initiative. Every area of Customs from People to Policy, Technology and Process will be impacted over the next couple of years as it is transformed into a worldclass Customs agency. The modernisation of Customs comes in the wake of SARS s recent Tax modernisation initiatives which have yielded incredible results both in terms of improving our internal efficiencies, enhancing our service offering and broadening the tax base. As with the transformation of our PAYE and Income Tax systems and processes, Customs will be moving from a complex, partially paper-based and labour-intensive environment to a simplified, automated and cost-efficient one. Service and enforcement (in line with the Compliance Model) are also pivotal to the modernisation programme, as we seek to divert resources into more value-adding activities i.e. service for the compliant and enforcement for the non-compliant. To help Customs align its operations to international standards and benchmarks, and to provide stakeholders with improved service, SARS has selected a number of technology solutions to complement various aspects of the electronic commerce, clearance processing, inspection, revenue collection, and case resolution aspects of the customs process. The integration of all technology platforms will provide customs users with a seamless interface to information relevant to his/her transaction or case. To this end, all customs information requirements have been aligned with version 3 of the WCO Customs Data Model. All customs clearances will in the near future be processed via a single declaration engine. In line with the Kyoto Convention, SARS will be introducing clearance by Customs Procedure as well as a variety of expedited and simplified customs clearance procedures. These alone will differentiate between current and future service offerings to the trader. 3

4 The modernisation programme will also ensure efficient processes, systems and organisational structures that improve the facilitation of trade and provide an improved service offering from expert Customs officers. Some of the key modernisation initiatives: 1. Electronic Supporting Documents: For Customs stakeholders, SARS will be extending the application of its current efiling, and EasyScan solutions to enable traders to file or submit any supporting document required by customs for the finalisation of a transaction or case. Various 3 rd party software providers will be offering tailored facilities within their applications to facilitate this requirement as an integral part of their solutions. This will contribute greatly towards reducing paper overload and the burden on the trader or broker to physically deliver them to SARS. 2. Enforcing mandatory electronic communication with traders, customs brokers, carriers and release agents: Since the introduction of Electronic Data Interchange (EDI) a few years ago, the uptake of EDI by the trade has grown remarkably. Customs now receives in excess of 90% of clearance declarations electronically. In October 2009 and April 2010 SARS introduced the mandatory submission of clearance transactions electronically to all traders in the Republic and BLNS countries respectively. Coupled with electronic receipt of declarations, Customs has also introduced electronic release messages to obviate the need for paper-based customs release notifications. 3. Implementing risk-based Customs assessment: The new way of working will provide a risk-based automated facility which will push the highest risk declaration at any given time to the assessment officer. This improves integrity of the customs process and will ensure that any opportunity for gain by either an internal user or collusion between internal and external parties is negated. 4. Single Registration: As of February 2011, SARS is introducing a single registration application process for all SARS s stakeholders. This means that taxpayers, traders and practitioners will have a single interface to SARS for all their client needs. Once introduced, clients can either register electronically via efiling or e@syfile or they will have the choice to go to any SARS office and physically register for any 4

5 Customs products, for example, Customs clients can apply at Taxpayer Service branches for application to register or license with SARS. The application will be completed on a single integrated SARS form known as the SR -1 or Single Registration form. Like other tax applications, it is based on the dynamic Adobe form technology that allows the form to dynamically structure the information required by SARS based on the forms wizard which the applicant will be required to complete 5. Preferred Trader pilot programme: Part of SARS s segmentation approach involves Customs redefining its Accreditation Programme to provide greater benefits for those demonstrating greater compliance. SARS is currently piloting a preferred trader initiative with about 30 importers and exporters that requires the client to perform a self assessment of their business systems and compliance with Customs formalities. Upon validation of their compliance by Customs Audit, these traders will receive customised services and benefits respective to their standing. The intention is to roll out this initiative to all qualifying traders. 6. Enhancing Customs Risk Management: The Customs risk engine will soon accommodate cargo declarations (manifests), in addition to goods declarations, ensuring reconciliation between the two. Risk management lies at the heart of the Customs process the inclusion of cargo reports not only improves customs risk assessment but provides also an additional form of supply chain reconciliation between what is declared and what is physically landed. Effective risk management within Customs will not only rely on developing an enhanced Customs Risk Engine but also the introduction of a proper trader management system. The implementation of an authorised economic operator also coincides with Customs ability to manage risk. 7. Centralisation of capabilities: Customs has identified activities particularly administrative, risk, and audit tasks which can be conducted in a central location away from ports of entry. These offices will be called Trade Administration Centres. Customs will also be introducing Centres of Excellence, comprising specialists in the areas of tariff, valuation and origin, which will also operate independently from ports of entry. 8: Integration of the SARS Contact Centre: The scope of the Contact Centres will be increased to accommodate Customs queries through 5

6 both the SARS-trained call centre agents, as well as the Interactive Voice Response system (IVR). A pilot was held in Pretoria during April this year, with reasonable success with clients. Following the pilot, all Customs queries to branch offices will be routed through the SARS Call Centre. 9. Introduction of the Customs Modernisation Programme (Release One): Until now Customs has operated 37 diverse systems. A new integrated Customs solution is being introduced to standardise the processing and validation of Customs declarations across all modes, The first phase will include the processing of all goods declarations based on new Customs Procedure Codes as provided for in the draft Customs Control Bill. The Customs Bills are expected to be approved by Parliament towards the end of Customs will further leverage its internal systems and user capabilities on technologies currently in use by SARS s tax division. Moreover, efiling, EasyDocs and EasyScan will be introduced to traders as an electronic interface for traders to communicate with Customs with respect to activities parallel to the clearance process, for instance the lodging of electronic applications for registration and licensing, as well as the submission of supporting documents relating to customs interventions. The customs clearance and response forms will soon be introduced on a dynamic form using Adobe technology. Customs revenue accounting will be implemented on the SAP Financials platform allowing traders improved control over their customs account and deferment profile. In this guide we would like to look at two initiatives in more detail in order to provide handy information to our Customs clients. A. Preferred Trader Initiative Customs Modernisation has established a Preferred Trader Programme that is currently undertaking a pilot with importers and exporters from key economic sectors identified by Government. The aim is to improve trade facilitation and economic protection of key industries, as well as raise voluntary compliance and increase efficiency for SARS. The intent of the Preferred Trader Programme is to create partnerships between Customs and Business, linking specific demonstrated and audited 6

7 compliance levels. Preferred Trader forms part of the revised Accreditation approach within SARS. This will award clients with a new status which will also introduce an Account Manager approach to approved Preferred Traders. SARS believes that about 80% of trade volume is undertaken by clients who should be able to demonstrate their compliance, and therefore be considered low risk and potentially suitable for accreditation. The mutual benefit is that Customs operations at the entry/exit points of SA should then be able to focus on high risk consignments and allow greater facilitation to its accredited clients. The Programme is dependent upon developing a solid Customs Audit capability supported by its core Legal, Policy, People, Process and Systems infrastructures. To achieve this, the Preferred Trader Programme has developed draft Audit and Account Management Policies, Procedures and Standard Operating Procedures to guide the new Programme. These are being tested by the pilot, and will be formalised in legislative rules and policy within the next year. A new Accreditation Policy is also being developed that will specify formal benefits for clients linked to their compliance levels This is in line with the EU AEO programme, which SARS is aligning with due to the fact that the EU Countries are our largest trading partners. The Assurance Audits will perform tests that will score compliance against specific measures and standards. This approach will also facilitate mutual recognition from international Customs Administrations for their local status. The new Accreditation process requires the companies to complete a detailed Self Assessment Questionnaire that represents a due diligence report of their own compliance. SARS validates each company s declaration through an Audit that performs a combination of internal systems tests and sampling of compliance. SARS has undertaken initial discussions with neighbouring countries to help them adopt and deploy the SARS Customs Draft Accreditation Policy into an aligned Regional Accreditation and Audit Programme. 7

8 Proposed benefits of the Accreditation Policy include: 1. Reduced interventions 2. Upgraded Service Model for participants 3. Simplified Procedures linked to Accreditation dependent on new systems and legislative provisions SARS is also busy with an AEO benchmarking programme which will assist in the finalisation of the Accreditation Programme. Tthe formal launch of the new Accreditation Programme, which includes the Preferred Trader Status, will coincide with legal and policy announcements in the coming year. New Customs Procedures A new integrated business solution has been developed in tandem with the draft Customs Control and Duty Bills which are expected to be promulgated towards the end of The new Bills were created to bring Customs in line with international norms and standards, such as the Revised Kyoto Convention. Some of their main attributes are: Simplified clearance Periodic clearance Clearance within customs procedures Expedited release without customs clearance, and Streamlined customs clearance requirements and enhanced notification through increased automation and provision of multiple service and entry channels for traders. Prior to the promulgation of the new Customs Act, the Customs Modernisation Programme will implement a new dispensation for Customs clearance. The existing purpose codes will be superseded by Customs Procedure Codes, otherwise known as CPCs. These codes will be introduced under Section 119A to the Customs and Excise Act, no. 91 of 1964, which provides for the implementation of modernisation procedures. Phase 1 of the Customs Modernisation Programme is seen as a step-change 8

9 initiative bringing internal staff, external traders and trade practitioners in line with the new way of representing goods for clearance under Home Use or a Customs Procedure. While SARS acknowledges that this phase does not align customs clearance fully with the expectations and intent of the draft Control Bill, it has developed a hybrid framework that will take account of current clearance requirements, while at the same time preparing both traders and staff for a new mindset before the introduction of the new Customs Act. The concept of an integrated clearance approach provides: A common format for all customs procedures. Common rules for the completion of a customs clearance across import, export and cross-border transactions A common guideline for the completion of a customs clearance declaration, and A common data model aligned to the WC s Data Model version 3, allowing for clearance information to be submitted electronically to Customs.. Full application of the new Customs Act will demand further adaptations to systems, policy and operational approach. How it works Customs clearance in the future will require a declarant to indicate a Procedure Category Code (PCC) at header level of the declaration, as follows: Procedure Category Code A B C D Description Home use (including goods intended for home use for which there is a relief of duties and taxes). National and International Transit Procedure Transhipment Procedure Temporary Admission Procedure 9

10 E F G H I J K L Customs Warehousing Procedure Stores Procedure Tax Free Shop Procedure Export Procedure Temporary Export and Re-importation in the Same State Procedure Inward Processing Procedure Home Processing Procedure Outward Processing Procedure At line level, a Requested Customs Procedure Code (RPC) and an associated Previous Customs Procedure Code (PPC) must be provided on the clearance declaration. The PCC identifies the customs procedure under which the declarant wishes to clear goods. The requested procedure code (CPC) specifies the intended purpose for which the goods are being cleared. A Previous CPC is required as it indicates any prior purpose which the goods may have been cleared or subjected to in one or other form of procedure, e.g. processing, re-warehousing, or change of ownership. The table below describes the base Customs Procedures which SARS has identified for implementation in Phase 1: 10

11 TABLE OF CUSTOMS PROCEDURES CODES PCC RPC Pr. MEASURE A Home Use DESCRIPTION 10 - Clearance of Ordinary Levy goods for home use Clearance of goods for Home Use, and free circulation Clearance for Home Use and payment of VAT, of free circulation goods arriving from a BLNS country Clearance for Home Use and free circulation of warranty replacement goods Clearance for Home use under relief of duties and taxes for specific conditions as provided for under Schedule 4 of the customs tariff Clearance for Home Use of goods offered for unconditional abandonment. P.CODE OL/XOL DP/XDP IM4 GR/XGR GR/XGR GR/XGR 11

12 B National & International Transit C Transhipment Procedure D Temporary Admission Procedure 20 - Clearance for National Transit of goods removed in bond from a customs controlled area at port/place of entry to a customs controlled area within the Republic for clearance for Home Use, or a permissible Customs Procedure Clearance for International Transit of goods removed in bond from a port/place of entry and exported from the Republic Clearance for transhipment of goods. (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) 35 - Clearance of goods under the Temporary Admission Procedure Outright Export of goods originally imported under the Temporary Admission procedure Temporary Admission of goods from BLNS states 38 - Outright Export of goods originally imported under the Temporary Admission procedure from BLNS states. RIB RIT N/A GR EIG IM5 EX3 12

13 E Customs Warehousing Procedure 40 - Clearance of goods in a customs warehouse under the Warehousing procedure Clearance for Change of Ownership of warehouse goods. (No physical movement of goods) 42 - Clearance of goods into a customs warehouse for subsequent exportation from the Republic Clearance for Removal of warehouse goods, in bond, from one customs warehouse to another customs warehouse 44 - Clearance for Re-warehousing of warehouse goods, previously removed in bond from one customs warehouse to another Clearance for Removal of excise goods from one excise warehouse to another excise warehouse Clearance for Re-warehousing of excise goods, removed in bond from one excise warehouse to another excise warehouse. WH XRW WE XIB XRW ZIB ZRW 13

14 F Stores Procedure G Tax Free Shop Procedure H Export Procedure 51 - Clearance for supply of free circulation goods cleared under the Stores Procedure as supplies to a foreign-going vessel, aircraft, or train Clearance for supply of locally produced excisable goods cleared under the Stores Procedure as supplies to a foreign-going vessel, aircraft, or train Clearance for supply of imported goods cleared under the Stores Procedure as supplies to a foreign-going vessel, aircraft, or train Clearance of non free circulation goods to a Tax Free Shop. (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) 60 - Clearance for Outright Export of free circulation goods Clearance for Outright Export of free circulation goods to the BLNS ; ; ; and Clearance for Outright Export of goods in same condition as imported for which a subsequent Specific Refund is to be claimed in terms of the 5th Schedule to the Customs Tariff. EAS ZES XES N/A ELG/EIG EX1 EIG 14

15 to ; and to ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; ; a n d Clearance for Outright Export of compensating products for which a subsequent Drawback in terms of the 5th Schedule to the Customs Tariff. Clearance for Outright Export of goods for which a subsequent Refund & Rebate (i.t.o. Excise Duties, Fuel Levy, Road Accident Fund Levy & Environmental Levy) is to be claimed under 6th Schedule to the Customs Tariff Clearance for Outright Export of uncleared goods, deemed imported, abandoned to Customs, sold by auction, now being exported outright from the Republic Clearance for re-export of goods that were originally permanently imported from a BLNS country, and which are being permanently returned, for whatever reason, (e.g. goods oversupplied, incorrectly supplied, damaged, etc). EIG/ELG ELG EIG - 15

16 I Temporary Export & Reimportation in Same State Procedure J Inward Processing Procedure 67 - Export of goods originally placed under the Warehouse Procedure Clearance for Outright Export of excise goods from an Excise Warehouse Clearance for Temporary export for re-imported unaltered goods for home use Clearance for Temporary export of goods to the BLNS for re-imported unaltered goods for h ome use ; ; ; and Clearance for re-importation of goods in same state, under the Temporary Export Procedure Clearance for re-importation of goods in same state from the BLNS, under the Temporary Export Procedure ; ; ; and Clearance of goods under the Inward Processing Procedure Transfer of ownership of Inward processing goods. (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) XE ZE EIG/ELG EX2 GR IM6 GR/XGR N/A 16

17 K Home Processing Procedure 82 - Sub-contracting of inward processing operations with no transfer of liability to a sub-contractor. (Cut-Make- Trim CMT). (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) 83 - Clearance for Export of inward processed compensating products (including any waste/ scrap) obtained from goods imported under the Inward Processing procedure to Clearance of goods under Processing for home use procedure Transfer of ownership of Processing for home use goods. (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) 87 - Sub-contracting of processing for home use operations with no transfer of liability to a sub-contractor. (Cut-Make- Trim CMT). (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) N/A EIG IR/XIR N/A N/A 17

18 L Outward Processing Procedure 88 - Clearance for Home Use of compensating Products (including and valuable waste/ scrap) obtained from goods imported under the Processing for Home Use procedure. (Note: excluded from Phase 1 implementation. Pending implementation of the new Customs Act.) 90 - Clearance of goods under the Outward Processing procedure ; and Clearance for Home Use of outward processed compensating products derived from goods exported under the Outward Processing procedure. N/A ELG GR In order to effect a customs clearance the above codes must be used in conjunction with a previous procedure code. The full compendium of permissible customs procedure code combinations is available on the SARS website - Under certain circumstances, a Procedure Measure (PM) must be provided. This will occur under any procedure which requires the use of either a 3rd Schedule industrial rebate or 4th Schedule general rebate item. In addition, the use of Procedure Measures are also extended to clearances which trigger a refund or drawback under the 5 th Schedule as well as rebates in respect of the export excise goods under the 6 th Schedule. Refer to the PCC/RPC combinations above to see those requiring declaration of a procedure measure. Implementation Impact Declaration Processing The new customs procedure codes will be applicable to all clearances 18

19 lodged on the date of implementation, scheduled for 1 October Some important characteristics of the modernisation journey are set out as follows: 1. Cross border (CCA) clearances will adopt the new customs procedure codes, although the requirements specified by the SACU agreement remain in force. 2. Amendments (vouchers of correction) to all clearances lodged prior to this date will be processed according to the requirements of the current purpose codes this is applicable to refund vouchers of corrections as well. The data to be submitted will follow the new data structures. 3. Clearances for the extraction of goods from a bonded warehouse, where the warehouse entry (WH/WE) is lodged prior to 1 October 2010, will be processed according to the new procedure codes. 4. Purpose Codes TOL, TIR, and TGR will no longer be permitted, and therefore no corresponding customs procedure codes have been defined. This is based on the principle that the party importing goods must be registered and eligible to clear goods under the OL, IR, and GR provisions. Any amendments to such clearances will be processed manually. 5. Clearances lodged for re-exportation (EIG/EX3) or re-importation (GR/ IM6) of goods originally declared prior to 1 October 2010 will be processed according to the new procedure codes. 6. Clearances for home use and any customs procedure where an RIB declaration has been processed prior to implementation date will be processed according to the new customs procedures. 7. Certain clearances for home use, and all clearances for inward processing, home processing, and temporary admission, and outward processing will require the declaration of a procedure measure. This implies the insertion of a 3 or 4 th Schedule Rebate item as the customs procedure code dictates. 8. Cancellation of clearances lodged prior to 1 October 2010 will be processed according to the requirements of the current purpose codes. 9. Replacement (substitution) clearances lodged in respect of goods cleared prior to 1 October 2010, will be processed according to the new procedure codes. 10. Refund applications (DA66) lodged in respect of refunds and drawbacks will follow the current assessment and approval processes. 19

20 11. Provisional payments (DA70) in respect of surety, penalty, and forfeiture will follow the current assessment, approval and payment process. 12. Processing of all other non-declaration financial documents will follow the current processes. 13. Normal excise declarations (ZDP, ZGR, and ZOL) will be managed according to the current purpose codes, and must be submitted within the new data structure catered for in the revised CUSDEC mapping guide. Need help? SARS is currently preparing an integrated Guide for the Completion of Customs Clearance Declarations to help trade understand the migration from the current declaration process to the new. This will go hand in hand with an update to the EDI Users Guide wherein the required changes to the respective clearance (CUSDEC) and customs notification/response (CUSRES) messages will be incorporated and available to stakeholders. In the latter regard SARS has been working closely with external stakeholders and their affiliated IT service providers concerning new systems and EDI requirements. If traders want to know more about the codes or have any questions regarding the changes which are taking place under Modernisation, they can go to the SARS website ( click on Customs and then on Customs Modernisation. 20

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