Customs and business resolve VAT deferment issue

ALAN PEAT AFTER A December 1 meeting between the private sector – in the form of the SA Association of Freight Forwarders (SAAFF), the SA Chamber of Business (Sacob) and representatives of the insurance industry – and customs, a solution has been found to the worrying amendments to the deferment policy. These amendments required guarantees for any value-added tax (VAT) deferred – added to those already required for deferred customs duty – and could have cost the forwarding industry billions in guarantees. Indeed a sum so massive, according to one analysis, that it would find the banks and insurance industry totally unable to cover it. “This,” said SAAFF adviser, Edward Little, “created a major concern to the clearing and forwarding industry and to all importers alike.” But, after the meeting – which Little described as “having been conducted in a particularly friendly atmosphere” - a solution was arrived at which should satisfy the auditor general (AG) without disrupting the functioning of the clearing and forwarding agents, especially the small and medium-sized entities (SMMEs) and emerging companies. “I think that the solution deserves to be publicised in the same constructive manner as the discussion that took place,” Little told FTW. The answer, according to customs, was that - to comply with the previous comments received from the AG to secure all revenue due to the state - they would implement surety on all deferments based on a risk assessment process. “In their view,” said Little, “this implementation of the proposed deferment policy would satisfy the AG’s requirement.” To establish the risk based surety requirement, customs will assess all clients/stakeholders individually – taking into consideration their financial capacity, their record of compliance with SA Revenue Services (SARS) as well as that of their clients, particularly where high risk cargo is involved. And it’s a very satisfactory solution, according to Little, and one which might see forwarders requiring a lower bond than they are currently paying. “Whilst the level of guarantee/bond required would have to cover the duty and VAT deferred,” he said, “it would be established in terms of the risk involved, determined by a uniform process. “As with all administrative decisions, the client would have the right to appeal should he choose to do so. “However, it might well be that the amount of guarantee/bond required for both duty and VAT could be less than the present requirement for duty alone.” The only sad point about this very positive public/private sector get together was that there was no representation from the AG’s office - despite the fact that the invitation had been accepted, and it was the AG who had raised the furore in the forwarding and import industries in the first place.