Customs certainty for development zones

Uncertainty
surrounding
customs regulations
in the industrial
development zones of the
Eastern Cape and elsewhere
in the country, which has
been hampering efforts to
attract investors, is in the
process of being cleared up,
according to Mark Goodger,
founder and chief executive
officer of Global Maritime
Learning/Legal Solutions
(GMLS).
His company is helping
Industrial Development
Zones (IDZs) and potential
investors to obtain clarity
on incentives and customs
rulings.
The East London (ELIDZ)
and Coega Industrial
Development Zones (IDZ)
in the Eastern Cape were the
first in South Africa.
Up to now, he believes,
inward investment has been
hampered by lack of clarity on
the tax and customs benefits
in the IDZs.
“The IDZ policy was
introduced under the
Manufacturing Development
Act as far back as the days
of Alec Erwin as finance
minister.
“It has been a long
journey together with Sars
in unravelling the legislative
provisions that would give rise
to full VAT and duty benefits
for overseas investors locating
in an IDZ,” says Goodger.
“Its regulations were first
promulgated in 2000, and
thereafter amended in 2006.
This signalled a drastic
change in that the zones’
identity and interpretative
framework was hinged on local
in place of extra-territorial
legislation.
“The subsequent
introduction of what is now
Special Economic Zone
(SEZ) legislation has shown
that under the provisions of
498 there is definitely a legal
interpretation problem which
centres around the receipt of
benefits to which investors are
entitled, as well as their access
into the local market,” he says.
This puts South African
SEZs at a disadvantage.
What investors want is
benefits that improve cash
flow, such as the non-payment
of VAT and import duties for
the setting up of a factory and
the manufacturing or assembly
of goods destined for export,
he says.
“Other zone frameworks of
this nature, such as Mauritius,
have provisions whereby
manufacturers in the zones
have controlled access to the
local market provided they
meet certain minimum export
targets.”
Extensive negotiations
and discussions with Sars are
providing some clarity.
“Much progress has been
made in this regard. The
ELIDZ and its consultants,
together with Sars, have
recently resolved that the DA62
will be utilised as an interim
solution for the movement and
control of goods between the
zone and rebate users,” he says.
INSERT & CAPTION
What investors want
is benefits that
improve cash flow,
such as the nonpayment
of VAT and
import duties.
– Mark Goodger