Transfer Pricing and Customs Initiative In a letter dated 21 August the South African Revenue Service (Sars) informed external stakeholders of the “Request for Information: Retroactive Transfer Pricing Adjustments”. According to the letter, Sars has embarked on a Transfer Pricing and Customs initiative to establish that all legal requirements in terms of the Customs and Excise Act (“the Act”) are correctly observed by taxpayers. A risk that has been identified is the non-declaration of year-end retroactive transfer pricing adjustments between related parties. The primary basis for Customs Valuation is the “transaction value”, which is defined as “the price actually paid or payable for goods sold for export to South Africa” provided that certain conditions are adhered to, in terms of Section 66(1) of the Act, adjusted in terms of Section 67 of the Act. One of the elements of Section 66(1) of the Act is the price review clause, which is subject to review at the end of a given period. Consequently retroactive transfer pricing year-end adjustments fall into this category. External stakeholders are requested to respond to the following questions to enable Sars to verify if the consideration of retroactive Transfer Pricing adjustments were taken into account with regard to the Customs Valuation: (i) Has the company made retroactive transfer pricing adjustments in the last five years of assessment? (ii) Is a value determination number in place? (iii) If yes, please supply the value determination number. (iv) Were the retroactive transfer pricing adjustments taken into account? Reply to the above enquiries within fourteen business days from date of this letter. Worn Clothing Rebate Item In a Government Gazette dated 24 August 2012 the International Trade Administration Commission of South Africa (Itac) published the “Guidelines Regarding Applications for Permits in terms of the Provision of Rebate Item 311.18/63.09/01.04 of Schedule No.3 to the Customs and Excise Act”, for comment due on 5 October 2012. The Guidelines relate to permits for the rebate of the full rate of customs duty on worn clothing and other worn articles of textile material used for the manufacturing of wiping rags and cleaning cloths. Worn clothing and other worn articles of textile materials are subject to Import Control conditions and an import permit will only be issued in instances where a rebate permit has already been obtained. The Inspectorate of the Directorate Import and Export Control must be notified in writing by the permit holder at least 10 working days in advance of the date of arrival of consignments of imported worn clothing and other imported worn articles of textile materials at its premises. According to the “The Use of Other Rebate Provisions” (2.1.9) registered users of the rebate provision for the manufacture of wiping rags and cleaning cloths may not apply to register and import under the rebate provision for used overcoats.
