A weekly summary of the main changes to the South African tariff dispensation and amendments to customs and excise legislation. Compiled by Riaan de Lange. E-mail: riaan@importsolutions.co.za Transfer Pricing – Addendum to Practice Note 7 According to the South African Revenue Service (SARS), given the magnitude of international trade between multinationals, tax systems generally contain provisions to permit tax authorities to review and, if necessary, adjust transfer prices to an arm’s length standard. South Africa’s transfer pricing provisions are contained in section 31 of the Income Tax Act, 1962 and were introduced on 19 July 1995. The interpretation of these provisions by SARS is expanded on in the SARS Practice Note 2, dealing with non-resident financial assistance and issued on 14 May 1996, and SARS Practice Note 7, dealing with transfer pricing more generally and issued on 6 August 1999. As dealt with in issued Addendum, SARS Practice Note 7 sets out the advantages of preparing documentation in support of a multinational’s transfer pricing. It notes, however, that the level of detail in this documentation must be informed by the nature, scope and complexity of the transactions involved. The Addendum confirms that changes in the company tax return in recent years have not been intended to disturb the balance struck in the Practice Note. More information available on request. SARS Publishes Power of Attorney Letter The South African Revenue Service has published a power of attorney letter that could be used by consultants acting on behalf of clients in respect of all taxation matters including customs and excise issues. The Administration of the Russia GSP and Turkey GSP – Response Due The Russian Federation and the Republic of Turkey extended Generalised System of Preferences (GSP) to South Africa. The GSP provides for the reduction in the rate of customs duties on developing countries’ exports. In this instance Russia and Turkey have extended GSP to South African exports. The SARS has released the draft rules for the administration of the two GSPs. Response due by 11 October 2005. No rule amendments – 30 September 2005 No tariff amendments – 30 September 2005 Tariff amendments – 23 September 2005 The general and the European Union (EU) rates of customs duty (duty) on maize are reduced from 8,424c/kg to 2,291c/kg and on maize flour from 12,636c/kg to 3,437c/kg respectively. The Southern African Development Community (SADC) rates of duty on maize flour remain unchanged at free of duty. The general, EU and SADC rates of duty on sugar are reduced from 55,0c/kg to 23,3c/kg. No Anti-dumping amendments – 23 September 2005 VWSA achieves export milestone VOLKSWAGEN SOUTH Africa’s (VWSA) Uitenhage plant has passed the 250 000 vehicle export milestone. Current exports which consist of the new Golfs and Polos are shipped to the Asia Pacific region. Other exports have been to China, Europe, Australia and the United Kingdom. The company plans to export more than 40 000 vehicles in 2005 to achieve year-on-year growth of about 45%. In April 2004, VWSA recorded the export of its 200 000th vehicle. Note: This is a non comprehensive statement of the law. No liability can be accepted for errors and omissions.
