Exploiting 'indirect' opportunities
helps fill exporters' coffers
IGNORANCE OF the law often prevents international traders from
making the most of the many cash saving opportunities that are there for the taking.
A case in point is the Customs Duty Drawback. Jed Michaletos, financial analyst at Deloitte & Touche Trade & Investment Solutions explains: "When imported goods or materials are used in a process of manufacture and the resultant product is exported, a company is entitled to a Customs Duty Drawback from the Customs & Excise division of the South African Revenue Service (SARS). This is equivalent to the percentage of import duties paid on the goods or materials that were used in the exports.
"We have observed in our dealings with import-export customers that the industry is either unaware of such drawback provisions or, if it is aware, is waiting extended periods to receive their money from SARS."
It's estimated that most companies are waiting anywhere up to 24 months to receive payment which impacts negatively on their cash flow and bottom line.
And this is where specialists like Deloitte & Touche believe they can make a difference.
"What many companies overlook are the indirect opportunities that exist to obtain this cash refund benefit," says Michaletos.
"If for example your company buys goods or materials from a local supplier, which are then used in a process of manufacture and subsequently exported, the local supplier may have initially imported those goods or materials and paid import duties. This means that your product is carrying those duties in its price and you could potentially be pricing it out of the export market. In a case of this nature, provided the
parties would be willing
to share information
and documentation, they would be able to submit a drawback claim to SARS and share mutually in the cash benefit."
This is where Michaletos believes his company can add value. "We are able to act as a trust intermediary, thereby providing a solution in situations where companies are not willing to share such information. We will calculate, prepare and submit the claim on the company's behalf and the ultimate cash benefit received can be shared between the two companies involved. In addition, through our recent partnership with Corpcapital Bank, we are now able to pre-finance the drawback claim.
"The message is quite simply with a depreciating
currency such as the rand
all savings opportunities should be exploited. The Customs Duty Drawback is one such measure."
