Multinational enterprises importing goods from related parties face new customs compliance requirements following amendments to the Customs and Excise Act rules that took effect on September 14.
The amendments, published in Government Gazette 55355 on September 11, prescribe how importers must adjust bills of entry when a transfer-pricing adjustment changes the declared customs value of imported goods.
Under the new process, an affected importer must notify the South African Revenue Service (SARS) of the adjustment and submit the relevant amended invoice or debit or credit note.
The importer must then obtain the latest data relating to the affected bills of entry from SARS’ Trade Statistics department. Within 30 calendar days of submitting the notification, it must provide SARS with a completed Customs Value Adjustment Calculation (CVAC) spreadsheet and supporting documentation.
The required documents include the applicable transfer-pricing policy and calculation, as well as signed annual financial statements. Purchase and sale agreements, distribution agreements, segmented financial data and royalty or licence agreements may also be required, depending on the circumstances.
The CVAC must show how the adjustment affects the customs value, duty and VAT payable on each affected bill of entry.
Where additional duty and VAT are payable, the importer must settle the amount within 14 days of receiving written notification that SARS has accepted the CVAC. Payment must be made using a Customs and Excise Billing Declaration or CEB01.
Where an adjustment results in a refund, the importer must submit a voucher of correction for each affected bill of entry.
Bills of entry for warehousing may not be included in the CVAC and must be amended through a separate process prescribed under the Act.
Customs and trade specialist Clifford Evans said the more detailed procedure formed part of a broader focus on customs valuation and enforcement.
“There are more and more cases of customs insisting that duty be paid on charges that are clearly non-dutiable,” he told Freight News.
“Valuation is a high risk for SARS, along with tariff classification and countries of origin.”
Evans noted that none of his clients currently used transfer pricing and that his comments related to the broader direction of customs enforcement rather than the operation of the new rules.
The amendments make it important for affected importers undertaking interim or year-end transfer-pricing adjustments to establish whether the customs values declared on previous entries must also be amended.
SARS’ acceptance of a CVAC does not protect an importer from subsequent audit findings, fines or penalties under the Act.
