Oil and gas industry in a spin over rebate dispute

Contractors to the oil and
gas industry are facing
customs bills of millions of
rand as the revenue service
is not recognising them as
certified or approved to
rebate duties and/
or VAT.
Under the oil
and gas rebate item
460.23 mineral
rights holders,
petroleum producers
and their contractors
are eligible to rebate
duties and VAT,
but in Cape Town
several contractors
have been told by
customs this is not the
case and that they are
required to produce
a certificate from the
director-general (DG)
of Mineral Resources
or the Petroleum Agency
of South Africa stating
they are in fact approved
to import under the rebate
item.
One company alone is
facing a bill of R8 million
following a customs audit.
“The Cape Town customs
audit division has taken an
interest in who is importing
under the rebate item
and there have now been
incidents where they have
tried to or have scheduled
companies that are
contracted to a petroleum
producer or rights holder,”
a customs expert told
FTW. “Customs’ position
is that the contractors are
not certified to apply the
rebate unless they have
the “certificate” already
mentioned.”
The problem, said the
expert, is that no such
documentation exists.
“In other words neither
the DG nor the
petroleum agency
issues the approval
certificates customs
is requesting
because the mineral
and petroleum
resources development
act 2002 states that
where a mineral
rights holder or
petroleum producer
appoints a contractor then
they, not the contractor,
shall accept
full liability
for any
matter in
which they
are licensed
with the
Petroleum
Agency or
the DG,”
explained the
expert.
According
to Sars spokesman Sandile
Memela, approval for
contractors must be
authorised by the DG or
the chief executive officer
of the agency designated
in terms of section 70 of
the Mineral and Petroleum
Resources Development
Act, 2002 (MPRDA) prior
to importation.
But several customs
experts maintain that the
requirement in the act for
“approval” or “certification”
of a contractor merely
requires some form of
evidence
such as a
contract
between the
contractor
and a rights
holder.
“Even in a
case where
contractors
are in
possession of
Itac rebate
permits they are being
told ‘no',” said another
source. “Itac won’t issue
any rebate permits covering
dutiable goods unless
Itac has satisfied itself
that the contractor has
the necessary “approval”
mentioned in terms of
the rebate item. Clearly,
there is a difference of
interpretation between
customs and Itac as well as
what constitutes ‘approval’.”
INSERT
One company is
facing a bill of R8m
following a customs
audit.