On 29 November, Sars announced that its Customs officials had destroyed several illegally imported vehicles and clothing valued at over R7 million in Durban in a bid to clamp down on illegal imports that harm the economy. Illegal imports also pose a significant health risk for consumers through the availability of under-priced and unregulated cigarettes which conflict with government’s health policy.
The illegal trade takes place through various mechanisms, including smuggling (bringing goods into the country undetected, or exporting them undetected), fraudulent shipment of goods via a third country to take advantage of preferential import duties and falsely declaring goods under tariff subheadings that do not attract high customs duties, amongst others.
The recently established high-level inter-governmental task team, consisting of the department of trade and industry, the international trade and administration commission of South Africa, and Sars has been tasked with tackling illicit trade, with a focus on clothing, textiles, leather and footwear, scrap metals and gold.
Sars has been working intensively in three key provinces - Western Cape, KwaZulu-Natal and Gauteng - with the highest import volumes in clothing and textiles.
The devastating impact of illegal imports includes: (a) customs duties and VAT due to Sars are not paid, which is a loss to the fiscus; (b) they distort the local economy in the affected value chain; (c) it results in a decline in the country’s ability to manufacture goods locally; (d) job losses, particularly in the manufacturing sector; (e) contravention of intellectual property rights; (f) it discourages local companies from innovating in these sectors; and (g) the fuelling of corruption through these illegal activities.