The South African Revenue Service (Sars) annually releases two ‘plan’ documents, a Strategic Plan, and an Annual Performance Plan. Over the next few week’s you will be reminded of the commitments in the first document.
This week, two of the “Strategic Risks Facing Sars”. The first, the “Commercial fraud on Imports”, the risks we need to manage – the incidence of import under-declarations not only create a leakage in potential Customs duties and Value-added Tax (VAT), but also lead to risk of illicit capital flow, foreign exchange transgressions and occurrence of tax havens. We have noted an increase in the abuse of rules of origin, valuation regime and tariff classification.
How we will manage these risks - (i) Invest in building a stronger and sophisticated transfer pricing, valuation and rules of origin capability in both our systems and people; and (ii) Participate in the trade and international Customs bodies and initiatives with other countries.
The second, the “Threat of global terrorism”, the risks we need to manage - Terrorist organisations use global trade supply chains as their financing mechanism and South Africa may be seen as the weak link or the springboard of global terrorism through weakened Customs and tax controls.
How we will manage these risks - (i) Continue to participate in both domestic and global anti-terrorism bodies such as the Financial Action Task Force, to assist Sars in the identification, mitigation and sharing of information on potential terrorist threats through the trade supply chain networks, (ii) Deploy Non-intrusive inspection at Ports of Entry such as container scanners, baggage scanners and body scanners; (iii) Introduce the Authorised Economic Operator (AEO) Partnership Programme in alignment with the World Customs Organisation (WCO) Framework of Standards to Secure and Facilitate Trade (SAFE) to support facilitation of secure trade; and (iv) Increase Customs Officer competencies and discipline to improve our detection and deterrence at Ports of Entry.