06 Dec 2021

Anything to declare?

by Taryn Hunkin, Consultant, Durban,

2021 strapped on turbo engines and just flew by and is dragging 2022 behind it.  Although, if the last few years have been anything to go by most of us will be cautiously looking forward to 2022 a bit afraid to expect too much of the new year only to be disappointed again.


From a Customs & Excise perspective, 2022 promises to be an eventful year with the updated Harmonised Commodity Description and Coding System coming into force in January. 


As the end of 2021 approaches, everyone is gearing down for the holidays, and dreaming of eggnog, mince pies, and all the goodies they hope to find under the tree come Christmas morning.  It’s been a VERY long and trying year for many and the festive season is a way for us all to put the chaos of 2021 behind us and enjoy spending time with friends and family (following the COVID protocols).


We can only hope that Customs turns a blind eye to the bag of goodies that Father Christmas transports around the world.  Can you imagine if a scrooge like Customs official managed to track the jolly elf down?  Father Christmas would have to register as an importer and exporter with SARS (although thankfully he may now do so online via his SARS e-filing profile) and would have to submit customs declarations to SARS and pay duties and VAT on the gifts he delivers in the Republic.  Bearing in mind not all the gifts in his sack are destined for the Republic, he would more than likely spend the next few years of his life filling out forms and applying for temporary importation for the gifts not destined for the Republic. 


SARS would, of course, do an audit, going back two years, and impose penalties, forfeiture, VAT, duty and interest on all the gifts delivered by Father Christmas in South Africa, and would naturally raise valuation questions.  To complicate things, the gifts are not being sold by Father Christmas to their recipients so there is no sale for export meaning that valuation Method 1 could not be used.  Father Christmas would, therefore, most likely have to make a value determination application to SARS in order to establish the correct value to be declared to SARS on importation. 


Then there’s the origin and tariff classification issues.  There is no preferential trade agreement in place between the North Pole and South Africa so duty would be levied on the gifts at the general rate.  Gifts like cell phones, make-up or certain size television sets will be subjected to ad valorem excise duty as well as customs duty.  Some gifts may require Father Christmas to apply to SARS for a tariff determination to confirm whether or not the tariff heading declared by Father Christmas is correct or not.  If SARS is of the opinion that Father Christmas has declared the wrong tariff heading, SARS will penalise him for the under-entry in VAT and duties. 


Father Christmas could appeal any decision taken by SARS by following their internal appeals processes, but that could take months if not years.  SARS works on a pay-now-argue-later basis so, unless SARS has agreed to suspend the debt, Father Christmas would have to make full payment of any amount demanded by SARS, and hope that his appeal is successful and that he will be able to claim a refund.


The North Pole would be bankrupt after making payment to SARS of the duties and VAT alone never mind the penalties, interest, and forfeiture amounts.  Just be grateful that you won't be selling the gifts received from Father Christmas on.  If you did SARS may hold you liable for any VAT and duties that Father Christmas is unable to pay.


Let's move on to the issue of the second hand vehicle he is parading around in.  The importation of second-hand goods into South Africa is regulated by the International Trade Administration Commission.  Generally second-hand goods are not allowed to be imported into South Africa without a permit.  Luckily Father Christmas’s sleigh isn't driven by an internal combustion engine so he may be able to tap dance his way out of that one.  What about the reindeer?  Have those been checked by the State Vet...I think not.


It's enough to leave you breathless.  However, lucky for Father Christmas, he has Shepstone & Wylie on his side.  Should he run into any difficulty in carrying out his annual foray around the world, he knows who to call. 


I have it on good authority, that Father Christmas has our number on speed dial, just in case.