SARS: A Look At The Benefits for Small Business – Part 3/3

Welcome back to another Did You Know? chapter where we breakdown everything business and finance simply for SMEs to understand. We continue our look into SARS and how small businesses benefit from it as well as many other fun things that come with SARS to further your knowledge base about how it all works.

Let us recap on Part 1 & Part 2 if you have not read it yet click here to immerse yourself so that you can follow along, we listed the main tax revenue streams of South Africa that every individual and business owners pay to the government to maintain the country’s infrastructure as well as SARS different service offerings to individuals and businesses, but now we are going to focus the second-third function of SARS and that is Import/Export duties, and levies, a very important contributing fact to our country’s GDP and global market presence.

SARS Functionality:

• Collection and administration of all taxes types;
• Protect against the illegal importation and exportation of goods, duties, and levies;
• Facilitate trade, and advise the Minister of Finance on all revenue matters.

History

The history of importing and exporting dates back to the Roman Empire, when European and Asian traders imported and exported goods across the vast lands of Eurasia. Trading along the Silk Road flourished during the thirteenth and fourteenth centuries. Caravans laden with imports from China and India came over the desert to Constantinople and Alexandria. From there, Italian ships transported the goods to European ports.

For centuries, importing and exporting has often involved intermediaries, due in part to the long distances travelled and different native languages spoken. The spice trade of the 1400s was no exception. Spices were very much in demand because Europeans had no refrigeration, which meant they had to preserve meat using large amounts of salt or risk eating half-rotten flesh. Spices disguised the otherwise poor flavour of the meat. Europeans also used spices as medicines. The European demand for spices gave rise to the spice trade. The trouble was that spices were difficult to obtain because they grew in jungles half a world away from Europe. The overland journey to the spice-rich lands was arduous and involved many middlemen along the way. Each middleman charged a fee and thus raised the price of the spice at each point. By the end of the journey, the price of the spice was inflated to almost 1,000 percent.

For additional information: Click Here

What is importing and exporting

Exporting is defined as the sale of products and services to foreign countries that are sourced or made in the home country. Importing is the flipside of exporting, it refers to buying goods and services from foreign sources and bringing them back into the home country. Importing is also known as global sourcing.

Let’s get started with part 3 of this miniseries about SARS. Now the first thing to do before registering for an Import & Export permit is to understand the definition of what that means because the registration process is complex as well as time-consuming for you to start bringing in or shipping out your products to other countries.

We recommend that you start by testing the waters first with importing a product from a different country and depending on that country’s rules, understand how the whole process works down from placing the order to paying for it, receiving the order, to getting a shipping invoice and the reason for us suggesting this option is because you can import twice in a single calendar year without needing to register to import goods even if you do not have an import license.

Definition of Importing and Exporting:

If you are planning to bring controlled, used or second-hand goods, waste, or scrap into the country, you first need to register as an importer with SARS and then apply to the International Trade Administration Commission (ITAC) for an import permit.

An import permit ensures that the items you intend importing, conform to the safety, quality, environmental, and health requirements of the country. They must comply with the provisions of international agreements. Import permits also help to control the inflow of goods of a strategic nature and are meant to limit or eliminate smuggled goods.

The policy that applies to the importation of goods differs from one sector to another. Most new goods are exempt from import control measures. However all used, second-hand goods, waste, and scrap are subject to import control measures.

The process of registering for an import and export permit begins with the following:

1. Register as an importer at SARS – this function can be completed on eFiling or via a SARS Customs Office
2. Go to ITAC or download the application form below:
3. Complete the following forms:
   1. Application to register as an importer, IE 230
   2. Application to import good for personal use, IE 463 & Annexure to IE 463 application to import for goods for personal use
   3. Application to import goods for commercial purposes, IE 461
   4. Application for permit to import chemicals, IE 464 and Annexure to IE 464
   5. Application for permit to import second hand or used passenger vehicle IE 462 and IE Information document to complete the IE 462 form
4. Submit the forms to the Directorate: Import and Export Control at ITAC

International Trade Administration Commission History:

From the mid-1920s, South Africa adopted a trade strategy based on import substitution as a means to pursue industrialisation. The import substitution strategy required relatively high tariffs and a complex tariff structure with various kinds of duties (ad-valorem; specific; compound; and formula duties) to develop, protect, and nurture domestic industries. In 1924, a permanent Board on Trade and Industries (BTI) was established and assigned the function of advising the government on the implementation of this strategy.

Although the tariff policy adopted in 1924 also applied to agricultural products, the government support to the agricultural sector was driven through the Agricultural Marketing Act of 1937 and the Co-operatives Act of 1939. The government intervention in terms of these measures virtually eliminated foreign competition through the application of import and price controls.

Basic commodities continued to dominate South Africa’s exports. The first signs of change to the inward-looking strategy through tariff and trade reform began in the early 1970s, which was necessitated by a perceived need to diversify exports. Towards the mid-1980s, import substitution possibilities were exhausted and exports were increasingly seen as the vehicle to growth. Several studies recommended reform of the customs tariff policy aimed at reversing the anti-export bias inherent in a protected economy with its high-cost structures.

For additional information: Click Here

Industry Insight:

South Africa has a thriving import and export industry on the whole. South African individuals and organisations exported more than R101 billion worth of goods in 2017/2018 alone boosting both the country’s economy and the profits of local exporters to the tune of a R4 billion trade surplus.

A list of the Top 10 Most-Exported goods

• Gems and Precious Metals (14.5%)
• Ores, Slag, and Ash (12.7%)
• Vehicles (12.7%)
• Mineral fuels including Oil (10.1%)
• Machinery including computers (6.1%)
• Iron and Steel (6%)
• Fruit and Nuts (3.8%)
• Aluminium (2%)
• Electrical Machinery Equipment (1.9%)
• Plastic and Plastic Articles (1.6%)

For additional information: Click Here

A list of the different types of import and export transportation:

• Sea Freight
• Air Freight
• Road Freight
• Rail Freight

The import-export industry coupled with all the levies and duties helps South African manufactures to greatly expand their businesses. SARS is the first to be consulted with to draw-up the benefits that come with expanding South Africa’s global market offering which leads to new agreements like the B.R.I.C.S which is starting to show a 1% net positive year on year for increasing South Africa taxes which in turn are used to grow entrepreneurship through the set-up of the different schemes by The Department of Small Business Development and they are as follows:

• Black Business Supplier Development Programme
• Co-operative Incentive Scheme
• National Informal Business Upliftment Strategy
• Shared Economic Infrastructure Facility

So when you hear the name SARS again think of it as more than just a glorified tax collection agent but a tool to grow entrepreneurship to strengthen Africa’s need to unify together as a continent so that we can become the next supercontinent the world has ever seen and to borrow the famous words from Black Partner “Wakanda forever”.

SARS helps the Minister of finance to allocate, review, and distribute the taxes you and I pay to local as well as national departments that keep the economy growing.  Because of SARS, we can now start creating intra-African trade possible under the African Continental Free Trade Area which will boost African country’s GDP by eliminating trade borders so the flow of goods and services will increase entrepreneurship as well as hopefully bring back South Africa’s previously successful manufacturing industry.

To end this miniseries off we would like to highlight we have not even scratched the surface of the complex beast we know as SARS so what these chapters are meant for is to inform you about what SARS does on a daily bases, and how their services can assist you to be more efficient at building your business and as a by-product of this, reducing the high unemployment. Stay tuned to more Did You Know? miniseries that delivers simple to understand information which gives you the power to transform into a force to be reckoned with.