Welcome to another edition of the SMME Traders’ Connect. This online publication was specially created to provide clarity and certainty to Customs and Excise SMME traders through information and knowledge sharing to make it easier for Traders to meet their compliance obligations.
In this series of our publications, we will focus on Customs Administered Incentives. There are several SARS incentives administered by Customs which may benefit SMME Traders. We plan to put a special spotlight on these incentives individually, to provide relevant information and insight. To begin, SARS will focus on the Authorised Economic Operator (AEO) incentive.
Quick Recap:
The previous publication looked at the topic of licensing and registration and is available here: small business traders and travellers connect edition-1
Congratulations are in order for the Commissioner of SARS, Professor Edward Kieswetter, who has been elected as the World Customs Organisation (WCO) Chairperson. During his tenure, he will be the voice of the global Customs Community. The Commissioner expressed his appreciation for the significant development that places South Africa in the position of global leader and trendsetter.
The Commissioner said that “leadership is an inordinate responsibility and a rare privilege to assist international efforts to bring matters of Customs to the centre of international trade facilitation.”
For the longest time, Customs was seen as a poor cousin to tax. This is bound to change as the Commissioner has vowed to bring customs related matters to the centre of SARS’ work.
SMME Segment
The SARS SMME Taxpayers and Traders (SMME T&T) Segment celebrated the International SMME day on 27 June 2023. SARS collaborated with relevant stakeholders concerned with uplifting SMMEs. At the event, the opportunities that exists as well as concomitant obligations with respect to SMMEs were identified and clarified. The engagements constituted part of the International SMME Day commemoration on 27 June 2023 at which SARS celebrated in Mpumalanga for 2023.
The event was hosted concurrently at Elukwatini Community Hall and Oshoek Border Post in Mpumalanga. We believe that the exchange of ideas and insights will help the segment find new ways to serve the SMMEs and create further opportunities for the sector to thrive.
Stakeholder Engagement
In pursuit of SARS strategic objective to work with and through stakeholders to improve the tax ecosystem, members of the SARS SMME T&T team attended an event that was hosted by Proudly SA, on 22 June 2023, to stimulate the local economy in the Western Cape province. The teams’ participation and contribution were to educate traders on their tax obligations
Special Edition
As it was earlier alluded to, each edition of the SMME Traders’ Connect will aim to provide clarity and certainty in the form of relevant information and knowledge on Customs and Excise Traders. Notably, the purpose is to make things easier for traders to meet their compliance obligations and, at the same time, promote a spirit of working together. The focus is on the promotion and implementation of the AEO Programme with an improved uptake.
What is AEO?
An Authorised Economic Operator (AEO) is a company involved in the international movement of goods and approved by SARS Customs as complying with World Customs Organisation or equivalent compliance and supply chain security standards. AEOs may include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses, distributors, and freight forwarders.
Who can join the AEO programme?
Any party who is involved in the international movement of goods or exports and/or imports goods. This includes parties such as Importers / Exporters/Manufacturers / Warehouse Operators / Clearing Agents and Transporters etc.
How do you qualify to join the AEO programme?
Traders must meet SARS Customs requirements of compliance and supply chain safety & security standards. The details are outlined below.
Qualifying criteria for level 1 compliance:
- Need to have sufficient customs knowledge
- Need to have sufficient financial recourses of 3-year period
- Need to have your tax affairs up to date with no outstanding disputes ,documents, taxes, penalties, or interests with SARS
- Need to have reliable computer logistical system and record keeping
- Need to have appropriate record of compliance.
Qualifying criteria for Level 2 safety and security:
N.B. The traders need to meet criteria for Level 1.
- Premises and/or building of the applicant must be safe and secure with controlled access.
- Trading partners associated with applicant must be reputable, meet and promote safety requirements.
- The trader must have measures in place to minimise and deal with risks such as loss or damage to records/information.
- Information must be kept confidential and protected at all times whether it be digital or physical.
- There must be controlled access for employees and any other person into the applicant’s premises.
- The applicant must ensure that the cargo under his control or supervision is always protected and secured.
- Employees must be trained and made aware of the different threats that come with the international supply value chain i.e. terrorism. They should be able to recognise suspicious threats and know what action needs to be taken when faced with that eventuality.
- Applicant must have good communication and cooperation with SARS.
- Applicant must have good governance in place and adhere to the latest version of King Reports on Corporate Governance.
What are the benefits of the AEO programme for Traders?
The AEO Programme has two types of levels namely, (a) Level 1 which is a compliance programme and (b) Level 2 which is a safety and security programme; the type of benefits available are dependent on each of these respective levels.
Below are the benefits that are available under the Level 1 compliance programme:
Level 1: Compliance benefits
- Allocation of a dedicated Client Relationship Manager (CRM)
- Reduced security amounts
- Tariff determination, valuation determination and non-intrusive inspection(s)
- Have fewer stops than other clients
- AEO goods may be inspected at the traders’ premises and not necessarily at the border and AEO traders may not pay any security deposit for this
- AEO clearance processes will be expedited
- You get allocated with a SARS AEO logo as an identifier
- Opportunity to be recognised by other major Trading Partners .
Level 2: Safety and Security benefits
N.B. Level 1 benefits are automatically inclusive in Level 2, additional benefits are:
- Exemption from specified customs supervision for special or extra attendance
- Prioritising of applications for special or extra attendance services, where not exempted.
- No charges being imposed where special or extra attendance is required.
- Expedited processing of refund and drawback applications.
- Fewer documentary and physical inspections for compliance and supply chain security risks.
- Exemption from security payments
- Extension of validity of the relevant license issued to such holder.
- Reduced cyclical compliance audits.
- Provision of targeted training sessions.
- Provision of trade statistics on a quarterly basis.
- Recognition by other government agencies to the extent provided for in a Memoranda of Understanding.
- Recognition by other customs authorities to the extent provided for in mutual recognition arrangements.
AEO Application process
Step 1: Submit Application for customs and exice accredited client status DA186 form which can be accessed on the SARS website or by emailing [email protected].
Step 2: Application goes through validation.
Step 3: Meet the requirement of the Competency Assessment Test.
Step 4: Application adjudicated by SARS internal Accreditation Committee.
Step 5: The status is conferred, and the benefits are offered for a period of five (5) years.
Validity of the accreditation status
The AEO Status is valid for 5 years and the renewal application must be submitted 30 days before the expiry date.
When does AEO status need to be renewed?
When the AEO status expires, as outlined above, traders can apply for renewal of the status no later than 30 calendar days before the expiry of the status.
The SARS Commissioner may extend the validity period of the status if the renewal application is not finalised before the expiry date.
For more information, please visit the AEO webpage or send an email to [email protected].
Our four primary strategic objectives are:
- To provide clarity and certainty.
- To make it easier for all traders to meet their tax obligations.
- To make it hard and costly for traders who do not comply.
- To work with and through stakeholders to improve the tax ecosystem
To achieve above objectives, SARS SMME recently hosted two webinars in collaboration with Taxpayer and Trader Education:
- Customs Administered Incentives, and
- The SMME Traders Rights
These are available on SARS TV YouTube channel via this link: https://youtube.com/live/1d0cAe9FVag?feature=share
Thank you for taking time to read this edition of the SMME Traders Connect newsletter. We encourage you to be on the lookout for other information-sharing opportunities where you can gain a better understanding of your obligations and opportunities where we can work together to promote compliance.
For more information, go to our webpage Small Businesses – Traders and Travellers | South African Revenue Service (sars.gov.za).
#YourTaxMatters www.sars.gov.za
