A warm welcome to another edition of our SMME Traders newsletter.
SARS Commissioner, Edward Kieswetter, announced the revenue results of the 2023/24 financial year, which were a net revenue of R1.741 trillion. This is a year-on-year growth of 3.2%, compared to a nominal gross domestic product growth of 4.9%.
The revenue of R508.5 billion (+4.1% YoY) from traders (importers and exporters) was 20% of the total revenue contribution. We thank all our compliant small, medium, and micro enterprise (SMME) traders for their contribution.
In the October 2023 and March 2024 publications, we focused on SARS Customs administered incentives, particularly the Authorised Economic Operator (AEO) and Customs Deferment. This was to raise awareness about these incentives so that our SMME traders can learn more about them and use the incentives to benefit their businesses and improve their compliance. This publication continues to zoom in on more incentives that the SMME trader community can benefit from.
Background of the Automotive Production Development Programme (APDP)
The APDP is a motor industry production incentive scheme that was established to promote production volumes within the motor industry. This was achieved through promoting and permitting value addition in the automotive component industry value chain, as well as creating and increasing employment across the automotive value chain. The APDP was in place until 2021. It has now been enhanced and is called the APDP Phase 2, a vision that will guide the automotive industry to 2035.
Customs and Excise legislative provisions relating to APDP Phase 2
The current APDP Phase 2 is administered by SARS, under Rebate items 317.04, 317.07 and 460.17 of Schedules 3 and 4 of the Customs and Excise Act, 1964 (Act 91 of 1964) (the Act).
The APDP Phase 2, like the Motor Industry Development Programme (MIPD) is a trade policy that was developed by the International Trade Administration Commission (ITAC) of South Africa, as the custodians of these legal regulations. ITAC has published the relevant documents pertaining to these regulations under the link Tariff Investigations – APDP Documents – ITAC
Benefits of the APDP Phase 2 to Customs traders
The APDP Phase 2 consists of rebates and refunds of the specific Customs duties. All these benefits allow the users to be more competitive and increase their production figures.
ITAC qualifying criteria for the APDP Phase 2
- Entities that have manufacturing operations and are based in South Africa;
- Entities that are registered with SARS as taxpayers and in good standing with SARS; and
- Entities that are Broad-Based Black Economic Empowerment (B-BBEE) compliant.
Examples of traders who can qualify to use the APDP Phase 2:
- Any motor vehicle manufacturers;
- Any motor vehicle component manufacturers; and
- Any motor vehicle component suppliers.
To participate in the programme, the participant must:
- Submit a letter of approval from ITAC confirming their qualification for participation, together with their application;
- Register a special manufacturing warehouse: APDP; and
- Import original equipment components of motor vehicles under chapter 98 of Schedule 1, part 1 of the Act.
Motor vehicle manufacturers must additionally be registered with SARS for rebate item 317.04 and visit the SARS Registration, Licensing and Accreditation system for more information on any other rebates available: Automotive-Production-and-Development-Programme
Licensing of the motor vehicle manufacturing warehouse
Existing and prospective manufacturing warehouse licensees in the automotive industry are required to be registered on eFiling. For a detailed step-by-step guide of the Licensing, Registration and Accreditation compliance obligation process, traders can refer to our previous newsletter (via the link below), which covered this topic in detail.
Traders and Travellers Connect Edition 1
The required certified supporting documents will be indicated during the application process and should be submitted.
It is important to note that licence fees and/or a security deposit may be required and should also be paid if applicable.
The APDP Phase 2 is a voluntary programme for Customs traders who meet the qualifying criteria. There are no legal implications for SMME traders who choose not to join.
A closer look at the changes from the old APDP to the current APDP Phase 2
The Past APDP pre-2021 | The Current APDP Phase 2 post-2021 |
The applicable Rebate item was 317.03. | The applicable Rebate item is 317.04. |
There was no B-BBEE compliance requirement. | There is a B-BBEE compliance requirements. |
There was a Production Rebate Credit Certificate. The Production Rebate Credit Certificates only rebated the Customs value. | There is a Production Rebate Certificate (PRC). The PRC rebates Customs duties. |
The Volume Assembly Allowance was based on the principle of increasing production volumes. | The Volume Assembly Localisation Allowance is based on the principle of local value addition. |
There are three categories of refunds from which Customs traders can claim under the APDP Phase 2.
Refund item 536:
This refund applies to the motor vehicle parts and accessories that would have been imported from outside of South Africa and supplied locally to the Original Equipment Manufacturers (OEMs), which are the original motor vehicle manufacturers.
- A duty would have had to be paid on import;
- Once goods have been supplied, duty liability shifts to the OEM, which will then issue an OEM report, detailing the descriptions of the goods, the quantities, the part numbers, etc.;
- The OEM report needs to be signed and stamped by both the OEM and the Customs officer; and
- The trader will receive the signed and stamped documentation, which they can then use to claim their refund.
Refund item 537:
This refund applies to completely built-up motor vehicles that are imported duty-paid or warehoused and removed from the warehouse (ex-warehouse) duty-paid.
- To be able to claim the refund, the importer must be in possession of a valid PRC, on which they are the beneficiary; and
- The bill of entry date of the imported vehicles must fall within 12 months of the PRC validity period.
Refund item 538:
- These claims are in respect of automotive components that are imported under duty-paid or warehoused and removed from warehouse (ex-warehouse) under duty-paid;
- To be able to claim the refund, the importer must be in possession of a valid PRC, on which they are the beneficiary;
- The bill of entry date of the imported vehicle components must fall within 12 months of the PRC validity period;
- For all refund claims listed above, the import bill of entry date should not be more than two years old; and
- Exceptions will only be allowed if there was a court process in place wherein SARS was involved.
SARS SMME AEO inauguration launch
SARS recently introduced its SMME AEO initiative, a project that aims to support and improve the trade operations of SMMEs by streamlining processes and expanding their global market prospects.
A diverse group of attendees, including senior SARS officials, SMME representatives, trade and industry experts, business community members, and government representatives, gathered for the inauguration. This broad spectrum of those who were in attendance underscored the importance and far-reaching impact of the AEO programme for SMMEs in South Africa.
The new criteria for SMMEs to be eligible for the AEO programme focus on four key areas:
- Consistent compliance with tax and Customs regulations;
- Financial stability and accurate record-keeping;
- Robust security measures to protect against supply chain risks; and
- Adherence to operational standards and practices for efficiency and reliability.
The AEO programme, is focused on growth, innovation, and sustainability. Key initiatives include:
- Encouraging partnerships and collaboration to promote sustainable trade practices;
- Providing ongoing support and mentoring to navigate international trade complexities; and
- Advocating for policies that foster SMME growth and development in global trade.
This new initiative by SARS marks a significant step towards enhancing the role of SMMEs in the global market, ensuring that they are well-equipped to thrive in the international trade environment.
SMME Trader education initiatives
Our strategic objectives are to provide clarity and certainty to make it easier for all traders to meet their tax obligations, to avoid costly penalties. We invite you to look out for announcements of our ongoing regional roadshows published on the SARS website.
- Webinars: In 2021 and 2022, SARS hosted two RLA webinars, which are available on the SARS TV YouTube channel. Click here for a list of traders and travellers webinars.
- Webpage: The SARS website has a dedicated Traders and Travellers Education page that provides useful information and updates for Customs & Excise SMME Traders and Travellers. Click here for information.
- Digital Channels:To make it easier for you to register and get licensed, onboard onto the RLA system, and to show you how to navigate the RLA eFiling system. Click here for self-registration.
For more information on how to register as a trader, you can email [email protected].
#YourTaxMatters www.sars.gov.za
