The customs division of the South African Revenue Service (SARS) is considering imposing “reference price guidelines” for specific clothing, textile and leather items that would be used to determine the level of duties applied to the goods. The guideline price would replace the invoiced price as a way of combating under-invoicing, which is rife and undermines the tax base.
The measure — suggested at the National Economic Development and Labour Council (Nedlac) — has raised concern among business on the grounds that it would prejudice legitimate traders and add to costs.
SARS chief officer for customs and border management, Gene Ravele, told Parliament’s economic development committee yesterday that reference price guidelines were used effectively by Brazil to combat the flood of cheap imports, which in SA had led to the closure of textile factories and the loss of jobs.
Reference price guidelines would entail determining a base price for a particular item for the purpose of calculating customs duty, which traders would be obliged to pay.
Ravele briefed the committee on SARS’s battle against illegal imports, saying that 120000kg of confiscated, uncleared or abandoned second-hand clothing had piled up in the state’s warehouse.
The quantity of counterfeit clothing and textiles seized has climbed from 756000 units with a value of R90m in 2007-08 to 1,4-million units valued at R31m in the year to date.
The other proposal on the Nedlac table, Ravele said, was to assign particular types of imports to dedicated ports that could develop the necessary expertise, but again business has warned that this would entail additional cost, particularly transport costs, and would act as a nontariff barrier. Discussions were taking place at Nedlac on this.
Ravele said the rapid growth of illicit trade, be it abalone exports, counterfeit cigarettes entering SA from neighbouring countries, illegal textile clothing and leather goods imports or the importation of vehicle components such as pirate tyres , had intensified in the global economic meltdown.
The fraud involved either the undervaluation of goods, the false declaration of country of origin and tariff, the rerouting of goods via third countries or the misuse of duty rebates and credits.
SARS was becoming increasingly tough with repeat offenders in the clothing and textile industries and intended to take them to court rather than simply impose penalties . Ravele said SARS believed there should be a specialised criminal court that dealt with commercial import fraud.
A new customs monetary penalty system was also being developed and SARS planned to intensify its cross- border inspection of factories in neighbouring countries, but Ravele said the effective exercise of customs controls was hampered by a lack of skills. He also said greater co- operation was needed with the Department of Trade and Industry.
