Opportunities in the Import Business – Laws and Regulations You Need to Know
In Part 1 in our two-part ‘Import Business series’, we took a look at what the import business sector looks like in South Africa, what opportunities exist for entrepreneurs and risks and challenges that exist within the sector. Part two looks at legal and regulatory compliance requirements import businesses have to adhere to.
“When starting or getting into the import business, companies need to educate themselves about the various laws and regulations that govern and run the sector – perhaps even look at outsourcing this service to a reputable company with knowledge on the logistics around customs and regulations in order to avoid hefty penalties,” advises Dr Greg Cline, head of corporate accounts at Investec Import Solutions. They help businesses with every aspect of an import transaction including hedging of foreign exchange risk and the management of import logistics.
Laws and the regulations import businesses have to adhere to:
South African Revenue Services (SARS)
Firstly, importation into South Africa is regulated via numerous legislations, with the main governing body being the South African Revenue Services (SARS) which is regulated by the Customs & Excise Act of 1964 as amended. This act has recently undergone a rewrite due to modernization, but is yet to be phased in.
Upon importation into South Africa, due declaration must be made to SARS. In order to make due declaration, you must be registered as an Importer with SARS. The basic documentation required for due declaration is a Bill of Lading, Commercial Invoice and a Packing List.
Additional documentation may be required based on the origin and type of commodity being imported, so the list is certainly not limited to the above. This will provide SARS with the relevant information to assess the risk of the import and determine if the goods may enter the republic of South Africa or be detained for further evaluation.
Note, SARS is assessing a wide range of criteria based on the documents presented and it is therefore fundamental to ensure your commercial invoice is detailed in depicting the description of goods being imported, country of origin and other such details stipulated within the SARS regulation. The description of goods allows SARS to evaluate if the correct tariff heading has been utilised for importation.
The tariff heading is a code assigned to a product to confirm the percentage of duty due to SARS at the time of importation. Misdeclarations of such a nature will lead to huge penalties and fines that could be detrimental to any importer.
Other laws and regulations
There are also other bodies to consider or be aware of such as Port Health/Plant Inspector and State Vet controlled by the Department of Agriculture and Fisheries, which regulates certain imported items such wooden items, items used for human consumption and items used for animals.
Additionally, we also have the National Regulator for Compulsory Standards (NRCS) which is previously known as South African Bureau of Standards (SABS) where they regulate electronic and safety equipment.
While there are regulations set in place to regulate goods coming into the country, there are also regulations that can prevent certain goods from entering based on a number of reasons. The South African Police Services (SAPS) Act gives SAPS the right to detain any cargo for detention and examination at time of importation. This is an effort to counter anti-smuggling of goods or counterfeit products from entering South African shores.
In fact, lots of items are restricted for importation into the country and certain items prohibited from entering all together. This is controlled by the International Trade Administration Commission of South Africa (ITAC) and available on the Prohibited and Regulated Goods index publication.