Customs Tax Status of Goods

            The Customs Procedure Codes (CPC) and the Tax Status of goods are inextricably linked. The CPC codes indicate what the Tax Status of goods are.

“export taxes from South Africa may become levied for the first time…”

The following definitions are important in understanding the concept of Tax Status in the new Customs Control Act:

Tax” is defined as “an import tax, export tax or domestic tax on goods”.

Taxable” indicates that an “import or export tax has been imposed… in terms of a tax levying Act”.

Tax Levying Act” means any legislation other than the Customs Control Act on which tax is levied. It includes any international agreements to which other legislation applies. It particularly includes the:

–        Customs Duty Act

–        Value-added Tax Act

–        Excise Duty Act

–        Diamond Export Levy Act

–        Diamond Export Levy Administration Act

A Tax Status may be conferred on Home Use goods or goods which attract any other Customs Procedure. The following Tax Statuses may apply to goods:

–        Tax Due Status

–        Tax Free Status (of tax imposed)

–        Tax Refundable Status (on domestic tax such as VAT and Excise duty)

The Customs Duty Act also makes reference to a “Partial Tax Due Status”.

            An interesting development at SARS over the past few years has being the imposition of environmental levies on goods such as plastic bags, tyres, and CO2 tax on motor vehicles.

            Industry rumors are abound that export taxes from South Africa may become levied for the first time in a number of decades. The new Customs legislation makes sufficient provision for the possibility of export taxes.

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Customs Compliance in South Africa

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How do Customs Procedure ‘Codes’ work?

            Customs Procedure Codes (CPC) consist of three parts. The first part is the Procedure “Category” Code (PCC), for example:

Category Description
A Home Use Procedure
B National and International Transit
C Transhipment Procedure
D Temporary Admission
E Warehousing Procedure
F Stores Procedure
G Tax Free Shops Procedure
H Export Procedure
I Temporary Export and Re-Importation
J Inward Processing Procedure
K Processing for Home Use
L Outward Processing Procedure

            The second part of the code is the Requested Procedure Code (RPC). This is the “Purpose” of the Customs declaration (examples to follow).

            The third part of the code is the Previous Procedure Code (PPC). This is the code of the “Previous” Customs declaration used in the movement of goods under Customs control.

“But don’t worry too much about the acronyms…”

            But don’t worry too much about the acronyms namely PCC, RPC and PPC. Your only real objective is to have a broad understanding of how the CPC and their intended use works. Here is an example of the three parts of a code for A11.00 (Home Use of goods, on imported goods):

Procedure Category Requested Procedure  Previous Procedure
A 11* 00
Home Use Home use on goods, of imported goods None

*The “1”  series generally means Home Use goods

In this example, the Previous Procedure is “00”. Whenever you see a “00”, it means that there was no Previous Procedure. In other words, there was no previous Customs clearance for the goods being cleared.

            Taking this example further, if you had cleared the goods directly into a bonded warehouse (E – Warehouse Procedure), and you subsequently cleared the goods out of the warehouse as Home Use goods (A – Home Use Procedure), the codes would look as follows:

  Procedure Category Requested Procedure  Previous Procedure
First Clearance E 40* 00
Ware-housing Clearance of imported goods into a customs warehouse under the Warehousing procedure None
Second Clearance A 11 40*
Home Use Home Use of goods… …previously placed under the Warehousing procedure

*The “4”  series generally means Warehouse goods

Notice the “40” in each of the two codes. In the first clearance, the “40” (because of its centre position) means that the goods are being placed into a bonded warehouse. In the second clearance the “40” (now at the end position) means that the goods are being taken out of the bonded warehouse where they were initially cleared. The “11”, which now takes precedence in the centre position, means that the goods are being cleared for Home Use. One needs to have an understanding of how the codes work and how the positioning of the codes affect the status of goods.

            For those accustomed to the traditional Purpose Codes, the first clearance (E40.00) would be WH (Warehouse) and the second clearance (A11.40) an XDP (Ex Duty Paid).

            In terms of the Customs clearance declaration, the Procedure Category is cleared at header level. The remainder of the code is cleared at line level.

            For a full list of codes visit the SARS website http://www.sars.gov.za and search for “Customs Procedure Poster” under the link “Find A Publication” on the home page.