Rand Invoicing

          This seemingly complex subject is rarely understood. Getting it wrong can lead to un-necessary risk which is easy to avoid.

          While risk is normally of a financial nature, the administrative burdens of getting it wrong can also be overwhelming to importers.

          Using a foreign suppliers Rand invoice is generally acceptable for Customs clearance purposes. However, there are certain conditions according to the SARS Valuations Policy SC-CR-A-03 dated 24 January 2014 for using Rand invoicing namely:

  1. The Rand price must be concluded in a Forward Exchange Contract
  2. The rate must be negotiated between un-related parties

According to the policy, Rand invoicing is not accepted when:

  1. The foreign currency was converted at a fixed rate of exchange
  2. The conversion rate was negotiated between related importers and suppliers

The latter circumstances may however be accepted by Customs provided it is accepted in a VDN (Value Determination) issued by SARS. A VDN issued but where the Rand values were not accepted, will contain an alternative course of action which must be followed when clearing goods, i.e. a mark-up on the Customs value or set criteria for converting the currency.

          When applicable, the Forward Exchange Contract number, date and rate concluded must be specified on the commercial invoice.

          Now, here is the seemingly complex part.  Where no Forward Exchange contract or number exists but where the rate was fixed, the invoice must contain the concluded rate. Here are the steps which must be followed by the Customs Clearing Agent when fixed rates are used:

Step 1:  Convert the Rand amount back to the foreign currency using the fixed rate on the invoice;

Step 2:  Re-convert the foreign amount back to Rand using the official SARS rate of exchange, i.e. using the FOB (Free On Board) date.

          It is that simple, but evidence must always be available.  If the invoice contains both Rand and foreign amounts, then merely use the foreign amount.