6 comments on “Invoice Declarations”

Invoice Declarations

          Trade Agreements (to which Invoice Declarations relate) are a topic on their own. One agreement which may be specified on the commercial invoice (in lieu of using a Certificate as proof) for preferential duty purposes is the EU (European Union) Trade Agreement. This agreement was established between the EU and certain countries in the SADC (Southern African Development Community).

          The EU Trade Agreement was changed on 10 October 2016. It was previously known as the TDCA (Trade Development and Co-Operation Agreement). Today it known as the SADC-EPA (Economic Partnership Agreement). This agreement now includes not only South Africa but also Botswana, Lesotho, Namibia, Swaziland and Mozambique on the SADC side, as participants.   

          Invoice Declarations also apply to the agreement between the EFTA (European Free Trade Area) countries and South Africa. 

          The use of Invoice Declarations is allowed by exporters who are approved by the Customs authority in the export country; to insert an Invoice Declaration on the commercial invoice. This may be applied in lieu of the EUR1 (EU) or EFTA Certificates respectively. 

          Approved exporters are issued with an Authorisation Number by Customs. This number must be inserted into the Invoice Declaration when used. It applies to invoices where the total value of originating products in the consignment is EUR 6,000 or more. Consignments with originating products valued at less than EUR 6,000 do not require the Authorisation Number although the invoice declaration may still be used, i.e. by exporters who are not approved. 

          An invoice declaration may only be used on a commercial document such as an invoice, packing list or indent order. SARS does not accept invoice declarations to be used on blanket supplier’s declarations covering multiple shipments or on correspondence of any sort. 

0 comments on “Third Party Invoicing”

Third Party Invoicing

          The golden rule when third party invoicing is involved in international trade consignments is to “use the last invoice”.  Third party invoicing refers to invoices issued by a third party, i.e. a buying or selling agent.

          But why is it important and what are the implications of not taking the most recent invoice into account?

          It has to do with commissions.  Commissions according to the SARS policy on Valuations (SC-CR-A-03 dated 24 January 2014) is when an intermediary acts on behalf of either the supplier of the goods (selling commission) or the importer of the goods (buying commission). Third party invoicing may also include other costs, charges and expenses as a condition of the sale.

Commissions and other expenses influence the Customs value of goods imported and hence, the amount of duty and Vat payable to SARS.

          The last invoice issued in the trade transaction would (or should), in addition to the original price paid or payable, include all commissions, costs, charges and expenses on the invoice. This does not mean that such commissions must always be included when calculating the Customs value for duty purposes. Buying Commissions are often accepted by Customs (and hence deductible) provided these are “bona fide” buying commissions. 

          Occasionally when multiple invoices are involved, confusion may exist over which invoice should be used for Customs clearance purposes.

A personal piece of advice is to obtain copies of all invoices involved in the transaction. Analyse the value of each and explore the invoice with the highest value. If Commissions or other expenses are reflected on a separate invoice altogether, then these too must be considered for inclusion. 

0 comments on “Invoice Part Payments”

Invoice Part Payments

          This is a classical error I’ve seeing made in the past.

          Some suppliers have an uncanny way of making reference to advance payments on an invoice inconspicuous and hard to find. One would typically read that the total value on the invoice resembles a 30% advance payment found at the lower end of the invoice in very fine print.

          In such an example the balance of the payment would be followed up with a supplementary invoice for say 70% of the payment. If this is overlooked it will result into an under payment in Customs duties and taxes. Any Customs clearance must reflect the full transaction value of the goods, i.e. inclusive of all part payments per shipment.

          My advice is that payment terms which have being split into two or three lots must be clearly specified and defined on one invoice. If they are split over more than one invoice then this must be clearly indicated.

          I further advise that the sum of all part payments on the invoice must be reflected on the bottom line.

          At the other end of the spectrum I’ve seeing invoices which cover numerous shipments in one transaction. There is nothing wrong with this so long as the quantities and values on the invoice can be apportioned per shipment. Such instances must be backed up with a packing list per shipment.

          Staged Consignments, i.e. large plant or machinery shipped over several consignments should be invoiced appropriately. More about Staged Consignments will be covered in another blog.

0 comments on “Blank Invoices”

Blank Invoices

          The penal provisions for importing or producing blank invoices going forward will be much different to the past.

          About 18 years ago I was participating in practical Customs training for passenger baggage searches. The training was based at JIA (Johannesburg International Airport), now ORTIA (OR Tambo International Airport).

          My training partner and I were being monitored by the instructor when opening passenger baggage one morning. My partner came across an original BOL (Bill of Lading) in one gentleman’s baggage. Because I was based at a coastal region I was familiar with reading BOL. As a result, we uncovered several containers of fake goods at a nearby premises. In addition, we found a booklet of blank invoices.

          It is illegal to import or to produce blank invoices which are capable of being completed. Blank or incomplete invoices are seeing to be utilised for fraudulent activities.

          At JIA that morning, we proceeded to issue a penalty of R 100 for every page of blank invoice found. There were 38 pages in total. The blank invoices were seized and later destroyed.

          There is a lot more to this story, but you get the point.

          The penal provisions for importing or producing blank invoices is a Category 1 offence in terms of the Customs Control Act.

          In particular, the new penal provisions are imprisonment or a fine not exceeding R 1 million. The new legislation also provides for an ‘additional’ penalty not exceeding three times the monetary benefit gained or to be gained from using them.

          Would you believe, the gentleman who we had penalised at JIA that morning attempted to bribe another Customs Officer to get the blank pages back. This all after being penalised R 3,800 and with several containers being seized. This was a lot of money 18 years ago.

          The penalties going forward appear to be more in line with the level of criminal activity, if engaged in. 

0 comments on “Amended Invoices for Customs Purposes”

Amended Invoices for Customs Purposes

          This seemingly boring subject contains a few cautioning aspects worth noting.

          Customs requires any change to invoice particulars (especially a change in the transaction value) to be accompanied by an amended invoice. Reasons for amended invoices may include for example:

a.       Amounts debited or credited.

b.      Any amount refunded.

c.       Any additional amounts paid or payable whether in money or in kind.

d.      Any information to be corrected.

e.       If SARS Customs request the invoice to be amended.

f.       If the invoice needs to be split for any reason.

An invoice replacing a previous invoice may only replace one invoice, not multiple invoices. Supplementary invoices may also be produced.

          Amended invoices must contain a statement setting out the reasons for the amendment. It should, where applicable, also be accompanied by documentary evidence of such amendment.

          Customs may refuse to accept an amended invoice if they believe that the amendment is not a true reflection of the change.

          You should be cautioned about Customs requesting an invoice to be amended (point e). Any such request should be based on an investigation of sorts. The outcome of such an investigation must be in writing. It may even be in the form of a Determination issued. If you are not satisfied with a decision made by Customs you should follow the dispute resolution process discussed in previous blogs.

          An amended invoice must be communicated to Customs by means of passing a VOC (Voucher of Correction). This is relevant if the amendment results into any change on the Customs clearance declaration.

          Another area of caution is that any VOC passed for an amended invoice must be done within one month of “receipt” of the amended invoice. While the emphasis is placed on the time of “receipt”, the date when the amended invoice was issued is important.

          One should realistically have received the amended invoice soon after its issue. Taking longer than one month may result in interest being demanded from SARS, i.e. for additional duties and taxes on debit notes.