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Customs Licensing – Foreign Registered Entities

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The concept of Customs Licensing – Foreign Registered Entities may seem daunting at first.

In this blog we aim clarify who (and the naming of each) the parties involved in an Agency Agreement (i.e. Foreign Representation) are, the types of licenses, nomination, legal implications and responsibilities, and VAT implications.

First, the concept of an Agency Agreement is different from that of a Customs Clearing Agent.

Agency Agreement and the Parties Involved

Here is a detailed explanation:

  • A Customs Clearing Agent is a company who performs, amongst other things, import and export clearance declarations. These are performed on behalf of an importer or exporter. This must not be confused with a Registered Agent (discussed hereafter)
  • An Agency Agreement in the context of Customs is where a Local Entity represents a Foreign Entity. The Local Entity is the Registered Agent or Agency
    • The Local Entity must register with SARS Customs as a Registered Agent. They represent a Foreign Entity
    • The Foreign Entity must register with SARS Customs as a Foreign Registered Entity. They are represented by a Registered Agent.
  • A Registered Agent may be any locally registered company or private individual with a South Africa residency. It may include for example an Importer, Exporter, Customs Clearing Agent, Road Transporter, etc.

Therefore, a Customs Clearing Agent may, in addition to being a Licensed Clearing Agent, also be a Registered Agent. These are two separate Licenses / Registrations.

Nomination of a Registered Agent

A Foreign Registered Entity may be represented by multiple Registered Agents. They may also be represented by multiple types of Registered Agents.

Before any Customs business may be transacted between the parties, the Foreign Registered Entity must “Nominate” the Registered Agent. This will allow transactional business between the parties to be legally transacted. This will allow SARS e-Filing System, and the SARS Customs EDI Clearance Declaration System to work effectively.

The licensing and nomination procedures are somewhat complex. One must pursue these in a particular sequence together with the correct documentation to avoid disappointment.

Consult with us for the correct license categories, types, and e-Filing procedures for Foreign Entities.

Types of Customs Licensing – Foreign Registered Entities

There are five SARS Customs types of licenses which one may qualify for in an Agency Agreement.

Types of Licenses:

  1. Importer
  2. Exporter
  3. ROG (Remover of Goods in Bond)
  4. Carriers for Sea, Air, Road or Own Goods Carrier. This falls into the category of RCG (Reporting and Conveyance of Goods)
  5. Searchers for a Wreck.

Please visit our RLA (Registration, Licensing and Accreditation) page for more information.

Simply put, the local entity, namely the Registered Agent legally puts themselves into the shoes of the Foreign Registered Entity.

The Registered Agent thus assumes all roles, responsibilities, legal liability and compliance of the Foreign Registered Entity.

The Foreign Entity may also be termed, the Foreign Principal by the authorities.

Please be sure to pursue a clearly defined contractual agreement between the parties when entering into any Agency Agreement.

The Registered Agent may thus conclude contractual obligations on behalf of their Foreign Principal with SARS Customs.

These may include for example:

  • Submitting (via a Clearing Agent, or as a Clearing Agent), all import or export clearance declarations, refunds and drawbacks
  • Setting up Deferment Accounts for the payment of Duties and Taxes with SARS Customs. This includes setting up of a Bond or Bonds for the Deferment Facility
  • Setting up a Bond or Bonds as a Remover of Goods in Bond
  • Issuing transport documents and reporting for RCG (Reporting and Conveyance of Goods).

VAT Implications

Each company and each scenario are somewhat different from another.

Once is best advised to seek the advice of a properly registered and qualified Tax Practitioner. Someone who specialises in Cross Border VAT issues.

Please Contact us if you require the expertise of a Specialist Cross Border VAT Consultant.

Contact Us

Please Contact us for advice or a quotation for Customs Licensing and Registrations.

We will help you with:

  1. Understanding the specific solutions required in the context of an Agency Agreement
  2. Application Process and e-Filing Procedures
  3. Supporting Documents and Templates
  4. Overcoming any e-Filing challenges.

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Customs Licensing – Trade Agreements

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Both importers and exporters can benefit from Customs Licensing – Trade Agreements.

Importers benefit from rates of duty which are lower than the General rates of duties at time of import.

Exporters benefit by positioning themselves as preferred suppliers for goods imported at destination countries. The benefits are import duties at lower rates.

While exporters from South African need to register for a Trade Agreement, importers into South Africa can benefit without registration. Importers merely need to produce the proof of origin to qualify.

This all seems fairly simplistic. In this blog we provide clarity on the inner workings of the ROO (Rules of Origin) and Trade Agreements.

Origin of Goods

But first, SARS Customs requires that the origin of the goods must be supplied or proven.

The origin of goods in this context is a separate issue from origin for Trade Agreements.

When it comes to “Origin”, the question simply is… “where do the goods come from?

The origin is understood from the Customs Act to be as follows.

Origin in the Customs Act

What is required?

  1. 25% of the materials produced or labor performed must be in that territory
  2. The last process in the production or manufacture of those goods must have taken place in that territory, or
  3. As otherwise determined by ITAC (International Trade Administration Commission) in respect of certain goods.

Why is the Origin of Goods Important?

The Origin of Goods is Important to Determine the following aspects:

  1. MFN (Most-Favored-Nation treatment) (i.e. for duty and non-duty benefits)
  2. Anti-dumping duties
  3. Safeguard measures
  4. Origin for physical marking requirements
  5. Trade statistics
  6. Import and export restrictions from specific countries, and
  7. Countervailing duties.

Proofs of Origin

Origin is normally proven by the supplier. The supplier must endorse the Commercial Invoice with the origin of the goods on it.

Certificates of Origin may also be supplied. These are normally issued by Chambers of Commerce, Government Departments or Statutory Bodies.

Where different rates of duty apply to goods originating from different territories or the extent of rebates under Schedule No. 3 (Industrial Rebates) is affected by the origin of the goods, then a COO (Certificate of Origin) must be produced.

Trade Agreements

A Reciprocal Trade Agreement means that the benefit of duty reductions flows in both directions. I.e., an agreement between South African and the European Union means that duties may be reduced in both countries.

A Non-Reciprocal Trade Agreement means that the benefit flows in one direction only. This is most prevalent when an MFN (Most Favored Nation) statis is conferred from one country to another. This is also known as a GSP (General System of Preferences).

The SACU (Southern African Customs Union) on the other hand is a Customs Union. Duties between the BELN (South Africa, Botswana, Eswatini – better known as Lesotho, and Namibia) are Free. There are also other dispensations and co-operative arrangements between Members States.

Reciprocal Trade Agreements in South Africa

These include for example:

  1. SADC (Southern African Development Community) – including about 15 countries in Africa and some adjacent islands
  2. EU (European Union) – South Africa and the EU States
  3. SACUM-UK (United Kingdom) – Southern African Customs Union, Mozambique and the United Kingdom
  4. EFTA (European Free Trade Area) – Iceland, Liechtenstein, Norway and Switzerland
  5. MERCOSUR (Common Market for the South) – Argentina, Brazil, Paraguay and Uruguay
  6. AfCFTA (African Continental Free Trade Area) – Most African Countries with the potential of being the largest in the world.

It is not uncommon for an importer under a Trade Agreement to by as much as 20% or more.

Non-Reciprocal Trade Agreements in South Africa

These include for example the GSPs (Gernal System of Preferences) with Norway, Turkey and Russia.

The AGOA (African Growth and Opportunity Act) is a legislation created in America. It is a MFN (Most Favored Nation) status is conferred onto African territories, including South Africa. Imports into America from South Africa may attract lower rates of duties.

Customs Licensing – Trade Agreements

Any exporter of goods from South African must license as an Exporter under each Trade Agreement to which it subscribes.

An exporter who is a Manufacturer of goods must also license as a Producer of goods. To be clear, an exporter who is also a manufacturer of goods must license for both, i.e. an Exporter and a Producer under each Trade Agreement. This entails two separate license applications and hence a separate license approval for each Trade Agreement.

I have seen too many Exporters, and their Consignees penalised by Customs. One must ensure full and proper registration.

Exporters who have not on-boarded to e-Filing yet must do so urgently to avoid becoming suspended. Suspensions are anticipated to take effect in mid to late 2024. Visit our RLA (Registration, Licensing and Accreditation) page for more information.

Contact Us

Please Contact us for advice or a quotation for Customs Licensing – Trade Agreements.

We will help you with:

  1. Application Process and e-Filing Procedures
  2. Supporting Documents and Templates
  3. Overcoming any e-Filing challenges.

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Customs Licensing – Importer Exporter Code

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There is so much confusion in industry about “Customs Licensing – Importer Exporter Code”.

At the same time there are so many Customs clients who are in-fact registered, but still not Onboarded to e-Filing.

In this blog we will clarify who must register and when one is required to be registered.

We will also discuss the consequences of not being properly registered with Customs, and also e-Filing challenges.

What is a Code 70707070?

A Code “70707070” or simply Code 70 is a First Time Importer or Exporter Code.

This is a general Customs code which is allowed to be used as a once-off code only. It is used when declaring goods into or out of South Africa.

The Code 70 in essence replaces a registered Customs Code. With this code one may declare goods on a Customs Clearance Declaration without registering at Customs.

Code 70 though is not without its pitfalls. When one uses a Code 70 it means that you do not declare your name or company name to SARS. SARS therefore does not know or understand “who” you are.

The result of this is that many imports or exports becomes automatically queried or stopped for inspection purposes. SARS may verify who you are and what you are importing.

Who is “Not” Required to Register?

The following persons are not required to register or license with SARS Customs:

  1. Natural persons who imports or exports for a total value not exceeding R 150,000.00 during a calendar year in one or more consignments
  2. People who import or export Household or Personal Effects
  3. A person who is not a South African citizen who exports a motor vehicle to a non-SACU country.

These persons may all use the General Customs Code 70.

Anyone not complying with paragraph numbers 1 – 3 must register or license with SARS Customs.

Who Must Register?

Conversely, and to make it clear, the following persons or companies must register or license with SARS Customs:

  1. Anyone who is not a natural person (i.e. a company)
  2. Anyone who imports or exports for commercial purposes or commercial gain
  3. Anyone who’s imports or exports exceed R 150,000.00 over a calendar year, even a natural person (i.e. a boat or vehicle exceeding R 150,000.00)
  4. Anyone who exports scrap metal
  5. Anyone who is involved in other Customs activities such as Rebates, Bond Stores, Trade Agreements, etc.
  6. Anyone who is required to make an advance payment via the APN (Advance Payment Notification) process.

If you are required to register or license with SARS Customs, then please Contact us for a quotation.

We can take allot of pain out of the process. You do not need to re-invent the wheel.

Exemptions from Customs Licensing – Importer Exporter Code

The following persons are exempt from Licensing with SARS Customs:

  1. Persons importing or exporting Human Remains
  2. Goods which in the opinion of the Commissioner for SARS are of no commercial value (i.e. samples which are mutilated or destroyed)
  3. Goods of a value “not” exceeding R 500.00, and on which no export duty is payable.

These persons are allowed to use the so called “Simplified Clearance Declaration” form “DA 306″. These are generally used at ports or airports and do not require any professional assistance.

e-Filing Challenges when Registering or Licensing

Most but not all license types are required to be performed on SARS e-Filing.

But e-Filing is not without its challenges. The following aspects may be problematic during the licensing process and may prevent one from proceeding.

Examples of e-Filing Challenges:

  1. Registered Representative issues
  2. Individual Profile issues
  3. Customs Agent issues
  4. Tax Type Merger issues
  5. APN (Advance Payment Notification) issues
  6. Company Income Tax issues
  7. User Rights issues.

Almost all of these issues can result in one not being able to proceed with the e-Filing application.

One is advised to seek professional help during the licensing or Onboarding process. We find that clients simply do not manage to resolve many of these e-Filing challenges by themselves.

These challenges may take a day or two to resolve. They may even take a month or two if not attended to properly. In some extreme examples one can wait up to 3 – 6 months or even longer to resolve.

Incidentally, Customs clients who are registered but not yet Onboarded to SARS e-Filing have become suspended.

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Consequences of Not Registering or Licensing

Here is a list of consequences of not been properly licensed with SARS Customs:

  • Firstly – one can attract a penalty of R 5,000.00 per incident, i.e. per SAD 500 Clearance Declaration
  • Secondly – Customs will query and stop the consignment for physical inspection, resulting in additional costs and delays
  • Thirdly – Customs can audit your books going two years back and “Schedule” you for past contraventions.

Types of Customs Licenses

See our Services page under RLA (Licensing, Registration & Accreditation) for information about the types of licenses.

Contact Us

Please Contact us for advice or a quotation for Customs Licensing and Registrations.

We will help you with:

  1. Application Process and e-Filing Procedures
  2. Supporting Documents and Templates
  3. Overcoming any e-Filing challenges.

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SARS Customs AEO Accreditation

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The Customs AEO (Authorised Economic Operator) Accreditation is better than its predecessor, the PTA (Preferred Trader Accreditation) Program.

  1. The AEO offers real tangible benefits
  2. With a little help, the Application Process is simpler, and
  3. The Audit Requirements are less stringent than before.

Also, the AEO Accreditation takes into account one’s relative company size during the vetting process. For example, even SMME’s now qualify to apply.

Smaller companies do not need a team of qualified corporate governance officers to draw-up highfalutin policies to prove compliance. Off-course, one does within reason, to demonstrate some level of compliance to the Customs legislation.

How to Demonstrate Compliance

  1. Supply of Standard Operating Procedures
  2. Proof of Financials and a Good Financial Track Record
  3. Passing the Customs CSK (Sufficient Knowledge Test).

There are two Levels of AEO Accreditation

Level 1 – Compliance

Level 1 has to do with one’s Record of Compliance, Logistical Systems, Sufficient Knowledge, Financial Resources and Domestic Taxes. This level may be viewed as internally focused.

Level 2 – Safety and Security

Level 2 builds on Level 1 Accreditation. In addition, it focuses on:

  • Security of Buildings and Premises
  • Business Partner Security
  • Crises Management and Recovery
  • Information and Confidentiality
  • Personnel Security
  • Cargo Security
  • Education and Training
  • Communication with SARS, and
  • Good Corporate Governance.

This level may be viewed as both internally and externally focused.

The Benefits of AEO Accreditation

There are varying benefits between Level 1 and Level 2 Accreditation. The below listed benefits are a consolidation of the primary benefits for both Levels 1 and 2.

Benefits Include:

  1. Access to a Customs Client Relationship Manager
  2. Prioritisation of Applications (Licensing and Clearance Related)
  3. Reduced Security Amounts (i.e. Guarantees for Bond Stores, Rebate Stores, and Deferment Accounts)
  4. Reduced Inspections and the ability to Inspect Cargo at Premises (i.e. Embargo’s).

The Customs AEO Accreditation is a far better instrument for Trade Facilitation than its predecessors.

The benefits are far reaching. They will help Importers, Exporters, Customs Clearing Agents and Transporters to expedite Customs formalities, and to reduce costs.

Contact Us

Please Contact us for advice or a quotation for the Customs AEO Accreditation.

We will help you with:

  1. Application Process and e-Filing Procedures
  2. Supporting Documents and Templates
  3. Compliance Verification Requirements and Guidance
  4. Preparation for the CSK (Customs Sufficient Knowledge) Test.

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Customs Licensing Deadline – 31 March 2023

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Did you know that the Customs licensing “renewal” deadline is 31 March 2023?

All Customs clients must re-register or migrate to Customs e-Filing, on time.

This is not merely an update of information. This is a complete re-registration of each license type to e-Filing.

How to License before the Customs Licensing Deadline – 31 March 2023

We assist all Importers, Exporter, Customs Clearing Agents, and Transporters in South Africa with Customs licensing.

Our qualified Customs Tax Practitioner knows how to overcome Customs Licensing and e-Filing challenges.

In a recent notice to trade, SARS indicated that Customs licenses not renewed on time will be canceled (end 2024).

Do you need our assistance?

Or do you have a client who may need our assistance?

Because of our vast experience and qualifications in this field, we have the means to facilitate this frustrating process.

You are welcome e-mail us, or set-up a Teams call to discuss your license requirements with us.  

License Types

We provide the following Customs Licensing and Registrations, and more:

  1. Importer Exporter Code
  2. Bond Store Registration
  3. Rebate Manufacturing Store
  4. Clearing Agents License
  5. Deferment Accounts
  6. Dual EDI Registration
  7. Remover of Goods in Bond
  8. Road Consignor Bond
  9. Drawback Registrations
  10. Name Changes & Updates, Bond Changes
  11. Foreign Registered Entities
  12. Trade Agreement Registrations
  13. Excise Rebate Manufacturing Stores
  14. Migration to e-Filing and Re-Registrations
  15. e-Filing Relationship Management, and
  16. RCG (Reporting and Conveyance of Goods).

Contact Us

Please Contact us for advice or a quotation.

We can help you with:

  1. Application Process and e-Filing Procedures
  2. Supporting Documents and Templates
  3. Overcoming any e-Filing challenges
  4. Excise Rebate and Manufacturing Applications.

Excise applications may include wine and fermented beverages, spirits, perfumes and similar products.

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