The ITA stands at the threshold of a new era for the local Information, Communication and Technology (ICT) Sector. This representative body, together with its membership and industry partners, is poised to play a crucial role in the growth and development of the sector, as well as serving as a credible, effective channel of communication between various stakeholders.
To this effect, ITA members initiate issues, which need attention at international and national governmental, NGO, para-statal and business level. Currently we are actively involved in addressing the following issues:
ISETT SETA Representation - The ITA has three representatives from our members on the ISETT SETA Board to ensure that there is a constant flow of credible feedback and that the input received from our members are tabled.
Nicole Sekelani +27 11 315 1319
Chairman: Dali Mpofu
For more information visit www.ictcharter.org.za
All of us in the IT Sector are affected by the SABS Levies, which are imposed upon our products, in one way or another. The formulation of the various levies are compiled by the SABS and they then have a series of discussion workshops with relevant Stakeholders, prior to them finalizing the levy and submitting them to the Department of Trade and Industry, for final ratification.
The ITA is currently the only recognised representative body for the ICT Sector at these quarterly workshops and through this active participation we are able to provide our members with regular feedback and also raise important issues on their behalf. We call upon any of our members that wish to be part of this process, or that have any issues that they would like us to address, to please the ITA offices.
Important Documentation Received from SABS:
Please find attached the Release form. The form is available at the SABS and is for the use of companies where the product they are importing does not have an LOA and the company need to obtain a LOA. The container will be stored in a warehouse and the product not to be sold until the LOA is obtained.
For detailed information regarding the form, please contact Mr. Cameron Ngwenya on 012 428 6974.
The change in tariff regime can be summarized as follows:
1. Previously all PC monitors were classified under tariff heading 8471.60 of the Harmonized Commodity Description and Coding System (“HS”), on account of the fact that the older technology allowed for these monitors to be fitted only with data inputs, such as 15 pin D-sub connectors.
2. With the change in technology and use of personal computers (gaming, home entertainment, etc), the manufacturers of these flat panel monitors started fitting the monitors with video inputs, e.g. S-video, DVI, etc, in addition to the data inputs.
3. As a consequence of these monitors being fitted with video inputs, the South African Revenue Service (“SARS”) determined that such monitors are no longer exclusively or principally used with automatic data processing machines, and determined that such monitors be classified in tariff heading 8528.59.10 as video monitors, as provided for in the HS Explanatory Notes for tariff heading 8471.60 (prior to 1 January 2007) and tariff heading 8528.51 (from 1 January 2007).
THE CONSEQUENCE OF THE CHANGE IN THE TARIFF CLASSIFICATION
The effect of SARS’s determination is that it is now seeking to recover approximately 35% of customs duty retrospectively for two years from all importers who cleared PC monitors with video inputs as PC monitors under tariff heading 8471.60 (before 1 January 2007) or 8528.51 (after 1 January 2007), which was free of duty.
WHAT ARE THE OPTIONS?
The Customs and Excise Act, No 91 of 1964 (“the Act”) does, however, provide for a full rebate of customs duty on imported video monitors, provided that, at the time of entry of the goods, importers have in their possession a certificate from the SABS confirming that the monitors have a resolution of more than 600 lines. The rebate provision in question is rebate item 460.16 of Schedule No 4 to the Act.
The use of the rebate item will still result in zero customs duty being paid, and takes care of the importers’ liability going forward.
With regard to the two year retrospective liability for duty on PC monitors fitted with video inputs, a different approach needs to be taken, as a result of the following:
1. The SABS does not, as a rule, issue the resolution certificates retrospectively. Therefore, if the resolution certificates are obtained from a current date, they cannot be applied to previous imports;
2. If the SABS could be convinced to issue such certificates retrospectively, in order to utilize the rebate item retrospectively, previous duty paid (“DP”) bills of entry would have to be changed to general rebate (“GR”) bills of entry. The process for such an amendment is clearly prescribed in the Act, which requires that the DP entries be substituted with GR entries. However, such substitution may only be made within a period of six months from the date of the DP entry, which essentially means that substitutions in the present instance can only be made for imports of the last six months. This still leaves a liability for customs duty for a period of 18 months.
In view of the above, we propose that SARS be approached at the highest possible level with a request that the customs duty payable on all previous imports of PC monitors with video inputs should not be demanded from the importers. In this regard we further propose that any such submissions to SARS should be made by/on behalf of the ITA as a representative body of the industry rather than by/on behalf of individual importers.
It is also conceivable that certain technical arguments could be developed with regard to the classification of the monitors, which should also resolve this issue.
ENGAGEMENT AGREEMENT ITA/KPMG: TRADE & CUSTOMS CONSULTANCY SERVICES
We are pleased to confirm the arrangements for KPMG to provide consulting services to the IT Association (“the ITA”) as set out in the attached engagement letter (“the engagement letter”), including the anticipated scope of the work to be performed and the estimated fees to be incurred in rendering the necessary services.
SCOPE OF ASSISTANCE
KPMG will advise the ITA on its legal position regarding any retrospective claims for customs duties, VAT and penalty amounts as a consequence of the South African Revenue Service’s (‘SARS”) reclassification within the Harmonized System of flat panel (LCD and plasma) PC monitors, video monitors and televisions.
KPMG will research and develop technical arguments with a view to the reinstatement of the previous status quo with regard to the classification of monitors traditionally imported for sale and use with data processing machines.
KPMG will then engage SARS and the South African Bureau of Standards with the view of limiting the effect of SARS’ reclassification of the products in question to future importations of such goods, and to avoid the retrospective implementation of the re-classification.
Where and when required, KPMG will meet with SARS and SABS, and will make written representations to SARS/SABS to formalize any proposed methodology to resolve the matter and obtain the desired outcome, i.e. the limitation of the retrospective implementation of the re-classification.
One of the many functions of the ITA is lobbying and negotiating at government level on behalf of its members and to this effect we have undertaken to coordinate all parties affected by this change in tariff classification to enable KPMG to present a collective argument to SARS and SABS. If you are interested in receiving updates on this initiative contact (email@example.com)