Johannesburg - A new price-reference system that will make it easier for customs officials to identify false amounts on invoices for clothing imports is expected to be put into operation by the end of this month.
This transpires from a Nedlac report explaining how customs fraud related to the importation of clothing, textiles and shoes, which has led to the loss of thousands of jobs in these industries in recent years, needs to be arrested.
Representatives from government, business and the unions have been negotiating on these proposals since April.
Agreements have been reached on a number of important bottlenecks, including the use of the price-reference system - about which clothing retailers have expressed concern because of the possibility of this price list being manipulated - and the criminal prosecution of certain people contravening the Customs and Excise Act.
Issues which have not yet been resolved include a limitation on the number of ports and other points of entry through which clothing, textiles and shoes may enter the country.
The Nedlac report, which it is believed will soon be signed off, will then be presented to the Minister of Labour and other "relevant ministers", including those of Trade & Industry and Economic Development. It will eventually need to be approved by parliament.
The introduction of a price-reference system is expected to have the quickest impact. It will identify "suspicious transactions" through the use of historical transaction prices, according to the report. Importers commonly use fraudulent amounts on import documents to avoid the 40% import duty on clothing products.
Sacu co-operation
A study in May found that the average prices reflected on invoices for imports included amounts like R0.47 for men's Chili denims, R4.94 for dresses from Thailand and R1.08 for men's briefs from China.
Other methods of avoiding tax include re-shipping goods via a third country, false declarations, corrupt payments to officials and the abuse of tax rebates and discounts.
Closer co-operation with other countries in the Southern Africa Customs Union (Sacu), namely Botswana, Lesotho, Swaziland and Namibia, has been called for to ensure that trade regulations and legislation are strictly enforced. A common external tariff applies to all Sacu countries, while trade between these countries is duty-free. If an importer finds it easier to avoid import duty in, for example, Swaziland, goods can thus be easily exported to it, although they are actually intended for South Africa.
An agreement already exists with the customs administration in Lesotho, which will help to better enforce the rules of origin - which determine where a product is manufactured and what duty should therefore be imposed. A similar agreement with Botswana is on the cards, says the report.
It is estimated that import duties are circumvented in some or other way on as much as 60% of all clothing imports, either through undervaluation of goods or through reshipment.
- Sake24.com
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