How to apply for a Customs Duty Increase

The economic lockdown due to COVID-19 will most likely negatively affect many manufacturing businesses in South Africa and worldwide. Some locally manufactured products may be under pressure in the coming months due to low demand and the possibility of increased import competition. If you are a manufacturer, it may be time to consider a duty increase application.

What is a duty increase?

A duty increase is a tax on imported products. It helps local manufacturers to compete against the same or similar imported products.

A Customs duty increase does not exceed the bound rate. The bound rate is the maximum duty rate South Africa agreed to implement, during negotiations at the World Trade Organization. The bound rate does not apply to anti-dumping, safeguard, or countervailing duties.

Does a duty increase impact every country?

Products covered in existing Free Trade Agreements are not subject to a duty increase. For example, any duty increase does not affect products originating from the EU because of the Economic Partnership Agreement.

How to apply for a duty increase

The International Trade Administration Commission (ITAC), receives and investigates all duty increase applications. ITAC determines the duty paid on any given product. SARS is responsible for collecting import duties.

Duty increase applications must comply with the Amended Tariff Investigations Regulations.

A well prepared, motivated, and a complete application is essential. This is the most important part of the process. The applications require specific information. This includes financial, labour, and market information among others.

Once the application has met basic requirements, a verification is scheduled. The verification aims to ensure the information submitted in the application is factually correct. Information in the application is verified against company documents.

If ITAC is satisfied that there is a case, the decision to investigate is published in the Government Gazette. This officially informs all interested parties, who can then submit comments in support or opposition to the application. The comments period is usually 3 weeks or 4 weeks.

Once all interested parties have made their submissions and ITAC has completed its internal processes, a final decision is taken. Either the requested duty is increased or rejected.

The duty increase process takes 8 – 12 months. However, in the last 2 years, the process is taking longer to complete. Click here to see some of the duty increase investigations currently ongoing.

The Regulations do not prescribe a maximum time frame within which duty increase investigations are completed. The time frame above is based on experience and analysis of past trends.

Who can apply for a duty increase?

Any manufacturer can apply for a duty increase irrespective of size. Many small manufacturers successfully apply for duty increases.

What is considered in making a decision?

ITAC considers many factors. They include; market share, investments, import and export trends, demand and supply conditions, cost and price structures, financial state of the industry, production capacity, and potential of the domestic industry in manufacturing the product, employment, and demographics of the relevant industry among others.

What is the success rate of duty increase applications?

Duty increase applications are determined on a case by case. The current policy supports manufacturers and looking at trends over the last 7 years, the success rate is high.

Does a Customs duty increase expire?

An increased Customs duty does not expire. As long as there is a local manufacturer of the product, a duty is generally not removed or reduced.

Depending on the circumstances of the industry, a temporary or industrial rebate may be considered to exempt specific products from import duties. Click here for more information on that.

Need assistance with a duty increase application?

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