Taxing Pitfalls
Organisations should have a clear understanding of the destination country's requirements, and which items are prohibited. Whether a product is being imported or exported, there is a host of requirements, depending on the product and country.
Fortunately the harmonisation of tariff headings provides a starting point in understanding duties and taxes, while services such as that provided by Bureau Inspection Valuation
Assessment Control (BIVAC) can aid companies in understanding what is needed to move goods.
Depending on the types of agreements in place, companies can get a rebate when importing or exporting goods. African Economic Outlook points out that while trade taxes levied at the border are mainly import tariffs and export duties, export duties have almost entirely disappeared on the continent.
Trade bloc benefits
Silke Mattern, global tax director at Price Waterhouse Coopers, points out that what happens in practice is not always what was intended by legislation, and documentation requirements can be extremely complex.
Making sure companies get it right is vital, as Mattern warns that there are risks of products being impounded by governments. Another problem is that Rules of Origin are also not consistently interpreted when it comes to the country of origin of a product for purposes of international trade.
However, there can be trade bloc benefits, such as economic partnership agreements that are negotiated by the European Commission with various regions. In Africa these include the
Common Market for Eastern and Southern Africa (Comesa), the Economic Community of West African States (Ecowas), the South African Customs Union (SACU) and the West African
Economic and Monetary Union (Uemoa, the French acronym).
The trade blocks in Africa are all "similarly" registered with the World Trade Organisation (WTO) and appear to operate within the WTO-customs valuation guidelines, which are there
to promote and protect trade between member countries and simultaneously impose protective duties to counter products imported from non-member countries.
Apart from the Southern African Customs Union, which consists of Botswana, Lesotho, Namibia, South Africa and Swaziland, all African countries have chosen cost, insurance and freight (CIF) price to work out the value on which import duties are computed. CIF is an international trade term and the exporter clears the goods at the port.
There are also agreements in place that cover Comesa and the Southern African Development Community (SADC) regions.
Avoiding a tax nightmare
Companies need to be aware of taxes such as service payments and royalties as well as penalties and destruction on genetically modified maize as well as pallets that do not conform to integrated pest management (IPM) recommendations. Exporters also need to be careful of shipping any items that could be embargoed in the destination country and protectionary regimes that impose a heavy import penalty to protect local business.
Louise Vosloo, director of tax at Deloitte, also points out that there have been instances where African revenue authorities have levied withholding taxes at higher rates than they are entitled to in terms of the double tax agreements concluded with South Africa. Although the taxpayers are legally entitled to a refund of the withholding taxes wrongfully withheld, it is often in practice virtually impossible to actually secure a refund.
Exporters also need to be on the lookout for borders where officials ask for non-receipted penalties for goods that are allegedly not marked well. This, although illegal, could lead to goods being impounded until payment is made, leading to service failure at the destination.
The best way to avoid a tax nightmare when importing and exporting in Africa is to do an upfront risk analysis of the target market and your client, and make sure you are aware of all tax compliance issues.
"Depending on the types of agreements in place, companies can get a rebate when importing or exporting goods."
The contact detail for Africa's leading BPO solution company Sherwood International is;
Physical Address:
3 Atlas Road
Elandsfontein
Johannesburg
South Africa
1406
Company Details:
Tel.: +27 11 255 0300
Email: info@sherwood.co.za
CEO:
Mrs Alida Smit
Tel: +27 11 255 0300
Fax: +27 (0)86 521 4965
Sales:
Mr N Botha, GM Business Development
Tel.: +27 11 255 0309
Fax: +27 (0)86 570 2492
Fortunately the harmonisation of tariff headings provides a starting point in understanding duties and taxes, while services such as that provided by Bureau Inspection Valuation
Assessment Control (BIVAC) can aid companies in understanding what is needed to move goods.
Depending on the types of agreements in place, companies can get a rebate when importing or exporting goods. African Economic Outlook points out that while trade taxes levied at the border are mainly import tariffs and export duties, export duties have almost entirely disappeared on the continent.
Trade bloc benefits
Silke Mattern, global tax director at Price Waterhouse Coopers, points out that what happens in practice is not always what was intended by legislation, and documentation requirements can be extremely complex.
Making sure companies get it right is vital, as Mattern warns that there are risks of products being impounded by governments. Another problem is that Rules of Origin are also not consistently interpreted when it comes to the country of origin of a product for purposes of international trade.
However, there can be trade bloc benefits, such as economic partnership agreements that are negotiated by the European Commission with various regions. In Africa these include the
Common Market for Eastern and Southern Africa (Comesa), the Economic Community of West African States (Ecowas), the South African Customs Union (SACU) and the West African
Economic and Monetary Union (Uemoa, the French acronym).
The trade blocks in Africa are all "similarly" registered with the World Trade Organisation (WTO) and appear to operate within the WTO-customs valuation guidelines, which are there
to promote and protect trade between member countries and simultaneously impose protective duties to counter products imported from non-member countries.
Apart from the Southern African Customs Union, which consists of Botswana, Lesotho, Namibia, South Africa and Swaziland, all African countries have chosen cost, insurance and freight (CIF) price to work out the value on which import duties are computed. CIF is an international trade term and the exporter clears the goods at the port.
There are also agreements in place that cover Comesa and the Southern African Development Community (SADC) regions.
Avoiding a tax nightmare
Companies need to be aware of taxes such as service payments and royalties as well as penalties and destruction on genetically modified maize as well as pallets that do not conform to integrated pest management (IPM) recommendations. Exporters also need to be careful of shipping any items that could be embargoed in the destination country and protectionary regimes that impose a heavy import penalty to protect local business.
Louise Vosloo, director of tax at Deloitte, also points out that there have been instances where African revenue authorities have levied withholding taxes at higher rates than they are entitled to in terms of the double tax agreements concluded with South Africa. Although the taxpayers are legally entitled to a refund of the withholding taxes wrongfully withheld, it is often in practice virtually impossible to actually secure a refund.
Exporters also need to be on the lookout for borders where officials ask for non-receipted penalties for goods that are allegedly not marked well. This, although illegal, could lead to goods being impounded until payment is made, leading to service failure at the destination.
The best way to avoid a tax nightmare when importing and exporting in Africa is to do an upfront risk analysis of the target market and your client, and make sure you are aware of all tax compliance issues.
"Depending on the types of agreements in place, companies can get a rebate when importing or exporting goods."
The contact detail for Africa's leading BPO solution company Sherwood International is;
Physical Address:
3 Atlas Road
Elandsfontein
Johannesburg
South Africa
1406
Company Details:
Tel.: +27 11 255 0300
Email: info@sherwood.co.za
CEO:
Mrs Alida Smit
Tel: +27 11 255 0300
Fax: +27 (0)86 521 4965
Sales:
Mr N Botha, GM Business Development
Tel.: +27 11 255 0309
Fax: +27 (0)86 570 2492
Source...