How and when export duties apply
The South African Customs Act was amended in 2020 so that customs duties (taxes) may be applied to imported, as well as exported shipments.
Export duties are generally imposed by developing countries with the purpose of protecting a local industry. Some examples of countries that have export duties are Argentina, Chile, Ecuador, Peru, and Uruguay.
An export duty is the inverse of an import duty. Just like an import duty would be applied to goods entering the South African market to discourage the import, an export duty is levied on goods leaving the South African market to discourage the export.
Reasons behind discouraging an export might be:
- There is a limited local supply of the goods
- Creating a limited supply will drive up local prices
- Producing the goods for an international market puts a strain on local resources
How export duties work
If an export duty is applicable to a shipment leaving South Africa, it is levied when the goods are cleared for export. Since the Customs Act now provides for export duty, it can be applied to any export where the local industry, supply and market price is sensitive to exports.
South African export duties
The only export duty currently listed in the South African tariff book applies to exports of scrap metal. The rates of duty are listed under Schedule 1 Part 6A of the Customs and Excise Act.
Why scrap metal exports should be taxed
According to SARS, the objective of levying export duty on scrap metal is to provide South African foundries and mills with better access to higher quality and more affordable scrap metals in the local market. The intended result is that these mills and foundries become more competitive, which in turn will attract foreign investors, create employment, and support industrialisation.
The export duty on scrap metal was also put in place to discourage illicit trade practices within the local metals industry.
What exporters of scrap metal should know
Scrap metal exports can only be done by a licensed exporter
Registering as an exporter with SARS customs is usually only required if you export more than three (3) times per year, or goods over the value of R150,000 per year. However, scrap metal exports that incur export duty may only be done by a export license holder regardless of these thresholds.
In short, to export scrap metal you must have an import export license.
Scrap metal exports require an ITAC permit
Without exception, scrap metal types listed in Schedule 1 Part 6A require an export permit from ITAC before it may leave South Africa. Without the permit the export shipment will be detained at customs until it is compliant.
Preferential rates apply for scrap metal exports to trade agreement countries
For example, scrap metal exports to another SADC country will be taxed at the preferential SADC rate, if a SADC certificate of origin accompanies the shipment.
The general rate and preferential rates of export duty are tabled in Schedule 1 Part 6A according to the relevant trade agreement or union. Refer to the image above for clarification.
As with any other export, a certificate of origin can only be issued to a licensed exporter who is registered under the relevant trade agreement.
Export duty is payable before the shipment is cleared for export
Exporters of scrap metal must self-assess the export duty payable on a shipment.
The duty must be paid in full before a shipment may be processed at export customs. Customs will do a documentary check to confirm the amount paid is sufficient at the time of clearance. If it is not, the export will be delaying until the exporter has settled the balance.
If the duty paid exceeds the required amount, a refund can be processed.
The export may still be submitted via EDI.
For assistance in registering as an exporter, or attaining the documentation you need for a successful export, contact our consultants now. Our friendly and knowledgeable team are ready to help you make the most of international trade. For updates on new export duties introduced by SARS, keep an eye on our social media.
About the author
Frieda-Marié de Jager
With a degree in design from CPUT, Frieda-Marié started her career in digital and content marketing in 2013. Since joining Import Export License in 2019, she’s created several e-books, guides, blog posts, and newsletters on international trade. On weekends you can find her building Lego with the family, walking her beagle, or whipping up a storm in the kitchen.