In the 2016 Budget speech it was proposed that the date of implementation of the environmental tyre levy be 1 October 2016. This levy will apply to all new and re-treaded pneumatic tyres. The tyre levy legislation is now only expected to come into operation in February 2017. The levy will be inserted as Part 3E to Schedule No. 1 of the Customs and Excise Act, 1964. Failure to adhere to the levy provisions are considered an offence that may render you liable to monetary penalties, criminal prosecution and/or suspension or cancellation of your registration and/or license.
The tyre levy will be implemented at a rate of R2.30/kg net, irrespective of the tyre’s previous use and irrespective of whether the tyre was imported or manufactured locally. The levy is payable in addition to any existing customs and excise duty payable on the import/export of such tyres. The levy will replace the current fee arrangements for tyres, as regulated by the Department of Environmental Affairs (“DEA”), and will be administered by SARS: Customs and Excise.
The South African Tyre Manufacturers Conference (“SATMC”), early this year, clarified that the payment of this levy is not new. SATMC members have been paying an amount of R2.30 per kilogram of tyres manufactured, to the DEA appointed Recycling and Economic Development Initiative of South Africa (“REDISA”), in accordance with mandatory legislative and regulatory requirements for waste tyre recycling. This amounts to a total industry spend of between R500 and R600 million per annum paid to REDISA for tyre waste management and recycling. The new levy effectively replaces the existing industry funding model for tyre waste management and mitigates against the industry having to pay a double levy to SARS and REDISA, to the detriment and expense of consumers.
The levy shall apply to:
• New, used or re-treaded tyres, imported into S.A.
• Tyres fitted to or presented with imported vehicles or chassis specified in Chapter 87
• Tyres fitted to or presented with imported road wheels fitted with tyres, wheel rims fitted with tyres specified in tariff heading 87.08
• Tyres imported in terms of Chapter 98
An account for payment of the environmental levy must be completed and submitted on a quarterly basis to SARS: Customs and Excise.
The liability for the levy is assessed and the levy will be collected on a duty at source (“DAS”) basis i.e. as close as possible to the point of manufacture. Importers (at time of importation) or manufacturers (licensees of VM warehouses) of new pneumatic and/or re-treaded tyres will be liable for the levy.
Exports and removals to Botswana, Lesotho, Namibia and Swaziland (“BLNS country”):
• Declarations are submitted electronically (if not, then the normal manual process must be followed)
• Invoices will only be submitted on request
• Processing takes place in the 4 hubs in Cape Town, Durban, Alberton and Doringkloof
• An electronic message will be generated that reads “Proceed to Border”
• Submit electronic road manifest - if accepted by the system, a unique number with a barcode will be returned
• Print manifest containing barcode and present it upon arrival at the border – the barcode will then be scanned
• If all consignments are as per the manifest and the manifest is accepted, a CN1 and CN2 will be printed
• Should a consignment as per the manifest indicate that it must be inspected, then only the CN1 will be printed – after inspection, and if found in order, then the CN2 will be printed
• Upon exiting the Republic, the CN2 will be scanned and the truck can then proceed. With the scanning, the transporter and the entity responsible for the declaration of the goods will receive an electronic message that the truck has left the Republic.
In terms of duty paid returns, returns of certain environmental levy goods to a manufacturing warehouse will be allowed for incorrect deliveries, off specification or incorrect quantities. Should these tyres be returned, then a credit note must be completed by the Licensee. The reason for such return must be endorsed on the credit note.
Accounting: EXD01 (e-filing) and DA178 (manual)
• The manual return option is only allowed when the manufacturing warehouse has a complete and ongoing electrical supply breakdown
• The return must be submitted quarterly:
o Q1: Oct and Nov; payment Dec (only for implementation phase)
o Q2: Dec, Jan and Feb; payment March
o Q3: March, April and May; payment June
o Q4: June, July and Aug; payment Sept
o Q1: Sept, Oct and Nov; payment Dec and so on...
• The relevant assessed environmental levy will be paid to SARS within 30 days of the date of the closing of the quarterly accounts, but no later than the penultimate official working day of the month following the period of 3 months during which the date of closing of duty/levy accounts occurs.
• Reductions from quantities subject to the levy may only be made in respect of (Rule 54F.13):
o Good exported; or
o Goods for which any rebate of the levy is allowed in terms of Schedule No. 6
o Where the Licensee has duly complied with the provisions of such item or where the goods have been received by the person entitled to such rebate
• Set-off is allowed in respect of goods that have been entered for home consumption in terms of any item of Schedule 6 e.g. re-processing. Rebate items applicable to losses are 681.01, 681.02, and 681.03. Rebate items applicable to refunds are 681.01, 681.02, 681.03 and 681.04.
Liability of the Licensee only ceases upon clearance of the goods for home consumption (where the levy due is paid) and removal of the goods from a manufacturing warehouse in the Republic to Botswana, Lesotho, Namibia or Swaziland. In terms of goods removed from a warehouse to any BLNS country, liability in terms of road transport ceases when the goods have been duly taken out of the Republic and a declaration has been processed. In terms of ship or aircraft transport, liability ceases when it is proved that the goods have been loaded. In terms of rail, liability ceases when the Licensee confirms that the good were delivered to the consignee in the country of destination. When it comes to goods entered for export, in terms of road transport, liability of the Licensee expired when it is proved that the goods have been delivered in the country of destination at the Customs office. When transported by ship or aircraft, liability ceases when it is proved that the goods have been loaded, and when by rail, liability ceases when the Licensee confirms the goods were delivered to the Consignee in the country of destination.
For various types of removals, various documents will be acceptable as acquittals for the movement of environmental levy goods. Please refer to External Standard on the SARS website: SC-TR-01-04 for Customs and SE-CL-02 for Excise.
Then Licensee of a VM must keep records of raw materials received/used in the production process/removed, yield from raw materials, production, stock on hand, removal of rebated product, removal for home consumption, returns of levy paid stock and exports. In terms of returns of levy paid stock, the Licensee must keep a copy of the bill of lading, air waybill or consignment note, proof of payment of consignment and credit notes (if applicable). A Licensee may keep electronic records if they can be readily converted into paper copies and made available to SARS when required/requested. For the purpose of the Customs and Excise Act, the retention period for all excise-related documents (prescribed customs and excise documents, as well as relevant trader’s commercial and financial records) is 5 years, subject to the provisions of Rule 60.08(2)(a)(i), which prescribes the minimum books, accounts, documents and data that must be kept.
Appeals against decisions
In cases where you are not satisfied with any decision taken against you in terms of the Customs and Excise Act, you have the right to appeal to the relevant appeal committee. The policy pertaining to this can be found in document SC-CC-24. Should you be unhappy with a decision of any appeal committee, you can lodge an application for Alternative Dispute Resolution (ADR) with the relevant appeal committee. The committee will add their comments to your application and forward it to the ADR Unit. The policy pertaining to this can be found in document SC-CC-26.
In cases where you are not satisfied with any decision taken against you in terms of Vat penalties, you are directed to the provisions of the Section 215 to 220 of the Tax Administration Act no. 28 of 2011 for the percentage-based penalty, and Section 224 of the Tax Administration Act for the understatement penalty.