Starting 1 December 2023, the South African Revenue Service (SARS) is set to introduce new advance payment notification (APN) requirements. These modifications are aimed at tackling unlawful cash outflows and will affect all import payments valued at R50,000 or more.
An APN is a notice submitted via SARS E-filing by an importer to inform a supplier of imported goods of their intention to make an Advance Import Payment exceeding R50,000.
An Advance Import Payment, meanwhile, is any foreign exchange payment made to import goods before the supplier ships the goods.
According to Dylan Govender, Head of Supply Chain at Investec for Business, the purpose of the APN is to enable SARS, authorised dealers and legitimate traders to work together to combat illicit financial flows as well as customs valuation fraud associated with the misuse of advance foreign exchange payments in respect of goods that are to be imported.
“There is nothing simple about importing a product into the domestic economy, which coupled with erratic global supply chains as well as port delays due to rising cargo volume and limited capacity, it is very easy for non-compliance and customs fraud to take place,” he said.
“This can include misdeclaration of goods, under and overvaluation and misrepresentation of country of origin across a number of channels.”
From December 2021, in terms of the published rules, importers had an obligation to notify SARS of their intention to apply to an authorised dealer for an advance foreign exchange payment in respect of goods to be imported.
Now, two years later, SARS has added an additional step and mandated this from the authorised dealers’ (banks) side as well to further facilitate the control of advanced pre-payments on import shipments – balancing competing needs of improved trade facilitation with improved compliance.
An APN is required for advance payments where goods have yet to be cleared into South Africa and will be valid for 30 days only, within which the instruction to pay must be provided to the importer’s paying bank.
Failure by importers to provide the APN at the time of payment may result in delays at the paying bank. APNs are not required for advance import payments into the Common Monetary Area (Eswatini, Lesotho and Namibia).
Coming into effect on 1 December 2023 – this mandate will have a noticeable impact on festive season imports as well as those importing ahead of the New Year.
Importers struggling to fulfil end-of-year orders might find the changes to be an additional complication in an already complex industry. Although most understand the logic behind the decision and would eventually adapt, they’d still have to invest time and effort into doing so.