Article

Amendments of the Authorized Economic Operator rules and launch of RLA system

Tools to assist in the trade facilitation

Published: 9 November 2021

Authorized Economic Operator for secure supply chains and trade facilitation benefits

According to the World Customs Organization (WCO) study titled “Compendium of Authorized Economic Operator Programmes”, the majority of global trade is legitimate, and a large portion of that trade is repetitive between highly compliant traders and this needs to be reflected in customs procedures as well as trade facilitation benefits. Authorized Economic Operator (AEO) programmes, in line with the World Custom’s Organization’s SAFE Framework, recognise businesses with secure supply chains and provide them trade facilitation benefits. Linking the support given to AEOs in return for demonstrating supply chain security provides opportunities for trade facilitation more broadly. Through assessing businesses’ trade compliance at the same time as supply chain security, greater trade facilitation benefits may be offered.

Many partnership programmes have been developing across the world based on the provisions of various international standards, including the Revised Kyoto Convention, the SAFE Framework of Standards to Secure and Facilitate Global Trade, the World Trade Organization Agreement on Trade Facilitation.

Moreover, AEO programmes internationally vary in their scope including in the benefits offered to businesses. The release of goods for authorised persons on submission of minimum information, clearance at the declarant’s premises, reliance on commercial records, simplified single goods declaration over a period, self-assessment of duties etc., have been provided in many AEO programmes.

In line with the above, the South African Revenue Service (SARS) launched a domestic accreditation programme on 23 July 2021 (after the pilot of 2019), which is aligned to the compliance requirements of an AEO programme. This was known as a Preferred Trader Programme and offered some benefits to accredited entities. From this initiative the AEO programme in its current form was born. The AEO-Compliance and Security programme is available to registered importers and exporters and all registered entities involved in the handling, transit, conveyance, storage and processing of imported goods, or goods to be exported, which are subject to customs control.

The rules under Section 64E of the Customs and Excise Act, 91 of 1964, have been amended to expand the participation of economic operators within the SARS AEO supply chain. The rules align more closely to the standards of Pillar 2 of the WCO Framework of Standards by introducing a safety and security leg in accordance with international best practices. There are two levels of accredited client status provided for namely level 1 which deals with AEO Compliance and level 2 which covers AEO Security with associated facilitations.


Benefits of AEO

The benefits of AEO, some highlighted below, are linked to the level of accreditation that the company receives.

Level 1 - Compliance
Level 2 - Security

1. Client relationship manager

Exemption from customs supervision when exporting for purposes of claiming back (drawbacks)

2. Reduction in security

Refunds and drawback applications expedited

3. Inspection at taxpayer’s premises

Reduced audits

4. Priority in tariff, value and origin determination applications

Targeted SARS training

5. The use of SARS AEO logo

In some instances, exemption from paying security (considered to be risk based)

6. Fewer inspections or jumping the line during the inspection

All level 2 benefits are in addition to the level 1 benefits.

 

Launch of the Registration Licensing and Accreditation system

Registration and licensing have been the biggest pain points for taxpayers. SARS initially followed a manual process when it came to registration and licensing. The process included submission, in paper format, of documents that sometimes where lost or for those posted through the South African post office, did not make it to SARS’ premises. This challenge was complicated further by the inadequate storage of the information submitted to the SARS and too few resources for process of the application and updating the system. This led to long delays before applications were registered or licensed by SARS. During that time, applicants did not have a customs code meaning that they could not participate in any economic activity that was regulated by the Customs and Excise Act.

To address these bottlenecks, SARS launched, an electronic platform for registration and licensing applications management in April 2020 called the Registration Licensing and Accreditation (RLA) system. The launch of the RLA system was welcomed because applicants could remotely apply for registration and licensing through eFiling. SARS also equipped selected branches to assist walk-in applicants, who did not have access to eFiling, with their applications. RLA was implemented in phases with the first phase providing for importers, exporters and clearing agents.

Since its launch, over 70 different client types can now register on the RLA system. There are a few client types that still need to apply using the manual process, but SARS is currently working on those. Those include exporters to the United Kingdom, deferment account applications and all excise applications.

The next phase, anticipated to be rolled-out during 2022, will allow for the remainder of the client types as listed above to also apply electronically.

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