The renewable energy industry is calling for the scrapping or a complete overhaul of what it describes as a “fundamentally flawed” staged-consignments policy administered by the South African Revenue Service (Sars), arguing that it has become a loophole exploited by importers to avoid paying import duties.
According to the industry, the policy is being abused by grouping many — or all — components needed for renewable energy plants under a single duty-free tariff code. This allows excess equipment, beyond project requirements, to enter the local market duty-free, undercutting domestic manufacturers.
This, the industry says, results in unfair competition and undermines South Africa’s industrial base and the government’s stated policy objectives on localisation and job creation. Attempts so far to get the department of trade, industry & competition and Sars to address the issue have not borne fruit, a local manufacturer complains.
The industry wants the policy scrapped in its entirety or reworked to include adequate safeguards.
Staged consignment allows imported goods forming part of a single consignment (for example, a large plant, machinery, or modular infrastructure project) to be delivered and cleared through customs in separate stages or shipments, rather than as one complete load.
The importer requests customs to treat all those shipments as one overall consignment for tariff classification and duty assessment purposes. With staged consignments, only one tariff subheading is applied.
The industry complains that the staged consignment provision is being used to import entire renewable energy projects, including solar and wind farms, as staged consignments. This meant that every single component, down to the smallest fastener, was being imported without attracting import duty, bypassing the 10% tariff protection that currently applies, for example, to locally manufactured transformers.
Trade, industry and competition minister Parks Tau said in a written reply to a parliamentary question from DA trade spokesperson Toby Chance that his department and Sars were investigating allegations of abuse under the Customs and Excise Act, after the industry raised concerns.
A meeting had been held with key stakeholders, namely Sars, the International Trade Administration Commission, the South African Wire Association, the Electrical Engineering and Allied Industries Association, the Powerline and Substation Association, the Steel and Engineering Industries Federation of South Africa, the Association of Electrical Cable Manufacturers of South Africa, the South African Iron and Steel Institute and the Local Content Compliance Unit.
" While the DTIC is working closely with Sars and other stakeholders to address the issue, it is essential to note that Sars retains the primary responsibility for investigating and addressing abuse related to staged consignments," the minister added.
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