In its customs control activities, the South African Revenue Service (Sars) aims to balance the dual aims of facilitating trade and preventing under-invoicing and the influx of counterfeit and illicit goods.
“Striking the right balance between trade facilitation and enforcement requires careful and expert judgement since defaulting to trade facilitation would mean that all declarations are processed without stopping any containers, while stopping every container would hamper trade and increase the cost of doing business for legitimate traders,” finance minister Enoch Godongwana said in a written reply to a parliamentary question by MK party MP Visvin Reddy.
Sars aimed, he added, to balance supporting trade with managing the risks associated therewith.
In the 2024/25 financial year, inspections — including traveller, cargo, regulatory, manual checks and Sars service manager cases — achieved a success rate of 46% from more than 281,000 inspections conducted by an average of 240 inspectors.
These efforts, Godongwana said, resulted in R1.28bn collected and 10,142 seizures valued at R6.3bn being made. Inspection revenue increased by 61.8% year-on-year.
“Both the World Trade Organisation (WTO) and the World Customs Organisation (WCO) share the view that while inspections are necessary, their implementation should be balanced to support both regulatory objectives and economic growth.
“Sars continuously benchmarks intervention rates with peers around the world in its pursuit of becoming a modern, trusted, effective and efficient tax revenue agency.”
The minister said the customs declaration system validated all declarations against a WCO data model, then screened them with risk rules. Declarations flagged as risky underwent full documentary checks and, if necessary, further non-intrusive or physical inspections.
Under-invoicing — when the price of goods on invoices is less than the price paid — is one ploy importers use to reduce the amount paid in import duties. Godongwana said gross undervaluation mostly occurred in respect of clothing, textiles, footwear and leather (CTFL) goods.
“Undervaluation cannot be proven, or adequately mitigated, in the frontline or at a port level, but rather through entity audit-based controls. As a result, Sars established a dedicated and centralised audit team within customs and excise operations in 2019 to combat undervaluation and customs fraud in the CTFL sector.
“This approach strengthened Sars’s audit capability to deal with undervaluation in a systematic and sustainable manner. In the past two financial years (2023/24 and 2024/25), the Sars audit team collected an additional R59m in enforcement revenue through targeted efforts.
“Furthermore, R3.5bn in additional revenue was raised from 75 finalised audits, which included emerging risk areas such as e-commerce, with a 69% success rate.”
Godongwana was not prepared to answer Reddy’s question as to what risk-based targeting methodology Sars applied for selecting containers for inspection, saying Sars would not release information that could be used to compromise the fight against illicit trade.
“We can give the assurance that Sars has a well-established risk methodology which includes an electronic risk-based system which screens 100% of all customs declarations submitted by importers, exporters, or logistics service providers representing traders.
“This is supported by real-time port risk profiling activities utilising various data sources. Sars cannot make public the rules that drive its customs risk engine or real-time risk-profiling techniques, as that would defeat their purpose,” the minister said.
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