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Customs Duty Act: Guarantees

Publishing Date : 03 December, 2019


The 2018 Customs Duty Act introduced the concept of guarantees for import duties purposes. The concept is not entirely new though as guarantees were provided in the form of bonds facilities with banks as reflected in taxpayers’ Asycuda or Customs Management System (CMS) statements.

A guarantee is a form of security provided by a taxpayer to the revenue authority on goods that are to be exported or imported by them. The guarantee is usually the equivalent of all duties and taxes that may arise from the temporary import or export of such goods. For the purposes of this article we will deal with temporary import of goods. Where the goods are imported from Southern Africa Customs Union (SACU) the guarantee will be Value Added Tax (VAT) only and if the goods are outside the SACU region it will be VAT and Custom duty payable.

The guarantee is usually calculated based on the market value of the goods being brought into the country. For example, a temporary export of a car from South Africa valued at P300, 000 may require a guarantee of P36, 000 (VAT at 12%) for the car to move freely within the period it has been granted if a customs officer has imposed a limit for such import.

It should be noted that the goods being brought into the country may be cleared before the guarantee is paid provided that the guarantee is paid within 10 days after the goods are cleared. Failure to pay within the required 10 days will result on interest charged on the taxes and duties that are payable and any repayment of the guarantee to the taxpayer will be paid net of the interest charged.

The guarantee for temporary imports of goods such as cars and other transport modes are usually not compulsory and may be requested by Botswana Unified Revenue Service (BURS) if they believe there is a risk of revenue loss from such import. Depending on the Customs officer dealing with the matter such guarantee can be limited to a certain period of time and expire after such time imposed lapses.

Where the conditions that were set in fulfilling a customs debt that requires a payment of a guarantee to BURS have been fulfilled without any violations, the full amount that was paid by the taxpayer will be refunded back. Penalties may apply where some conditions were not fulfilled. Customs guarantees are beneficial to BURS as they help in preventing trade fraud and other Customs/import taxes and duties related offences.

Where the goods that were said to be temporarily imported are not returned back to their country of origin revenue will be protected as BURS can make a claim against the guarantee. It also brings about efficiency in collection of import taxes and duties because they don’t have to chase the taxpayer around for payment where circumstances relating to the import have materially changed. Regular importers are normally not required to have cash guarantees but have bank guarantees and have their taxes due deferred by a month.

The bank guarantees are useful for businesses as demanding cash guarantees will cripple them cash flow wise due to the magnitude of the goods they usually bring into the country. Additionally there are available mechanisms that these dues can be traced to the taxpayer unlike in a situation where a taxpayer does not import goods regularly and is not registered with BURS as an importer.



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