Steel Construction Vol 40 no 6 - International Steel Structures | Page 6

SAISC FEATURE

Steel Export
By Donald MacKay, Director, XA International Trade Advisors

competitiveness

With the depreciation of the Rand in the
last year, local manufacturers are (and
certainly should) be looking at export
opportunities. Please note: When we
talk about exports, we are referring to
exports outside of South Africa and the
BLNS (Botswana, Lesotho, Namibia and
Swaziland) countries. Any sales made inside
the BLNS countries is still considered to
be a domestic sale for Customs purposes.
South Africa and the BLNS countries are
collectively referred to as the Southern
African Customs Union (SACU).

With the
depreciation of
the Rand in the
last year, local
manufacturers
are (and certainly
should) be looking
at export

Primary steel materials have not attracted
any duty for a very long time and so
producers of downstream products have
never had to contend with this additional
cost when competing for work outside
of South Africa. Of course, if the steel is
purchased from ArcelorMittal or Columbus
Stainless steel, those companies may offer
commercial rebates to assist manufacturers
to become competitive in export markets.
If the steel is imported however, then
clearly these commercial rebates will not
apply. If you use imported raw material in
your manufacturing process and these raw
materials attract duty, then being able to
offset these duties at the time of export is
important.

This is also known as a 470.03 rebate store
and allows the suspension of duty on raw
materials that are used in the manufacture
of something that is exported. As long as
the finished product leaves SACU, the duty
on the raw material will not be payable.
Any finished product sold inside SACU
would result in the duty remaining payable.
Whilst it is attractive to never pay the duty
over to SARS, a 470.03 rebate store is not
always allowed by SARS. Of course each
case needs to be assessed on its own merits,
but the following are typically reasons why
a 470.03 rebate store would be disallowed:
1. The bulk of the finished goods
manufactured are sold within SACU.
2. The domestic supplier of the raw
material opposes the application
because they believe they can make the
supply.
In order for a 470.03 rebate to be accessed,
the manufacturer needs to first apply to
the International Trade Administration
Commission (ITAC). ITAC will consider the
application and will contact the domestic
producer to see if they are able to supply
the product. If they can, then ITAC may
disallow the rebate. However, ITAC do have
the authority to allow the rebate even if the
domestic producer opposes the application.
Photo courtesy en.wikipedia.org

opportunities.

The importance of not exporting
duties

An export rebate store

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Steel Construction Vol. 40 No. 6 2016