Cigarettes and Alcohol
“The import of ‘Sin Products’ (i.e. liquor and tobacco) are subject to specific Customs Duties based on either weight or litreage (measurement of liquid capacity). Providing regulations are followed to the letter you can import these products into South Africa.
On cigarettes you have to pay duty at source, meaning that you pay duty before you can sell the product. Because of this you need to have enough start-up capital for it to work,” says spokesperson, Una van Zyl, The Tobacco Institute of South Africa.
All the customs regulations that apply can be found on the SARS Website, under ‘Legal & Policy’, ‘Legislation’, ‘Harmonised Tariff System’, ‘Schedule 1 Part 1 – Ordinary Customs Duty’, p. 456 of 1023.
Duties on tobacco products
Excise duties are also available on website of National Treasury under these headings, ‘Budget Information’, ‘National Budget’, ‘2010’, ‘Chapter 5’ p.80.
Tobacco control legislation (health warnings, tar and nicotine readings etc) must be adhered to. This information is available on The Tobacco Institute of South Africa’s website under ‘Legislation’.
“If there are particular issues you would like to check contact the Department of Health who are the custodians of the tobacco control legislation,” advises van Zyl. Contact the Health Promotion section by clicking on www.tobaccosa.co.za.
Late last year draft regulations were published on Reduced Ignition Propensity (RIP) Cigarettes. The introduction of reduced ignition propensity cigarettes means that the cigarette paper has to be changed to a slow burning paper.
This will reduce the pleasure from smoking since cigarettes won’t burn as easily. See draft regulations on www.gov.za, ‘Documents’, ‘Notices’, ‘2009’, ‘Dec’, 4 December 2009. The final regulations can be found here.
If you are intending to import a brand into South Africa, it is advisable that you register the trademark in South Africa through trademark lawyers if this has not been done. For more information contact the Tobacco Institute of South Africa offices on +27 21 421 0011.
You will require a permit to import liquor into South Africa. You will also need an import certificate.
An import certificate is required in order to import a liquor product (excluding beer) to South Africa. The import certificate or a copy will be required before a consignment can be released from the port of entry.
An importer applies for an import certificate only once in the lifetime of a product. After that, the same import certificate number can be used if the composition, content, bottle size and label of that product do not change.
You have to have a license to import petroleum products from oil producing nations such as Russia and Saudi Arabia to South Africa. The term “petroleum products” refers to aviation gasoline, bio-fuels, diesel, jet fuel, liquefied petroleum gas, paraffin and petrol.
Diesel is classified as 1D, 2D and 4D. Key differences between these are the pour point, the lowest temperature a liquid will flow; and differences in viscosity, or the resistance of a liquid to flowing.
1D diesel fuel has lower viscosity and a lower pour point than 2D, so is preferred for use in cold weather areas. 4D fuels are only used in very low-speed engines such as stationary units.
Who issues Petroleum licences?
Wholesale, retail, import and export petroleum licenses are issued through the Department of Energy. Call the Controller of Petroleum Products +27 12 317 8982 or visit http://www.energy.gov.za/ or www.dem.gov.za
The application process is complicated
It is easier to deal through a consulting firm who has the necessary expertise in dealing with complicated petroleum licensing requirements in South Africa. Tour Media is a consultancy that helps individuals apply for new wholesale and retail petroleum licences.
Duty and surcharges may apply
If you are importing in “bulk” (1 500 litres or more), per transaction you require a wholesale licence. Duties, excise taxes and import surcharges levied on goods can be obtained from the International Trade Admission Commission of South Africa by clicking on: http://www.itac.org.za/guidelinesofpetrolium.asp
How do I know whether my product is export-ready?
Your product has to tick several boxes before you can consider exporting it.
I want to start exporting my product into Africa. I’ve made contact with some buyers in Nigeria and they’re interested in signing a contract. How do I make sure that my product is ready for export?
Whether or not your product is export ready depends on the buyer’s needs, your product’s ability to meet those needs, and how your product will shape up against international competition.
In order to determine export readiness, you need to research the following:
- Your target market
- Any potential competitors
- The buyers themselves.
Common factors that would affect the exportability of a product include:
Unless there is a market for it, your product won’t sell. Look at your domestic market for an indication. If you are meeting a need locally, you should be able to meet the same need internationally.
This, however, is not the only consideration. International markets are usually further away, meaning that you will have to add transport costs, and will most probably have to include the cost of import duties and taxes in the final delivery price.
2. Product adaptability
A key quality of an export product is its ability to adapt to suit an international market. Cultural differences between countries could affect the use or acceptability of a product in each country. A product name could have a totally different and possibly derogatory meaning in another language and might have to be changed for that market.
3. Cost structure
The cost structure of the product will obviously impact on its competitiveness. For example, depending on the cost of materials, and whether or not those materials can be locally sourced, international transport costs and customs duties in the importing country will collectively determine the final delivery price.
The more you know about your competitor’s product, the better your position when determining your own chances of succeeding. Price is an important factor in determining success, but not the only way to compete. You can also differentiate your product by highlighting some of its unique selling points.
5. Product complexity
The greater the complexity of your product, the more important the strength of your business. Products that need a high level of support or installation assistance will need a strong local network with trained staff to support them. The investment in setting up a sales and support structure in the importing country could be prohibitive, making it unviable to export the product.
For more information, read more here.
How do I verify foreign suppliers?
Do your homework to reduce the likelihood that you’ll end up out of pocket.
I run a small import business and want to find some new suppliers in the Far East. How do I establish their credibility from South Africa?
It’s essential to establish that any new suppliers that you intend to do business with are credible and reliable. Here are some ways that you can check up on their credentials:
- Use internet trading forums such as that on eBay to establish whether the supplier has a history of being trustworthy and dependable
- Do online research to find out more about the company, including how long it’s been in business for and how long it’s had the product line that you’re interested in.
- What does their website look like? Has it been professionally designed and kept up to date? Does it have proper contact details including a physical address and telephone number?
- If you can’t afford to visit the supplier, contact them by phone or email and discuss your requirements. Find out about delivery times, payment methods and ability to deliver what you need, when you need it. These discussions should give you a feeling for how professional the supplier is in conducting its business.
- Ask for references and check them.
- You can consider using the services of a reputable inspection agency to make absolutely certain that the supplier is trustworthy.
- Obviously a site visit is the number one way of establishing a supplier’s credibility.
See the full article here.
What insurance does an importer or exporter need to take out?
Being under-insured can cost you dearly in the long run.
Can you point out some of the common insurance mistakes that SA exporters and importers should avoid?
As South Africa continues to strengthen its trade ties with countries like China, Germany, Japan and the United Kingdom, it is becoming increasingly important for exporters and importers to get to grips with the complexities of arranging marine cargo insurance.
With the rise of cargo ship accidents worldwide, including the bulk carrier Smart, that recently ran aground off the main beach at Richards Bay, exporters and importers can least afford skimping on cover, or making costly mistakes that could present their businesses with even bigger problems, in the event of an accident.
Marine cargo insurance helps exporters and importers to cover the physical damage or loss of their goods while being transported by sea. Failing to arrange appropriate cover can potentially harm a business and have a serve impact on its revenue stream.
Exporters and importers should take note of the following when taking out marine cargo insurance cover:
- Limited cover: Inexperienced exporters and importers often view insurance as a grudge purchase and risk not having adequate cover in place. This exposes their businesses to financial and liability risks in the event of an accident.
- Picking on price: During tough economic conditions, exporters and importers have the tendency to shop around for cover only using price as determining factor. Businesses should rather focus on what the policy covers, instead of basing their decision solely on price. Rushing to sign a contract without fully understanding the terms and condition of the policy is a mistake. Each business is unique and has its own insurance needs. For example, a perishable goods importer will have different insurance needs to a components importer.
- Reducing liability: Opting for lower liability, or other limits, in order to save on monthly premium costs is certainly not advisable. Exporters and Importers should seek advice from their brokers and insurers to arrange the right amount of cover for their business, as well as to protect personal assets.
- Unaffordable deductibles: Exporters and importers should avoid opting for deductibles that they cannot afford. A deductible, commonly known as excess, is the amount that a business will have to pay upfront before an insurer can settle a claim. While choosing a higher deductible may help to reduce monthly premium costs, it is best to choose a deductible that will be affordable in the event of a claim.
Know about the general average
Exporters and importers should also be familiar with general average, which is independent from marine cargo insurance. It is an agreement between the ship owner and cargo owners, to share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole during an emergency.
General average claims can arise from the ship being stranded, catching fire, damaged engine, and when the ship is in any danger of sinking.
The 2 types of policies
Marine cargo policies come in two forms, namely, open policy, which covers a number of consignments and a specific policy, which normally covers specific consignments.
There is also an option to take out an all-risk or total loss cargo policy, which covers against all fortuitous losses.
Regardless of the nature of business, it is advisable to seek advice from a broker or insurer before arranging any type of marine cargo cover, to fully understand exclusions and avoid being over and underinsured in the event of a loss.