Meet Your Trade Obligations With Customs Bonds
Customs and Excise Duties On Imported Goods
Whenever goods enter South Africa, SARS imposes various taxes and duties on them. One of these taxes includes customs duties SARS levies on the actual goods brought into the country. Here, the importer is responsible to pay for these taxes. In addition, SARS will also impose excise duties on the producer of local goods which can include alcohol, tobacco etc. Customs and excise are the divisions in SARS responsible for collecting these taxes, at all points of entry into the country.
What Is A Customs Bond?
A customs bond is a type of surety bond issued to guarantee the payment of customs fees when importing goods that contains taxes and duties. A customs bond is not intended to protect the importer, but instead to ensure that all customs duties, penalties and other charges assessed by customs will be properly paid and that all trade procedures will be followed.
In other words, a customs bond is a form of security you give to SARS to guarantee payment of the appropriate taxes and duties. When you import your goods, SARS allows you 51 days to pay the duties on the goods imported. This gives you time to sell the goods and collect payment. However, SARS requires a guarantee that if they release the goods to you, these fees will be paid.
A customs surety bond is used for this very purpose. The bond guarantees that importers will fulfil their import obligations with Customs, for any given import transaction. It insures SARS against non-payment.
The customs bond guarantees that all customs duties, customs penalties, and obligations you incur as an importer, and other charges Customs assesses, will be properly paid and that all trade procedures will be followed.
When Do You Need A Customs Bond?
As an importer, you will need to open an account with a freight forwarder who will be responsible for clearing the goods through Customs. The freight forwarder – also known as the clearing agent, is responsible for fulfilling import obligations on your behalf and will lodge the bond with SARS.
Customs requires the bond from importers, because it covers the government against an importer’s failure to pay its debts. If the importer cannot pay, the customs bond insurer who issued the bond will reconcile remaining costs.
The freight forwarder usually doesn’t have sufficient cash security to offer SARS – to insure against non-payment. They also cannot operate without the relevant bonds being lodged to SARS. So, they will apply to a financial institution like Credit Guarantee to issue the bond on your behalf.
How To Get Customs Bonds?
A customs bond is issued, on behalf of the importer by a customs bonds insurer such as Credit Guarantee. Follow these four easy steps to get custom bonds from Credit Guarantee:
- Fill in our standard Credit Guarantee proposal form – you can obtain this by emailing firstname.lastname@example.org.
- Provide all your relevant supporting documentation.
- At Credit Guarantee, we will assess the freight forwarder’s financial strength to determine if we can approve the application.
- We issue the bonds on your behalf to SARS as required.
The bond provides peace of mind and surety that monies will be paid on time and that you will be able to meet all your Customs obligations.
The Benefits of Getting Covered by Credit Guarantee
When you take out customs bonds with Credit Guarantee you:
- Take advantage of our vast database and expert knowledge gained over 60 years in the trade credit insurance industry;
- Work with a leading trade credit insurer – we hold a stellar AA+ credit rating, which means we have a high ability to pay out monies due;
- Can assure Customs that you will comply with any pertinent law, regulation or instruction you’re required to adhere to, with our backing;
- Free up working capital to take on new ventures, knowing you have the cover you need to meet all your trade obligations.
At Credit Guarantee, we understand that as an importer you need a quick, efficient, uncomplicated and cost-effective solution when establishing your surety bonds. So, let us provide you with the cover you need to take on international trade with confidence.
Editor’s note: This post was originally published in May 2017 and has been updated for accuracy and comprehensiveness.