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[FAQ] Surety upon the submission of an amendment to an existing Excise facility
- 26 May 2021
- Customs and Excise
- The Tax Faculty Tax Specialist
This article is based on tax law for the year ending 28 February 2021.
Background
A taxpayer, who is a wine merchant, is registered for a bonded warehouse. The operations moved from the registered address to the farm next door and the taxpayer needs to amend the details with SARS. The taxpayer went through the entire process and received the documents (EB05) from SARS but he doesn't understand why surety needs to be provided? Please advise
Answer
Customs and Excise Act
Please refer to the SARS External Policy on Bonds updated in July 2020 (see SARS website and search: SE-BON-02). This document explains, inter alia, as follows:
In terms of Sections 47B(6), 54E(4), 59A(2)(a), 60(1)(c), 61(1) and (2), 64B(3) and (4), 64D(5), the Commissioner may require that security be lodged, in the form, nature and amount determined by the Commissioner, in order to protect the State from any possible loss of revenue incurred as a result of any relevant activity carried out by that client.
The amount of surety will be determined in terms of standards and assessed on an individual basis in terms of the criteria established.
The client is responsible for informing SARS immediately if any information on a bond / addendum e.g. financial institution, director, etc. has changed. The following bonds or addendums must be submitted manually to the applicable Branch Office (B/O) and this is applicable to all new registrations or licences which require bonds or addendums, including an Excise Bond: Approved Warehouses (OS & SOS) - Bond number: EB05.
.…Bonds and addendums, as indicated below, which are still registered will remain effective and are not required to be replaced, unless there is any legal requirement, such as a change in the conditions or an increase of bond amounts.
In all instances where bonds / addendums are required, the bond / addendum amount must cover the duty and / or levies.
Surety may be requested upon the submission of an amendment to an existing active Excise facility registered / licensed prior to the effective date of this policy document.
Standard amount of surety required for each category is set out in the document. In respect of an Excise Bond: Approved warehouses (OS / SOS) EB05 it states that the standard surety amount must cover the duties / levies and taxes on goods that will be stored in a licensed Customs and Excise warehouse and be calculated based on a one (1) month average of the duties / levies and taxes calculated over a twelve (12) month period.
The policy document also clarifies that application may be made at any time to reduce the bond amount, and the decision by SARS on this is appealable.
Webinar Commentary
Refer to the following webinar: Monthly Tax Update - May 2021 here.