Earlier this year it was announced that the South African Revenue Service (SARS) had embarked on a number of strategic initiatives to curb revenue leakages. In line with this initiative, SARS has proposed new rules that require the registration at Customs of each tobacco leaf threshing factory.

The draft rules provide requirements in respect of tobacco leaf threshers, who are required to register their factories with the Commissioner and keep records for the purposes of inspection by the Commissioner.

A “tobacco leaf thresher” is any person who carries out any preliminary, intermediate or supplementary processing of tobacco not stemmed or stripped, tobacco partly or wholly stemmed or stripped, or tobacco refuse.

A separate application must be submitted in respect of each factory. Properly representative photographs that indicate the size, layout and other general identifying features of the leaf threshing factory should accompany each application.

Every tobacco leaf thresher will be required to keep records of:

  • each supplier of tobacco inputs, together with the dates and values of each such supply
  • the processes carried out in respect of such tobacco inputs
  • the persons on whose behalf such processes were carried out
  • each purchaser of tobacco outputs, together with the dates and values of each such purchase

These records and the documents in support thereof must be kept available for inspection by the Commissioner for a period of five years, calculated from the end of the calendar year in which any such record was created.

If a company has failed to comply with the Customs and Excise Act, 1964 or any law relating to the illicit manufacture, conveyance, supply or possession of excisable tobacco products during the past two years, it is required to state the nature of the offence and penalty imposed, as this will be taken into consideration in the application for registration.

Comments on the draft rules are due by 28 June 2019. The tobacco industry is encouraged to comment on the practicality of the draft rules.

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