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Yet another (intimidating) textile rebate in South Africa

By Donald MacKay | Jul 10, 2021

Thank goodness in this case it’s nothing important. Only the use of fabrics used to make wadding, gauze and bandages. The fabrics without the rebate, attract a 22% duty, which is a lot.

The actual description is a very wordy

Rebate of the full duty on woven fabrics of cotton, containing 85 per cent or more by mass of cotton, of a mass not exceeding 100g/m2 bleached, in a plain weave, used for the manufacture of wadding, gauze, bandages and similar articles (for example, dressings, adhesive plasters, poultices), impregnated or coated with pharmaceutical substances or put up in forms or packings for retail sale, for medical, surgical, dental or veterinary purposes classifiable under tariff subheading 5208.21.

Normally a temporary rebate would give the importer the duty preference if the raw material is not available in SACU and that would be that. Not so in this case. In addition to a lack of availability in SACU, the following conditions also need to met (I am leaving out the obvious, such as being registered with SARS as an importer).

  1. Everything on the form must be properly completed. I know this feels obvious, but it evidently is not, hence its specific mention. If you leave anything out, ITAC will reject your application. Assuming all is in order, they have 14 working days to process the application.
  2. You get the rebate for a year at a time, which is good. Some of the temporary rebates (such as the one on chicken) needs to be renewed every 3 months. You can also extend it for up to an extra year if you don’t use up all of the quota before the expiry of the permit.
  3. Small mercies however. Here come the extra conditions. You can’t transfer the permit, so no traders can import the product and then sell it to the factory. You also can’t trade any surplus given on a permit to another factory, or buy their surplus.
  4. There has to be a visible permanent change in the fabrics and a change in tariff heading. In other words, you need to add significant value to the raw material to qualify for the rebate.
  5. You need to have enough capacity to process the volume of raw material you applied to be rebated on. ITAC could check up on you if they are not sure about the capacity you declare to them.
  6. And now to the special requirements to ensure you can’t qualify if you in any SACU country besides South Africa:
  • Compliance with [South African] labour laws
  • Proof of registration and a Certificate of Compliance obtained from the relevant Bargaining Council. ITAC may consult with the Southern African Clothing and Textile Worker’s Union (SACTWU), Minister Patel’s alma mater until 2009.
  • Proof of tax compliance with the South African Revenue Services.
  • Contact the Textile Federation (Texfed) and local manufacturers to make sure you can’t be supplied locally (by a South African company).
  • A commitment to creating employment, by having the duty removed on a product you can’t buy locally. You need to give this commitment with each application and then annually give ITAC an annual report on job performance.
  1. If you don’t comply you will be sent to the naughty corner. Or face criminal charges, withdrawal of the permit or permits and future rejection of permits.

Up for the challenge?! Contact us on info@xa.co.za or partners@sideraconsult.com for more information.

Photo by Teona Swift no Pexels

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