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Import duties falling through the Net
Tax man at a loss as cyber shopping goes globalJANET PATERSON ONE way to avoid import duties when shopping abroad is to use the Internet. SA revenue authorities turn a blind eye to most purchases over the web, says a legal expert, because amounts are considered "trivial". But SA Internet guru Arthur Goldstuck, says the authorities don't react "because they still do not understand this new economic and technological environment, and have no idea how to regain the control that it takes away from them". South Africans order goods on line, and these are delivered from countries like the US and the UK by courier. But in the process, they circumvent SA tax and customs charges. While shopping at SA web sites presents no legal problems, shopping at global shops like Amazon.com for books and Music Boulevard for CDs can present a legal minefield. Michael Silber, an attorney at Werksmans Attorneys, warns: "Generally, Internet shopping would not cause any serious jurisdictional issues or conflicts at law. Most Internet shops are in First World countries with sophisticated consumer-protection laws, so you may be better off from a consumer-rights perspective than you are under SA law. "But availing yourself of on-line share trading, on-line banking and other on-line insurance and financial services outside of SA involves more complex legal issues." Silber adds that all credit-card purchases or other payments are, strictly speaking, a breach of the exchange-control regulations and thus illegal. What is relevant is not the amount being spent, but furnishing proof that assets have been purchased and imported into the country. "The Reserve Bank is taking the approach of not concerning itself with trivialities. So small amounts being paid out of the country by credit card via the Internet are largely ignored." Many South Africans who buy over the Internet have, until now, managed to avoid import duties on the items coming into the country, but the post office is taking steps to tighten up and clamp down. Attempts to get comment from Customs and Excise, the SA Revenue Service and the Reserve Bank were unsuccessful. Goldstuck believes neither the SARS nor the Reserve Bank will comment officially as "they still do not understand this new economic and technological environment, and have no idea how to regain the control that it takes away from them. "It is believed that the Reserve Bank has decided to ignore small transactions (under R1 000) and irregular buyers as it is more trouble than it is worth to try to control that market. They will not, however, admit this on the record. The SARS has a more complicated problem in this regard, but it is at this stage probably minuscule compared to the longtime problem of untaxed earnings outside SA that have nothing to do with the Internet." Some post offices are less efficient than others in performing their function, and many imported products slip through. Says Silber: "There does appear to be an effort to clamp down on imported goods coming in duty-free. Duty will be levied at the appropriate rate. But don't forget that payment of funds outside of the common monetary area is strictly illegal unless in accordance with exchange-control regulations. For a person buying music, books, software, hardware or any other product over the Internet this would involve obtaining prior approval from an authorised exchange-control agent, like a bank. So you'd need to produce an invoice to get a draft to send to the seller, and you may need to prove that the items for which you're paying will be imported." There are also the questions of product liability, warranties, guarantees and repairs to consider. You might buy a multimedia PC or hi-fi over the Net only to find it is not supported here. And if there is a local distributor it may refuse to honour guarantees because of grey imports.
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