Thumbs up for move to curb ‘grey imports’

The National Association of Automobile Manufacturers of South Africa (Naamsa) has welcomed the R1.8 billion allocation in the budget towards curbing grey imports and illicit cross-border activities.

Naamsa CEO Mikel Mabasa said on Thursday that grey imports have a massive negative impact on the automotive ecosystem in South Africa and cost the fiscus an estimated R3.8 billion annually in uncollected taxes.

Mabasa said more than 300 000 of the 12.7 million cars on South African roads are grey imports and this figure is growing by 30 000 vehicles per annum.

“Unquestionably, this displaces new car sales and harms the country’s economy,” he said.

Finance Minister Tito Mboweni said in his budget speech on Wednesday the SA Revenue Service (Sars), SA Reserve Bank and the Financial Intelligence Centre (FIC) are working jointly on combating criminal and illicit cross border activities through an inter-agency working group.

Mboweni said this group has completed 117 investigations and found R2.7 billion for SA’s fiscus.

He said customs and excise operations are reducing the illicit movement of goods across borders, assisted by specialised cargo scanners, resulting in 3 393 seizures valued at R1.5 billion for the fiscal year to January 2021.

Mabasa told Moneyweb in December 2020 that Naamsa’s estimates of the 300 000 illegal vehicles in South Africa and the 30 000 a year increase in these illegal vehicles on the country’s roads was based on data obtained from a company in Durban it has commissioned to do this work on Naamsa’s behalf, and on police statistics.

He said the majority of these illegal vehicles entered South Africa through the port of Durban and were for transhipment to landlocked neighbouring countries, including Botswana, Eswatini (formerly Swaziland) and Lesotho, but never ended up in those countries.

Mabasa said on Thursday that based on the suite of taxes applicable to new car sales locally, Naamsa estimates the impact of grey imports is costing the fiscus R3.8 billion per annum but that “this grows to over R4 billion when you consider the taxable income on corporate profits in the value chain”.