Customs valuation is usually a concern for importers, because duties and import VAT are calculated on the customs value of goods entering the country. Exporters seldom face the same scrutiny, as most exported goods attract no duty and do not trigger VAT on exit. One notable exception is the export duty on waste and scrap metal listed in Schedule 1 Part 6 of the Customs and Excise Act, 1964 (CEA).

Over the past few years, however, SARS has shown a growing interest in verifying the declared customs value on export declarations for scrap metal. There is also a real possibility that SARS may expand this focus to other export categories if it identifies recurring inaccuracies. This makes it important for exporters to understand how customs value should be calculated when goods leave South Africa.

Limited Guidance Exists for Export Valuation

While South African law and international instruments provide detailed valuation rules for imports, there is far less commentary on how exports should be valued. For this reason, section 72 of the CEA becomes the primary reference point. This provision sets out the valuation method applicable to exports.

The International Framework: GATT Valuation Principles

South Africa is bound by the General Agreement on Tariffs and Trade Valuation Agreement, which establishes global rules for determining customs value. In terms of Article VII, the value of goods is generally based on the actual transaction price reflected on the invoice, subject to certain adjustments.

Article 8 of the Valuation Agreement requires member states to specify when the following costs must be added or excluded in determining customs value:

• the cost of transporting goods to the port or place of import
• loading, unloading and handling fees related to the transport of the goods
• insurance costs

Any adjustments must be based on objective, quantifiable information. No other additions may be made beyond those contemplated in Article 8.

Although these principles were designed primarily for imports, they inform the broader valuation framework applied by South African law.

How Section 72 of the CEA Determines Export Valuation

For exports, section 72 sets the valuation point at the “free on board” (FOB) stage—meaning when the goods are loaded onto the ship, aircraft, rail wagon or vehicle that will carry them across the border.

Section 72(cA)(i) expands on this, stating that the FOB value must include:

“all profits, costs, charges and expenses incidental to placing the goods on board” the carrier used for export.

In other words, any expenditure incurred up to the moment the goods are physically loaded onto the export conveyance must be factored into the customs value.

SARS’ Recent Interpretation: A Broad Approach to Costs

In a recent ruling involving an “ex works” invoice, SARS required a number of costs to be added to the invoice price when calculating the customs value for export purposes, including:

• transport to the storage depot
• storage-related charges
• agency fees
• clearing agent costs
• shipping-line charges
• port fees

There is debate about whether this wide interpretation aligns with the meaning of FOB. Expenses directly associated with preparing and positioning the goods for loading should clearly form part of the customs value. However, costs relating to the vessel itself or its time in the port arguably fall outside the FOB scope and should not be included.

Practical Takeaways for Exporters

Given SARS’ increasing focus on export valuations, especially for scrap metal, exporters and clearing agents should take care to ensure that:

• the customs value reflects all costs needed to bring the goods to the FOB loading point
• irrelevant expenses, particularly those relating to the vessel or port operations after loading, are not included
• documentation clearly supports each component of the declared customs value

Accurate customs valuation is essential not only for compliance, but also to avoid assessments, penalties or delays in export clearance.