The updated Automotive Production and Development Programme – Phase 2 (APDP2) regulations were published in the Government Gazette dated 11 February 2021. These regulations become effective from 1 July 2021. No benefits will be claimable under APDP from 31 June 2021.
The published regulations did not include any of the referenced information documents (Doc A, Doc B or Form C2). The release of these documents is expected shortly together with the operational detail of this gazette.
Key Takeaways From The Automotive Production and Development Programme
- APDP2 wants to support the vision of the South African Masterplan of creating a “globally competitive and transformed automotive industry which actively contributes to the sustainable development of South Africa’s productive economy. This is in order to create prosperity for industry stakeholders and the broader society.
- Participation under this APDP2 is voluntary.
- The APDP2 consists of rebates and refunds of the relevant customs duties as legislated in the Customs Act.
- Production Rebate Certificates (PRCs) are duty credit certificates issued by ITAC. These certificates indicate the amount of customs duty that can be rebated using the Production Incentives (PI). This is an incentive available to final manufacturers of eligible products in South Africa. Such manufacturers must be B-BBEE compliant and registered taxpayers.
Completed applications claiming PRCs must be submitted to ITAC no later than 12 months after the invoice for eligible products.
- Production Incentive (PI) value is determined by local value addition adjusted by the PI Factor, and the applicable customs duty:
• The PI Factor for PRC claims applicable to specified motor vehicles: 50%
• The PI Factor for PRC claims applicable to automotive components and tooling: 62.5% - Eligible products under APDP2:
• Specified motor vehicles fitted with an engine and gear box manufactured in a licenced, special vehicle manufacturing warehouse in South Africa.
• Specified motor vehicles not fitted with an engine or gear box manufactured in a licenced, special vehicle manufacturing warehouse in South Africa.
• Automotive components applicable to specified motor vehicles.
• Automotive tooling.
• Automotive components applicable to heavy motor vehicles, meeting all requirements.
• Specified motor vehicles manufactured in a licenced, special manufacturing warehouse in South Africa, destined for assembly outside the borders of the Republic, must be in the form of kits that have untrimmed painted bodies with no parts assembled to the body (Exclusions apply here).
Where the above product requirements are not met there are alternative requirements that may apply.
- Standard Materials: Qualifying value-added materials set forth in APDP2 Info Doc A. The SVA used in the manufacture of an eligible product will be 25% of the value of the standard material.
- The calculation of Company Specific Percentage (CSP) is calculated by ITAC and used by SARS to calculate the Volume Assembly Localization Allowance (VALA).
Entities qualifying for CSP:
• Motor vehicle manufacturers with a plant capacity of 10 000 units per annum may apply.
• ITAC will calculate CSP and provide this to SARS only where a light motor vehicle manufacturer achieves a minimum production level of 10 000 units in the most recent four-quarter total.
• A registered light motor vehicle manufacturer that introduces a new model to replace an existing model in its manufacturing plant. “Dead quarters” application to be dependent on the ITAC’s decision.
• New motor vehicle manufacturers that are new entrants but only qualify for VALA where they have a production capacity of 10 000units per annum.
- VALA is used to reduce the value for customs duty purposes. Where a manufacturer uses the excess VALA in a quarter rebate duty on vehicles imported, SARS will reduce VALA by 20%.
- Specified motor vehicle manufacturers and component manufacturers are required to declare their imported component and material values in a form quarterly. Where incorrect information is supplied the document will become void and may result in the full purchase price of items being regarded as the imported content values.
Values must be determined using the method and basis of calculation set out by the ITAC, where values must be entered as Rand amounts and not percentages or in a foreign currency.
- The gazetted regulations do not clarify the exact requirement for B-BBEE compliance levels, despite press statements referring to Level 6 for 2022 and Level 4 for 2023. We expect the Minister will clarify these details soon.
Please find attached the published Government Gazette for your ease of reference.
If you would like to discuss the impact of the Updated Automotive Production and Development Programme on your business, please do not hesitate to contact me on [email protected].
Kind regards,