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Export Taxes on Scrap Metal Under the Spotlight

March 12, 2020

National Treasury

National treasury seeks comment on the proposal to introduce export taxes on scrap metal.

In the 2020 Budget Review, treasury announced that it will commence consultations with affected industries on the introduction of export taxes on scrap metal.

A price preference system for scrap steel is currently in place.

In October 2019 the International Trade Administration Commission (ITAC) sought comment on the proposed export duties on ferrous and non-ferrous waste and scrap.

Proposed export duties include R1000 per ton on ferrous (including stainless steel); R3000 per ton on aluminium and R 8 426 on red metals.

According to the notice, the trade and industry minister, Ebrahim Patel, had directed ITAC to investigate and advise on whether it would be appropriate to replace the existing Price Preference System (PPS) regulating the exportation of ferrous and non-ferrous waste and scrap metal with an export duty on scrap metal.

The PPS was introduced in September 2013 for an initial period of five years and extended twice, firstly until 30 June 2019 and, secondly, until 31 March 2020.

The trade and industry department recently called for comment on a proposal to extend the Policy Directive by nine months from 1 April 2020 until 31 December 2020 to enable treasury and the trade and industry and economic development departments to finalise the implementation of an export tax.

According to the treasury statement, ITAC submitted recommendations on the proposal flowing from a feasibility study.

Treasury points out that the envisaged consultation will take place in two phases.

“The first phase will be a shorter and broader public comment process on the objective, implementation, functioning and economic and financial impact of such an export tax, including the level of rates and base for such a tax.”

The second phase will focus on the proposed legislative provisions to give effect to specific export taxes on scrap metal to be included in the 2020 Draft Taxation Laws Amendment Bill to be published for comment in mid-July.

Parliament’s finance committees will also call for comment on the draft bill and hold public hearings.

To get the first phase underway, treasury will brief stakeholders on the proposal on 25 March 2020 in Midrand.

Comment on the proposal is invited until 9 April 2020.

Technical workshops on comments received are scheduled for the remainder of April 2020.