Trade Briefs

Overview of the rebate facilities in the Southern African Customs Union

Overview of the rebate facilities in the Southern African Customs Union

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03 May 2017

Author(s): Khutsafalo Sekolokwane, Maria Immanuel, Moureen L. Matomola and Ron Sandrey

The Southern African Customs Union (SACU) Agreement (SACUA) of 2002 aims to facilitate free movement of goods between SACU member countries. For goods imported outside the region, a common external tariff is applied and varies across products. In addition, Article 20 of SACUA makes provision for granting a rebate of the customs duties in respect of goods imported into the customs area in line with the stipulated clauses. The rebates regime facilitates achievement of the objectives set out in Article 2 of SACUA such as increasing investment opportunities, enhancing economic development as well as promoting industrialisation in the member states.

In terms of administration and endorsement of these trade-supporting instruments, Article 8 of SACUA mandates the SACU Council of Ministers to approve customs tariffs, rebates, refunds, drawbacks and trade-related remedies. The different rebates available to the SACU member states are covered under Schedules 3 and 4 of the SACU Customs and Excise Act of 1964. Schedule 3 covers industrial rebates and Schedule 4 covers what is classified as general rebates. Depending on the purpose of importation of the concerned product, there are specific conditions attached to prevent exportation into SACU member states of products manufactured from the materials imported from non-SACU countries through the rebate facility.

The rebates are therefore used as policy instruments aimed to address the effects of tariffs on industrial development since they offer relief to industries by offsetting the duties paid on imports of rebated products. The rebate facility is thus intended to promote sectoral competitiveness and industrial development in SACU.

The main objective of the paper is to provide a baseline outline and preliminary assessment of the rebate facilities in SACU. The paper looks at the types of rebates available, the rationale and legal basis, the policy implications of rebates in the SACU member states and, more particularly, their effect on industrial development.


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