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THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA

THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA. AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME (APDP). APDP. DOCUMENTATION AVAILABLE ON THE APDP 1 . REGULATIONS INFO DOC A – PRCC 3. INFO DOC B – CSP 4. INFO DOC – Form C1 5. REBATE ITEM 317.03.

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THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA

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  1. THE INTERNATIONAL TRADE ADMINISTRATION COMMISSION OF SOUTH AFRICA AUTOMOTIVE PRODUCTION AND DEVELOPMENT PROGRAMME (APDP)

  2. APDP DOCUMENTATION AVAILABLE ON THE APDP 1. REGULATIONS • INFO DOC A – PRCC 3. INFO DOC B – CSP 4. INFO DOC – Form C1 5. REBATE ITEM 317.03

  3. Part C – Production Rebate Credit Certificate (PRCC) • PRODUCTION INCENTIVE (PI)   The PI is an incentive available to final manufacturers and will be calculated at the point of sale based on value added on qualifying motor vehicles and components manufactured in the South Africa. The PI will basically be calculated on the sales invoice of the final manufacturer less the value of imports and local materials used by itself or by other manufacturers in the manufacturing chain.

  4. Part C – PRCC 2. Qualifying entities The following final manufacturers based in South Africa, which are registered with SARS as taxpayers, may apply for a PRCC: 2.1 Registered light motor vehicle manufacturers, manufacturing specified motor vehicles in South Africa that adhering to the qualifying criteria as set out under section 9, according to the extent of assembly provided for in Note 5 to Chapter 98 of Part 1 of Schedule 1 to the Customs Act. 2.2 Component manufacturers manufacturing components adhering to the qualifying criteria as set out under section 9. (EPC, application procedures Annexure A1.1 and A1.2)

  5. Part C – PRCC 3. Eligible Products under the APDP The following products qualify as eligible products under the APDP: 3.1 specified motor vehicles fitted with an engine and gear box manufactured in a licensed, special vehicle manufacturing warehouse in South Africa; 3.2specified motor vehicles not fitted with an engine or gear-box manufactured in a licensed, special vehicle manufacturing warehouse in South Africa; and 3.3 components.

  6. Part C – PRCC 3.4 In order to qualify for a PRCC: 3.4.1 The products listed in 3.1, 3.2 and 3.3 must be wholly manufactured in South Africa ; 3.4.2 The products listed in 3.3 must be covered by an EPC certificate; 3.4.3 Not less than 25 per cent of the ex-factory selling price (exclusive of VAT, ad valorem excise duty and environmental levy) of such components, at the time of sale, be represented by the sum of – - the cost of labour in the SACU; - the value of materials originating in the SACU; - the factory overhead expenses (excluding profit) incurred in South Africa in respect of components; and

  7. Part C – PRCC the final process of manufacture was carried out in South Africa, provided that operations that consist only of packing or painting shall not qualify as manufacturing processes. 3.4.4 Manufacturers of components must achieve a local and/or international OEM supply chain turnover of at least 25% of total automotive turnover or R10m in OEM supply chain invoicing (exclusive of VAT, ad valorem excise duty and environmental levy) per annum, whichever comes first. 3.4.5 Components manufactured for which a PI is claimed must be: - Part of a local or international OEM supply chain; - Replacements parts manufactured by a manufacturer adhering to the conditions set in 3.4.2, 3.4.3 and 3.4.4

  8. Part C – PRCC 4.3.1 Standard material is the sum of the following local materials, 25% of the value will be deemed to be local:   - Aluminum; - Brass; - Leather; - PGM; - Raw automotive flat glass; - Stainless steel, and; - Steel.

  9. Part C - PRCC Silica Sodium oxide Soda ash Lime RAW FLAT GLASS

  10. Part C - PRCC Abattoir Trader Chem WET BLUE TANNER

  11. Part C – PRCC Bead Plies Steel belts Tread TYRE

  12. Part C - PRCC Substrate Stainless steel Wash coat PGM CATALYTIC CONVERTER Welding Matting

  13. Part C - PRCC Polymer BUMPER

  14. Part C - PRCC ZIM Abattoir Ireland Namibia Local Trader Chem A Local Chem B Local Chem B Imported LOCAL WET BLUE TANNER

  15. Part C - PRCC Purchases during Q1/13 m² R m² Total – R FOREX Local Hides • Namibia 10 40.00 400.00 0.00 • Abattoir 30 50.00 1 500.00 0.00 • Trader 20 50.00 1 000.000.00 Total hides 60 R 2 900.00 0.00 Chemicals • A 100.00 0.00 • B 120.00 100.00 • C 200.00 180.00 Total chemicals 280.00 FOREX value 280.00 Sales 01/01/13 20 60.00 1 200.00 10/01/13 70 70.00 4 900.00 20/03/13 10 80.00 800.00 100 6 900.00 Weighted average standard material Value (selling price)per m² (R6 900/100) 69.00 Weighted average Customs value per m² (R280/60) 4.67

  16. Part C - PRCC Purchases during Q1/13 m² SM - R NSM - R FOREX - R Hides • Local 60 4 140.00 0.00 280.00 • Zimbabwe 20 0.00 1 400.00 200.00 • Ireland 20 0.002 000.001 800.00 Total hides 1004 140.00 3 400.00 2 280.00 Chemicals • A 200.00 0.00 • B 300.00 100.00 • C 400.00180.00 Total chemicals 900.00 380.00 Total hides and chem 100 4 140.00 4 300.00 2 660.00 Weighted average value per m² Standard material (R4 140 / 100) 69.00 Non-standard material (R4 000 / 100) 40.00 Weighted average Customs value per m² (R2 660/100) 26.60

  17. Part C - PRCC LWB Imported wet blue Imported leather Local chemicals Imported chemical AUTOMOTIVE TANNER

  18. Part C - PRCC Purchases during Q2/13 m² SM - R NSM - R FOREX - R Wet blue and leather • LWBT 70 2 898.00 3 010.00 1 862.00 • Imported wet blue 20 0.00 1 000.00 800.00 • Imported leather 10 0.00 800.00760.00 Total hides 1002 898.00 4 810.00 3 422.00 Chemicals • A 200.00 0.00 • B 600.00 560.00 • C 800.00 720.00 Total chemicals 1 600.00 1 240.00 Total hides and chem 100 2 898.00 6 410.00 4 702.00 Weighted average value per m² Standard material (R2 898 / 100) 28.98 Non-standard material (R6 410 / 100) 64.10 Weighted average Customs value per m² (R4 702/100) 47.02

  19. Part C - PRCC Local AT Imported leather parts Other imported components/ parts SEWER

  20. Part C - PRCC Purchases during Q3/13 m² SM - R NSM - R FOREX - R Leather parts purchased • LAT 90 2 608.20 5 769.00 4 231.80 • Imported leather parts 20 0.00 2 000.00 1 800.00 - Other material/comp 0.00 500.00 400.00 Total leather parts and other Material/components 110 2 608.20 8 269.00 6 431.80 Weighted average value per m² Standard material (R2 608.2 / 110) 23.71 Non-standard material (R8 269 / 110) 75.17 Weighted average Customs value per m² (R6 431.80 / 110) 58.47

  21. Part C - PRCC m² SM - R NSM - R FOREX - R Final SMD, 4m² leather per seat 94.84 300.69 233.88 Annexure A2 - Selling price R1 000.00 • Less: 75% of standard material R 71.13 • Less: Non-standard material R 300.69 R 628.18 • PI (Factor = 80%) R 502.54 • Duty @ 20% R 100.51 • ”Real benefit” 10.05%

  22. Local steel mnf Other imported material Tow ball mnf Other local material OEM sales Other sales ITAC – PRCC SYSTEM

  23. ABATTOIR Other local material Other imported material WET BLUE TANNER Other imported material Other local material AUTOMOTIVE TANNER Other imported material Other local material SEWER OTHER SALES OEM SALES ITAC – PRCC SYSTEM

  24. MINE (SMELTER) Other material DIGESTER COATER (DIGESTER) Other material CANNER Other material ITAC – PRCC SYSTEM SALES

  25. Part C - PRCC

  26. Part C - PRCC

  27. Part C – PRCC 4.3.1 Vulnerable products - Alloy wheels; - Aluminiumproducts (Engine and transmission components, heat exchangers and tubes therefore, suspension components and heat shields); - Cast iron components (Engine/axle/brake/transmission and related types of components); - Catalytic converters; - Flexible couplings; - Leather interiors; - Machined brass components; and Bleistahl valve guides • Steel jacks.

  28. Part C – PRCC 4. PRODUCTION INCENTIVE The PI, basically a percentage (PI factor) of the difference between the selling price and material (value added or VA), may be earned by the final manufacturer in South Africa of eligible products, see 2 and 3 above. For purposes of the APDP, 25% of certain material, also referred to as standard material, will qualify for the PI. 4.4.1The PI factor for the 2013 calendar year for non vulnerable products will be 55% per annum from 1 January 2013 and will be reduced by 1percentage point per annum to 50% from 1 January 2018 onwards. 4.4.2 The PI factor for the products listed in note 4.3.2 for the 2013 and 2014 calendar years will be 80% and will be reduced by 5 percentage points per annum from 1 January 2015 to 50% from 1 January 2020 onwards.

  29. Part C – PRCC 4.1 Calculation of the PI, the PI is calculated as follows: - Invoice price (exclusive of VAT, ad valorem excise duty and environmental levy) R100 - Less: Imports and non qualifying components/material R 20 - 75% of standard materials R 15 - Standard material R 20 • Less: 25% qualifying portion R 5 - Non standard material R 5________ • Value addition R 80 • PI factor 55% - PI value R 44 - Duty @ 20% R8.80 - Real benefit 8,8% • The 25% local value deeming will be calculated by the applicant of the PI whilst ITAC will apply the PI factor.

  30. Part C – PRCC Vulnerable industries and products are those identified by the Minister and set forth in the APDP Info Doc 4.3.2 With regards to Vulnerable Industries/products, 40% of the standard material listed in 4.3.1 applicable to the industries/ products listed below will be deemed to be local: - Alloy wheels; - Aluminum products; - Flexible couplings; - Catalytic converters; - Leather interiors; - Machined brass components; - Machined grey iron castings; and - Steel jacks.

  31. Part C - PRCC

  32. Part C - PRCC APPLICABLE TO LAST PAGE Separate applications must be submitted in respect of non vulnerable or vulnerable industries, registered light motor vehicles with or without engine. Name of person who may be contacted in case of any queries: .................................... Tel: ................................Fax: .............................. E-mail: ........................................ For use to issue credit PRCC: Customs port of import: ................ Customs import number: ...............

  33. Part C – PRCC 5. Application for a PRCC 5.1 Anytime once payment was received 5.2 5.3 No duplicate claims 5.4 The right to claim PRCCs lies with the applicant who is the registered manufacturer of such a product, except for a component manufacturer that supplies components for fitment on line to a registered local light motor vehicle manufacturer for the assembly of an eligible specified light motor vehicle, in which case the value added on the applicable components will roll up to the standard material declaration of the registered light motor vehicle manufacturer, who may claim the PRCC for the manufactured vehicle which incorporates the applicable components.

  34. Part C - PRCC 5.5 12 months 5.6 & 5.7 Application must be complete 5.8 No transfer of PRCC after 2 years 5.9 ITAC may verify 5.10 Original supporting docs 5.11 Books of account & production records 5.12 30Day period 5.13 Responsibility of MD 5.14 Right to apply for PRCC 5.15 Investigation by SARS, etc 5.16 Promotion of Access to Information

  35. Part C - PRCC 5.17 IDZ 5.18 Tax concession Section 10(1)(zA) 5.19 Errors by ITAC 5.20 Applicant caries burden of proof 6. Issue and use of PRCC 6.1 Products 6.2 Certificate will indicate what was exported 6.3 Original to SARS 6.4 Transfer of IRCC 6.5&6.6 6.7 Warts and all

  36. Part C - PRCC 7. Claim procedure 7.1 Original documentation (Annex 3) 7.2 Copies 7.3 Sampling 7.4 Basic information 7.5.2 Jacobsons 7.5.3 Multiple Annexures A2 7.5.4 Separate applications 7.6 Worksheet 7.7 Form A2SL & A2SE 8. Proof of payment 9. Assurance report

  37. Part C - PRCC • SUMMARY OF TOTAL CLAIM PER TARIFF SUBHEADING (LOCAL) – Applicable to goods sold in SACU • NAME OF APPLICANT: ..............................................

  38. Part C – PRCC 10. Withdrawal of PRCCs and penalties 10.1 Should the verification by ITAC, or the verification referred to in par. 9 above, reveal anomalies, or if SARS report incorrect PRCCs that necessitate the adjustment of PRCC values already issued, the following procedures will be followed: 10.1.1 If the PRCC had not been used it will be reduced by the value over declared and a new PRCC recalculated balance. 10.1.2 If the PRCC had been used or partially used, or if the balance remaining on the PRCC is less than the applicable correction, SARS will be informed to recover the benefits over utilised. 10.1.3 ITAC may also rule that the original claimant may adjust a future claim. However, this will only be considered if the claimant is a regular claimant, a relative small value and it is not a regular occurrence.

  39. Part E – Foreign Currency Usage • PURPOSE OF FORM C1 Motor vehicle manufacturers must pay customs duty on a quarterly basis on the FOREX content of components used in the production of vehicles. In addition to the FOREX content contained in their own imports, the FOREX content in domestic purchases must also be brought to account. Local suppliers/manufacturers of material/components declare the FOREX content on their goods by way of Form C1. Form C1 must be obtained for all domestic purchases of components and materials used in the manufacture of specified motor vehicles and automotive components.

  40. Part E - Form C1 What is Form C1 20.1 Form C1 is the form that must be used by specified motor vehicle manufacturers and component manufacturers supplying goods to specified motor vehicle manufacturers to the declare their foreign currency usage. 20.2 In terms of Note 7.3 to Rebate Item 317.03 of Schedule 3 to the Customs Act, all participants in the APDP must use Form C1 to declare their foreign currency usage in respect of original equipment components for use in the manufacture of specified motor vehicles received from any person in the SACU.

  41. Part E - Form C1 20.3 Any incorrect information supplied on Form C1 can render the whole document null and void and may result in the purchase price of all items in such document being regarded as foreign currency usage. 20.4 If Form C1 is not obtained and completed, the foreign currency usage in respect of such goods may be deemed to be the price at which such goods were purchased.

  42. Part E - Form C1 Who should declare foreign currency usage and when Specified motor vehicle manufacturers, component manufacturers and component and material suppliers to the motor vehicle industry must declare the foreign currency usage in respect of each type of component received duringa quarter. How is the foreign currency usage calculated - The foreign currency usage of specified motor vehicle manufactures must be determined using the method and basis of calculation as set out by ITAC in the APDP Info Doc. - ITAC has the right to verify the correctness of the foreign currency usage declared by manufacturers of eligible products by, amongst others, verifying Form C1s and related documents. Discrepancies detected by ITAC will be dealt with as provided for in the APDP Info Doc. - Values must be entered in Rand (ZAR) and may not be expressed as a percentage or as a foreign currency.

  43. Weighted Average Customs Value (Per part/material type imported) SHIP B/E NO. B/E DATE VOL TOT CV • 101 08-01-04 500 8 305,65 • 201 14-01-04 600 10 541,10 • 301 26-01-04 400 7 331,40 • 401 03-02-04 100 1 761,80 • 501 10-02-04 150 2 631,60 • 601 14-03-04 500 8 333,35 TOTAL 2 250(a)38 904,90(b) Weighted Average R17,29 (b/a)

  44. Weighted Average Customs Value for a Product Sourced from 1 Overseas and 1 Local Supplier

  45. Weighted average roe based on customs values US $ SHIP B/E NO. B/E DATE FOREX CV • 101 08-01-04 1 407.74 8 305,65 • 201 14-01-04 1 833.23 10 541,10 • 301 26-01-04 1 242.61 7 331,40 • 401 03-02-04 287.88 1 761,80 • 501 10-02-04 443.03 2 631,60 • 604 14-03-04 1 436.78 8 333,35 TOTAL US$6 651.27(a) R38 904,90(b) Weighted Average R5.85 (b/a)

  46. Part E - Form C1 FOREIGN CURRENCY USAGE PER UNIT - R

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