The rate of customs duty on digital smart cards excluding the proximity cards and tags has been reduced from 5 % ad valorem to free of duty from the 30th June 2017. International Trade Administration Commission of South Africa received an application from the Gemalto Southern Africa (Pty) Ltd (“Gemalto”) for the reduction in the rate of customs duty on the digital cards, classifiable under the tariff subheading 8523.52.10 from 5% ad valorem to free duty, by the way of creating a separate 8-digit tariff subheading.

The applicant cited in their application as motivation that, there are no local manufactures of the subject products in the SACU region; and the current customs duty rate of 5% has an unnecessary cost raising effect on the net ex-factory selling price of the products. In the domestic industry, the subject products are normally used in the banking and mobile communications sectors such as Tele-communication brand “Vodacom”. The subject products include smart ID cards which are used by only the South African Department of Home Affairs.

Currently there are no local manufacturers of digital smart cards with a microprocessor (contact chip) which has an on-board cryptographic processing capability in the SACU region. NamlTech and Xantium Integrated Solutions ceased manufacturing of the subject products in the SACU region. Card Technology Services (Pty) Ltd (“CTS”} only produces digital proximity cards and tags. According to the applicant, they import the subject products pre-printed and pre-branded as per the customer’s specifications. The subject products are personalised according to customer’s specification by embossing the required information onto the cards.

ISSUED BY ITAC