Are you considering importing or exporting as part of your business strategy? Would you like to frequently import goods for personal use? If so, you’ve likely heard of import export licenses (or ‘codes’). If you are wondering what exactly these licenses are, whether you need one to trade, and how they can be used, this article will help answer some of your key questions.
One of the most frequent questions clients ask me is, “When do I need an import export license?”. Many clients wonder whether it is necessary to obtain a license if they only need to import small quantities of goods, import infrequently, or aren’t running an import/export business. In this article, I’d like to shed some light on:
- What an import export license is,
- When you need to get an import export license,
- The rules around using your import export license, and
- How to know whether you are ready to import or export.
What is an export import license?
First things first – what exactly is an import export license? In short, it is a code that Customs issues businesses or individuals that register as importers or exporters.
These codes are also referred to as ‘Customs codes’ or ‘CNN numbers’. An import export license allows registered parties to clear their imports and exports through Customs, and to make international payments for imported or exported goods. Once a business or individual registers, they receive their import export code from Customs via email.
When do I need an export import license?
An import export customs registration is required when you:
- Import or export goods over the value of R50 000;
- Import or export goods more than 3 times per calendar year; or
- Import or export for commercial purposes and not personal use.
Banks often also require an import export license number to clear payments for internationally traded goods.
What can I do with my export import license?
An import export license opens doors for frequent international trade. It is especially useful if you want to regularly import goods for personal use, or require raw materials or products from other countries for business purposes. An import export license allows you to:
- Import or export goods from or to any country. You can import or export anything you’ve dreamed of, from or to any country, using one license to move items through South African borders.
Note – the South African government does have a list of prohibited and regulated goods for export, as well as a list for prohibited and regulated goods for import. Goods on these lists may be subject to additional permits. Foreign countries have similar requirement to move items over their borders.
- Import or export as many goods as you like. There is no prescribed maximum for the quantity of goods that you are allowed to import or export. This of course, excludes certain regulated or prohibited items (as stipulated in the lists above).
- Clear international payments. You can present your import export license to your bank or foreign exchange broker to clear your import- and export-related international payments.
- Import or export as a SA citizen or a foreigner. Both South African citizens and foreigners can apply for import export licenses.
- Import or export as either a business or an individual. You can apply for your license in your personal or business name, depending on your preference. Remember that the name on your import export license must match the name on your commercial invoices for imports and exports.
Note – you do NOT need to be VAT registered to apply for an import export license.
Am I ready to import or export?
Lastly, before venturing into the world of imports and exports, it is important to make sure you are ready to trade. These useful checklists can help you assess whether you are import- or export-ready:
- Import readiness checklist
- Export readiness checklist
In summary, an import export license can open many doors for both personal and commercial trade. If you are ready to import or export, know that you will be trading internationally more than a few times per year, and would like the certainty of being in Customs’ good books, an import export license is the perfect fit for you.