1. NRCS Levy Consultations November 2016

2. NRCS representation Mr. Edward Mamadise Ms. Reshma Mathura
Acting Chief Executive Officer
Ms. Reshma Mathura
Chief Financial Officer
Ms. Elmarie Cornelius
Financial Manager
Mr Bongani Khanyile
General Manager Electrotechnical
Ms Meisie Katz
General Manager FAI

3. Scope of Presentation Strategic Overview of the NRCS
NRCS Operational performance
NRCS Financial performance
Fee and Tariff proposal

4. Strategic Overview of the NRCS

5. NRCS Strategy, Mission and Vision
NRCS Strategic Goals
Mission & Vision
To ensure an optimally capacitated institution
To develop, maintain and administer compulsory specifications and technical regulations
To maximise compliance with all specifications and technical regulations
To inform and educate our stakeholders about the NRCS
Mission
To develop compulsory specifications and technical regulations, and maximise compliance of regulated products and services
Vision
A credible and respected regulator for the protection of the public, the economy and the environment

6. Legislative Mandate
Mandate of the NRCS is derived from the following Acts.
National Regulator for Compulsory Specifications Act
(Act No. 5 of 2008)
Legal Metrology Act
(Act No. 9 of 2014)
National Building Regulations and Building Standards Act
(Act No. 103 of 1977)
The Foodstuffs, Cosmetics and Disinfectants Act
(Act 54 of 1972)

7. Industries regulated by NRCS
Industry Sector
Product regulated / Service rendered
Automotive
Vehicles, Replacements components, Manufacturers Importers and Builders
Chemicals, Materials and Mechanicals
Building materials (Cement. Treated timber, Safety glass and other safety glazing material).
PPE (Safety Footwear, Swimming aids, personal flotation devices, respirators
Electro-technical
Electrical appliances and products, Electronic appliances and products
Foods and Associated Industries (FAI)
Fishery products, canned meat and processed meat
Legal Metrology
Verification of measuring instruments, type approval of measuring instruments, calibration in fields of mass and volume, designation of verification laboratories, Verification Officer examinations, E-mark Registration and LOCs for gaming equipment
Building Regulations
Ensure uniform interpretation of National Building Regulations and Standards Act, administer review Board

8. Organisational performance
Operational Performance
Financial Performance

9. NRCS Successes IPAP: Lock in and Lock out principles implemented
Non-compliant products to the value of R204,85 million were removed from the market.
The NRCS conducted inspections
The NRCS issued approval certificates for Electro-technical, Automotive and Chemicals, Materials and Mechanicals products
Issued health guarantees which ensured that all exported fishery and associated products were accepted in foreign markets.
Developed, withdrew and/or amended eight compulsory specifications (VCs) and submitted for approval to the Minister. These VCs were for Live Lobsters, Lamp Holders, Flexible Cords, Medium Voltage Electric Cables, Electric Cables with Extruded solid dielectric (300/500V to 1900/3300V)
2 Technical Papers developed and approved by the CEO for publication
Corporate social investment (Safe paraffin stove campaign)
Levy Audit successes (R9.5m in Q2 of 2017)

10. Challenges and strategies
Inadequate testing facilities in South Africa for some regulated products e.g. Motor cycle helmets.
Capacity constraints, given resources available
Escalating cost of regulation
Importation of products without NRCS Approval
Generation of revenue reliant on trends and markets.
Non-compliant levy payers
Internal control weaknesses – ICT system
Strategies
SARS & NRCS Collaboration (Code alignment project)
NRCS and other government departments & entities
System modernisation
Border enforcement
Levy collections and under-declarations
Meeting the current LOA turnaround times

11. Financial Status: Income Statement

12. Financial Status: Revenue

13. Financial Status: Revenue

14. Completeness of levies
Levies are incomplete/ inaccurate due to:
Bona fide error
If a levy payer has incorrectly classified the levy commodity which they import or manufacture a bona fide error has been made. Lists of regulated products are available on the NRCS website and technical specialists are available to advise.
Under-declaration
The NRCS has the right to request any information it deems necessary for a period of five years.
If under-declaration is suspected notify a levy officer. A levy auditor will then be dispatched to follow up.
Non-submission of returns
As at the end of October 2016, 53% of the levy returns due to the NRCS had not been submitted yet.
A levy is the equivalent of a tax
If the NRCS does not recognise all levies due to it, its revenue is incomplete
A combination of levy audits and follow up on outstanding levies attempts to address this

15. Levy Declaration: Deadlines
According to the Standards of GRAP:
A levy is the equivalent of a tax
A tax must be recognized at the date of the taxable event
A taxable event for a levy happens when manufacture or import occurs
Therefore levies need to be aligned to the NRCS’s financial year
Mandatory declarations were introduced to achieve this
Type of submission
Mandatory declaration 1
Levy period 1 (Period A)
Mandatory declaration 2
Levy period 2 (Period B)
Period covered
1 January – 31 March annually
1 January – 30 June annually
1 July – 30 September annually
1 July – 31 December annually
Submission
Mandatory declaration Period A
Levy declaration & payment
Mandatory declaration Period B
Due date for submission
30 April annually
31 July annually
31 October annually
31 January annually
A period (January to June)
B period (July to December)
Mandatory declaration March
Mandatory declaration March
NRCS Financial year
(April to March)

16. Financial areas highlighted
Successes
Strengthened Levy Audit function
Compliance check on applications (levy, debtors, fees)
Challenges
Non-compliant industry (levy declarations, payment)
Adverse economic conditions
Declining government funding
Key strategies
Automation of the NRCS levy declaration function
Levy audit focus on non compliance (under-declaration, incorrect declaration, non-declaration)
statements

17. Proposal for increases
Overall proposal
A fixed increase equal to CPI.
CPI calculated as at end of September 2016 = 6% applicable to both levies and fees.
Exceptions
Fees
Legal Metrology (LM)
Levy tariffs
Foods and Associated Industries (FAI)

18. Legal Metrology: Rationale
Scope
Legal metrology fees
Rationale for approach
Benchmarking exercise conducted by NRCS
Fees charges by NRCS are significantly lower than industry
Legal Metrology is funded by government grant, which is reducing
Approach
Adjustment of fees to match industry tariffs based on a benchmarking exercise conducted.
These fees are applicable to verification and type approval services.

19. Legal Metrology: Proposal for increases

20. FAI: Rationale Scope FAI Levies Rationale for FAI proposed increases
Fee disparity between low volume and high volume producers
SMME’s disadvantaged financially
Intra-Industry cross subsidisation
To provide a more equitable basis of pricing between high volume producers/ importers and low volume producers/ importers
FAI unit not fully funded – Loss of R 12m
Levy increase alternatives
Levy scale review
Single scale for levies

21. Proposal for increases - FAI
CPI increase for 14 commodities

22. Proposal for increases - FAI
Single tariff for 8 Commodities

23. Proposal for increases - FAI

24. End
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