FSC CNRA ZAF V1 0 EN 2016 01 26
Centralized National Risk
Assessment for
South Africa
FSC-CNRA-ZAF V1-0 EN
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 1 of 75 –
Title:
Centralized National Risk Assessment for South Africa
Document reference
code:
FSC-CNRA-ZAF V1-0 EN
Approval body:
FSC International Center: Policy and Standards Unit
Date of approval:
17 December 2015
Contact for comments:
FSC International Center
- Policy and Standards Unit Charles-de-Gaulle-Str. 5
53113 Bonn, Germany
+49-(0)228-36766-0
+49-(0)228-36766-30
policy.standards@fsc.org
© 2015 Forest Stewardship Council, A.C. All rights reserved.
No part of this work covered by the publisher’s copyright may be reproduced or
copied in any form or by any means (graphic, electronic or mechanical, including
photocopying, recording, recording taping, or information retrieval systems) without
the written permission of the publisher.
Printed copies of this document are for reference only. Please refer to the electronic
copy on the FSC website (ic.fsc.org) to ensure you are referring to the latest version.
The Forest Stewardship Council® (FSC) is an independent, not for profit, nongovernment organization established to support environmentally appropriate,
socially beneficial, and economically viable management of the world’s forests.
FSC’s vision is that the world’s forests meet the social, ecological, and economic
rights and needs of the present generation without compromising those of future
generations.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 2 of 75 –
Contents
Risk assessments that have been finalized for South Africa ...................................... 4
Risk designations in finalized risk assessments for South Africa ............................... 5
Risk assessments ..................................................................................................... 6
Controlled wood category 1: Illegally harvested wood ........................................... 6
Overview ........................................................................................................... 6
Sources of legal timber in South Africa .............................................................. 7
Risk assessment ............................................................................................... 7
Recommended control measures .................................................................... 23
Controlled wood category 2: Wood harvested in violation of traditional and human
rights ................................................................................................................... 24
Risk assessment ............................................................................................. 24
Recommended control measures .................................................................... 24
Detailed analysis ............................................................................................. 25
Controlled wood category 5: Wood from forests in which genetically modified trees
are planted .......................................................................................................... 74
Risk assessment ............................................................................................. 74
Recommended control measures .................................................................... 75
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 3 of 75 –
Risk assessments that have been finalized for South
Africa
Controlled Wood categories
1 Illegally harvested wood
Wood harvested in violation of traditional and human
2
rights
Wood from forests where high conservation values are
3
threatened by management activities
Wood from forests being converted to plantations or
4
non-forest use
Wood from forests in which genetically modified trees
5
are planted
Risk assessment
completed?
YES
YES
NO
NO
YES
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 4 of 75 –
Risk designations in finalized risk assessments for South
Africa
Indicator
Risk designation (including functional scale when relevant)
Controlled wood category 1: Illegally harvested wood
1.1
Low risk
1.2
N/A
1.3
Low risk
1.4
Low risk
1.5
N/A
1.6
Low risk
1.7
Low risk
1.8
N/A
1.9
Low risk
1.10
Low risk
1.11
Low risk
1.12
Low risk
1.13
N/A
1.14
N/A
1.15
N/A
1.16
N/A
1.17
N/A
1.18
Low risk
1.19
Low risk
1.20
Low risk
1.21
N/A
Controlled wood category 2: Wood harvested in violation of traditional and human rights
2.1
Low risk
2.2
Low risk
2.3
Low risk
Controlled wood category 3: Wood from forests where high conservation values are
threatened by management activities
3.0
3.1
3.2
3.3
3.4
3.5
3.6
Controlled wood category 4: Wood from forests being converted to plantations or non-forest
use
4.1
Controlled wood category 5: Wood from forests in which genetically modified trees are
planted
5.1
Low risk
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 5 of 75 –
Risk assessments
Controlled wood category 1: Illegally harvested wood
Overview
Of South Africa’s forest, 10% is primary forest, 71% is naturally regenerated, and 19% comprises plantations. Commercial forestry in South Africa is based
exclusively on plantation forestry. Since its origins at the beginning of the 1900s, the industry has become well established, with a high level of self-imposed
internal regulation; reflected in over 80% of the commercial forestry area being FSC-certified. Two genera dominate the market, namely Eucalyptus and Pinus
species. Additionally, a fair amount of Acacia mearnsii is planted.
Although this risk assessment covers both natural forests and exotic commercial plantations, the actual situation in the country is such that natural forests are
protected, with no commercial activity and no communities depending on natural forests for their livelihoods.
Ownership of the South African commercial forest area is primarily private. The Department of Agriculture, Forestry and Fisheries owns some 35 000 hectares (3%) of a total of some 1,2 million hectares of plantation forestry in South Africa. Ownership of the private forest area can be divided into three
categories: the bulk of the area, owned by private companies; followed by farms planted by commercial farmers; and lastly a very small portion of community
land planted with trees in very small woodlots.
There are no permits required to harvest timber in South Africa. Any landowner has the right to harvest any timber on his land, based on his management
objectives and financial needs. Government regulation of private forests is achieved through the Department of Agriculture, Forestry and Fisheries' field
officials who focus on checking the planted areas on private land with regard to legality issues such as water registration requirements. There is no legislation
requiring the checking of any harvesting activity per se. As mentioned above, natural forests are fully protected in South Africa, with no incentive to harvest
them for commercial purposes on any large scale, as none of the natural wood species is usable or marketable on any significant scale within the commercial
forestry products produced in South Africa. Rather than using wood from natural forests for firewood, local communities use plantation wood and residues.
The list of sources provided in FSC-PRO-60-002a, section 3.3.3, has been reviewed in regards to the national legality risk assessment for South Africa. The
following sources have been used: World Bank Worldwide Governance Indicators and the Transparency International Corruption Perceptions Index. The
remaining sources were determined to be not relevant to the legality risk assessment for South Africa.
South Africa has an average governance score according to the World Bank Governance Index. On a range from -2.5 to +2.5, South Africa has a 2013 score
of 0.13 in relation to 'rule of law' and, on control of corruption, a 2013 score of -0.12. According to Transparency International, South Africa has a Corruption
Perception Index of 44 (2014).
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 6 of 75 –
In relation to tax issues, the South African Revenue Service (SARS) is not considered to be highly corrupt, and consultation with stakeholders through
interviews has confirmed the perception that the South African forest sector is well-regulated and enforced by the government. The South African forestry
industry has a high level of self-governance with a high level of certification and company due diligence.
Sources of legal timber in South Africa
Forest
classification type
Production
plantation
Natural forest
Permit/license type
N/A
A license needs to be obtained to cut, disturb,
damage or destroy any indigenous tree in a
natural forest. There is no commercial
harvesting of any significant scale of natural
forests in South Africa.
Main license requirements
(forest management plan,
harvest plan or similar?)
No harvesting license
required
None
Clarification
All forestry in South Africa is in the form of fast-growing, exotic
plantations in commercial operations.
A license is required to cut, disturb, damage or destroy any
indigenous tree in a natural forest, but these licenses have no
bearing on commercial forestry operations in South Africa, which
totally exclude natural forests.
Risk assessment
Indicator
1.1 Land
tenure and
managem
ent rights
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Legal rights to harvest
Low risk
CIPC website: www.cipro.co.za/
Applicable laws and regulations
National Water Act (No. 36 of 1998),
specifically Chapter 4
Restitution of Land Rights Act (No. 22 of
1994)
Extension of Security of Tenure Act 62 of
1997 (ESTA), Communal
Land Rights Act 11 of 2004 (CLARA)
Interim Protection of Informal Land Rights
Act, 1996 (Act No. 31 of
1996)
License Assessment Advisory
Committee (LAAC)
memorandum of agreement
Minutes of Unlawful Afforestation
Committee meetings
National Water Act (No. 36 of
1998) , specifically: Chapter 4
http://faolex.fao.org/docs/pdf/saf
123836.pdf
Companies Act (No. 71 of 2008),
specifically Sections 11–22
The Department of Land Affairs is responsible for ensuring that security of
tenure is provided for all. The Land Reform Programme consists of four
elements: Land Restitution, Land Redistribution, Land Tenure Reform, and
Development. The Programme aims to reverse the current land ownership
patterns that were evident with the first democratic government of 1994, and
were part of the legacy of the Native Land Act of 1913, which promulgated
into law on 19 June 1913 and formally adopted territorial segregation as a
principle of a post-Union South Africa land policy. The Restitution of Land
Rights Act of 1994 requires that a person, direct descendent of an estate or
community is entitled to restitution if dispossessed of a right in land, after 19
June1913, as a result of past racially discriminatory laws or practices and
has lodged a claim for restitution was first set to no later than 31 December
1998, but changed to 30 June 2019.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 7 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Land Reform (Labour Tenants) (Act No. 3
of 1996)
Prevention of Illegal Eviction from and
Unlawful Occupation of Land
Act 19 of 1998
Companies Act (No. 71 of 2008),
specifically sections 11–22
Tax Administration Act (No. 28 of 2011),
specifically Chapter 3 (sections 22–24)
Value-Added Tax Act (No. 89 of 1991),
specifically Part III (sections 23–26); also
Part A of Schedule 2 relating to Plants
(Item 5): Zero-rating
Legal Authority
Department of Water Affairs
(DWA) (National Water Act)
Companies and Intellectual
Property Commission
South African Revenue Service
Department of Land Affairs (Land tenure)
Forestry South Africa
Department of Agriculture, Forestry and
Fisheries
Institute for Commercial Forestry
Research
http://www.justice.gov.za/legislati
on/acts/2008-071amended.pdf
Tax Administration Act (No. 28 of
2011), specifically Chapter 3
(Sections 22–24)
http://www.sars.gov.za/AllDocs/L
egalDoclib/AABC/LAPD-LPrimAct-2012-01%20%20Tax%20Administration%20A
ct%202011.pdf
Value-Added Tax Act (No. 89 of
1991), specifically Part III
(sections 23–26). Also Part A of
Schedule 2 relating to Plants
(Item 5)
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Stakeholder 1 (Forestry South
Africa)
Department of Trade and Industry
Forestry and Fisheries
Sources of Information
Institute for Commercial Forestry
Research
http://www.icfr.ukzn.ac.za/resear
ch/sustainable-productivityresearch/
Chief Land Claims
Commissioner’s Annual Report
2012/2013:
http://www.ruraldevelopment.gov
.za/publications/annualreport/category/249-commissionon-restitution-of-land-rights
Risk designation and determination
The potential risks in South Africa are as follows:
- Disputes of land tenure rights
- Land managers are not operating within a legally registered entity
- Lack of tax registration
The introduction of the Restitution Programme in 1995 has contributed to
changing patterns of land ownership through the award of 3 million hectares
of land, 1,5 million hectares of which have been transferred to persons and
communities who qualified for restitution and opted for land restoration.
As evidence of enforcement of the Land Reform Programme, the Chief Land
Claims Commissioner's 2012/2013 Annual Report recorded that between
1965 and 2013, a total of 77,334 claims were settled. Of these, 71,292
claims (92%) were settled by payment of financial compensation to
claimants. The majority of beneficiaries have thus chosen financial
compensation as their preferred form of restitution. Had they chosen land
restoration, a further 1,992 million hectares would have been awarded to the
claimants. The land restitution system in South Africa is accepted by all
parties as being a fair and legitimate system and poses no risk in terms of
conflict.
South African commercial forestry has a high level of self-imposed, internal
regulation, as reflected by the high percentage of FSC-certified plantations in
the country today (over 80% of the total forestry area is FSC certified). The
non-FSC certified entities apply internal due diligence systems to maintain
international levels of responsible forest management.
The larger role players (including some 7% owned and managed by the
state) constitute about 76% of the total plantation forestry in the country.
Commercial timber farmers manage about 21% of the total area and
community growers the remaining 3%. All landowners and managers have to
be registered as water users under the National Water Act. A water license
can be issued only if a right to the land can be confirmed. Thus being
registered as a water user provides evidence of legality of land use and
management rights, and a water license can be retrieved for any forest
operation, thus making it easy to verify whether a company has legally
established management right to the area. The water registration is strongly
enforced and there are frequent field visits aimed at controlling the on-site
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 8 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Department of Rural Development and
Land Reform
The Eastern Cape Department of
Economic Development and
Environmental Affairs
Legally required documents or records
Receipt of payment of water registration
fees
Water license
Business registration document (CC or Pty
Ltd)
Tax clearance certificate
Receiver of Revenue to provide proof of
tax registration
Sources of Information
Risk designation and determination
water user.
The only entities potentially posing a risk of non-payment of water
registration fees are community forest owners. However, for areas under
10 ha, owners can apply for exemption from registering as a water user, and
thus the risk is low.
None of the forests that are today managed either by commercial farmers or
forestry companies were created by local communities. Community growers
manage about 3% of the total forest by area in South Africa, and small
grower cooperatives estimate that more than 95% of all commercial farmers
have registered as water users; thus the risk of not being registered and
operating without proper tenure rights is considered to be very low.
Stream flow reduction activities are carefully monitored by a joint
governmental committee – the Stream Flow Reduction Activity License
Assessment Advisory Committee (LAAC) – with membership from four
Government departments: the Department of Agriculture, Forestry and
Fisheries; the Department of Water Affairs; the Department of Rural
Development and Land Reform; and the Eastern Cape Department of
Economic Development and Environmental Affairs. There is also a subcommittee of LAAC called the Unlawful Afforestation Committee, which is
very active and credible in monitoring plantation owners for compliance with
their water registration requirements. Credibility of the Unlawful Afforestation
Committee is reflected in the support they have within NGO, industry and
Government organisations alike; as well as their track record of dealing with
water registration issues when they arise. This is reflected in the minutes of
Unlawful Afforestation Committee meetings.
Business registration in South Africa is very well policed and enforced by the
South African Revenue Service in particular. The evidence of this is the
significant increase in the number of registered tax payers - both companies
and individuals - since the advent of democracy in South Africa. The South
African Revenue Service (SARS) is known for its efficiency and
effectiveness in tax registration across the country. It is not possible to
acquire a tax clearance certificate if a company's tax affairs are not 100%
up-to-date and in order. The risk in terms of scale is thus negligible as the
occurrence is very improbable in the South African business environment.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 9 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
The impact of businesses operating illegally and the consequential nonpayment of tax – should it occur – would have a small financial impact due to
the low tariffs that need to be paid. However, the occurrence is negligible,
as stated above.
There is no evidence of transgression of land tenure rights in natural forests.
There were no concerns raised with regard to this sub-criterion during
consultations with stakeholders and local experts.
There are no significant issues that would constitute specified risk.
Based on the findings of low-scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.2
Concessio
n licenses
Applicable laws and regulations
N/A
N/A
National Forests Act (No. 84 of
1998), specifically Chapter 2
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Low risk
N/A. There is no legislation relating to
forest concessions in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.3
Managem
ent and
harvesting
planning
Applicable laws and regulations
National Forests Act, No. 84 of 1998,
specifically Chapter 2
Legal Authority
Department of Agriculture, Forestry and
Fisheries (DAFF)
Forestry South Africa Institute for
Commercial Forestry Research
Legally required documents or records
www.daff.gov.za/
Stakeholder 1 (Forestry South
Africa)
The National Forests Act requires that responsible forest management is
adhered to and that the general principles of forest management are thus
complied with; however these principles are very general and there is no
definition of responsible forest management for the company to comply with.
Commercial forestry in South Africa is based exclusively on plantation
forestry, with a high level of self-regulation within the industry. There is a
high percentage of FSC-certified plantations in the country today with over
80% of the total forestry area being FSC-certified. The 20% uncertified
plantations are by and large managed by forestry companies with very
strong governance systems in place.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 10 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
There are no specific documents required
in the Act.
Sources of Information
Risk designation and determination
The forestry industry, as part of its self-regulation, has developed and
implemented several rules and guidelines with which the whole industry is
expected to comply. These are the following:
- Forest Engineering Guidelines of South Africa
- Environmental Guidelines of South Africa
- Chainsaw Safety Handbook
- Cable Yarding Handbook
- Forest Roads Handbook
However these rules and guidelines are voluntary.
Stakeholders raised no concerns regarding this sub-criterion; and there are
no significant issues that would constitute specified risk. The law itself is very
general and cannot be enforced. As most forest entities are either FSCcertified (80%) or have implemented industry-specific guidelines, the scale of
non-compliance is considered low.
1.4
Harvesting
permits
Applicable laws and regulations
Legal Authority
National Forests Act (No. 84 of
1998), Section 7
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Department of Agriculture, Forestry and
Fisheries (DAFF)
Stakeholder 1 (Forestry South
Africa)
Legally required documents or records
Stakeholder 2 (Department of
Agriculture, Forestry and
Fisheries)
National Forests Act, No. 84 of 1998,
Sections 12 and 15
Single tree permit for a dead or dying tree
Low risk
Description of possible risks: Removal of single trees (not in a forest) that
are protected in the National Forest Act, also harvesting of natural forests.
Evaluation of risk:
Sections 12 and 15 of the National Forests Act list 46 protected trees in
South Africa. The Act requires a license to be issued for any tree that is not
in a forest and which is to be removed for whatever reason. Such licenses
do not relate to forestry. Section 7 of the National Forests Act names 26
forest biomes in South Africa, all of which are fully protected, unless it is in
the national or provincial interest to convert such a forest (e.g. the
construction of a national road between two provinces). The only exception –
that is a natural forest where dead and dying trees are being removed – is
the indigenous forest in the southern Cape that is being managed by the
South African National Parks Board (internal policy of SANParks), for which
licenses are issued by the Department of Agriculture, Forestry and Fisheries
(DAFF). This forest is FSC-certified. This activity is not related to commercial
forestry in the country and poses no risk of being mixed with commercial
plantation species (Eucalyptus, Pinus and Acacia spp.). Since 1994 (when
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 11 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
South Africa became a democracy), there has been no evidence of dead or
dying trees illegally entering the country's commercial timber chain.
There are no significant issues that would constitute specified risk relating to
licenses to cut, disturb, damage or destroy any indigenous tree in a natural
forest.
Based on the findings, it is concluded that the risk in this sub-category is low.
Taxes and fees
1.5
Payment
of royalties
and
harvesting
fees
Applicable laws and regulations
N/A
N/A
Applicable laws and regulations
www.sars.gov.za
Low risk
Value-Added Tax Act (No. 89 of 1991),
specifically Section 7(1)(a); sections 9–12
The risk posed here is that a company is not registered for VAT and
therefore does not pay VAT to the Receiver of Revenue.
South African Revenue Service
Value-Added Tax Act (No. 89 of
1991), specifically Section
7(1)(a); Sections 9–12
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Legally required documents or records
Stakeholder 3 (accounting firm)
N/A. There is no legislation requiring
specific fees to be paid to authorities
based on harvesting of forest products.
Legal Authority
N/A
Legally required documents or records
N/A
1.6 Value
added
taxes and
other sales
taxes
Legal Authority
Tax clearance certificate
Evaluation of risk:
Business registration in South Africa is very well policed and enforced by the
South African Revenue Service (SARS) in particular. The evidence of this is
the significant increase in the number of registered tax payers – both
companies and individuals – since the advent of democracy in South Africa
in 1994. SARS is known for its efficiency and effectiveness in revenue
collection across the country. It is not possible to acquire a tax clearance
certificate if a company's tax affairs are not 100% up-to-date and in order.
The risk in terms if scale is thus negligible as the occurrence is very
improbable in the South African business environment.
As a large company needs to claim VAT expenses, it is actually in the
company's interest to register for VAT and there is thus virtually no risk that
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 12 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
medium and large companies will not register for VAT. Furthermore, small
companies are exempted from registering and therefore charging VAT on
their invoices.
No stakeholders raised concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings of low scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.7 Income
and profit
taxes
Applicable laws and regulations
Income Tax Act (No. 58 of 1962),
specifically Section 12B First Schedule –
paragraphs 12(1)(g), 14, 15
Legal Authority
South African Revenue Service
Legally required documents or records
Tax clearance certificate
South African Revenue Service
(SARS) website:
www.sars.gov.za/
Income Tax Act (No. 58 of
1962), specifically: Section 12B
First Schedule, paragraphs
12(1)(g), 14, 15
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Business Anti-corruption Portal –
Country Profile: South African
Tax
Administration:
http://www.business-anticorruption.dk/countryprofiles/sub-saharanafrica/south-africa/corruptionlevels/tax-administration.aspx
Stakeholder 1 (Forestry South
Africa)
Low risk
Description of possible risks:
The risk posed here is that a company does not pay the income tax it is
legally obliged to pay to the Receiver of Revenue.
Evaluation of risk:
- Scale: Tax collection systems in South Africa are considered robust and
well-implemented. Despite a CPI of 42 (below the threshold of 50), tax
officials are considered to be relatively uncorrupt (Business Anti-Corruption
Portal: http://www.business-anti-corruption.com). This subject was discussed
during stakeholder consultations, as part of the process to develop the
CNRA, with all stakeholders consulted confirming compliance. SARS is
known for its ability to police and enforce tax collection. The evidence of this
is the significant increase in the number of registered tax payers – both
companies and individuals – since the advent of democracy in South Africa.
The South African Revenue Service (SARS) is known for its efficiency and
effectiveness in revenue collection across the country. It is not possible to
acquire a tax clearance certificate if a company's tax affairs are not 100%
up-to-date and in order. Further consultation about this issue was carried out
with the Operations Director of Forestry South Africa who confirmed the
above. The risk in terms of scale is thus negligible as the occurrence is very
improbable in the South African business environment.
- Impact: The impact of non-registration for income tax can be significant
from the perspective of income to the state from large forestry companies.
Corporate governance prohibits large companies from not paying the
required income tax, so the probability of this happening is extremely
remote. The impact of community forestry not paying VAT is very low.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 13 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Stakeholders raised no concerns regarding this sub-criterion.
There are no significant issues that would constitute specified risk. Based on
the findings of low scale and manageable impact, it is concluded that the risk
is low in this sub-category.
Timber harvesting activities
1.8 Timber
harvesting
regulations
Applicable laws and regulations
Not applicable
The National Forests Act, Chapter 2,
requires that responsible forest
management is adhered to and that the
general principles of forest management
are thus complied with; however these
principles are not specified in the
legislation and there is no definition of
responsible forest management for the
company to comply with.
National Forests Act (No. 84 of
1998), Chapter 2
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
N/A
The National Forests Act requires that responsible forest management is
adhered to and that the general principles of forest management are thus
complied with; however these principles are not specified in the legislation
and there is no definition of responsible forest management for the company
to comply with.
The forestry industry, as part of its self-regulation, has developed and
implemented several rules and guidelines with which the whole industry is
expected to comply. These are the following:
- Forest Engineering Guidelines of South Africa
- Environmental Guidelines of South Africa
- Chainsaw Safety Handbook
- Cable Yarding Handbook
- Forest Roads Handbook
Legal Authority
Department of Agriculture, Forestry and
Fisheries (DAFF)
However these rules and guidelines are voluntary. The law itself has no
specific requirements.
Legally required documents or records
As commercial forestry is exclusively based on plantation forestry, the
impact of not complying with the general statement of the National Forests
Act will be over-cutting of plantation forestry areas.
N/A. The National Forests Act does not
specify any required documents.
Natural forest areas (not commercial forestry) are mostly under the control of
the National Parks Board and the Department of Agriculture, Forestry and
Fisheries (DAFF).
1.9
Protected
Applicable laws and regulations
https://www.environment.gov.za/l
egislation/actsregulations
Low risk
The stated legislation requires that areas requiring protection be identified
and protected during forest operations. There is a risk that companies will
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 14 of 75 –
Indicator
sites and
species
Applicable laws and regulations, legal
authority, &
legally required documents or records
National Environmental Management Act
(No. 107 of 1998) (NEMA), specifically
Section 24(2)(a) or (b)
National Environmental Management:
Biodiversity Act (No. 10 of
2004), specifically Chapters 3, 4, 5 and 7
National Environmental Management:
Protected Areas Act (No. 57 of 2003),
specifically Chapters 2, 3 and 4
National Forests Act (No. 84 of 1998),
Chapter 3, Part 1 and Part 3
National Heritage Resources Act No. 25 of
1999
Legal Authority
Department of Environmental Affairs
Department of Agriculture, Forestry and
Fisheries - protection of trees
The South African Heritage Resources
Agency (SAHRA)
Legally required documents or records
Environmental authorisation from the
Department of Environmental Affairs
Sources of Information
National Environmental
Management Act (No. 107 of
1998) (NEMA), specifically
Section 24(2)(a) or (b)
http://faolex.fao.org/docs/pdf/saf
123691.pdf
National Environmental
Management Biodiversity Act
(No. 10 of 2004), specifically
Chapters 3, 4, 5 and 7
https://www.environment.gov.za/
sites/default/files/legislations/ne
mba10of2004_alienandinvasive_
speciesregulations.pdf
National Environmental
Management: Protected Areas
Act (No. 57 of
2003), specifically chapters 2, 3
and 4
https://www.environment.gov.za/
sites/default/files/gazetted_notic
es/nempaa_actno57of2003_prot
ectedareas.pdf
National Forests Act (No. 84 of
1998), Chapter 3, Part 1 and
Part 3 http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Risk designation and determination
not comply with legal requirements related to protecting sensitive sites
during harvesting operations.
Evaluation of risk:
- Scale: South African commercial forestry is based exclusively on
plantation forestry, with a high level of self-regulation, as reflected by the
high percentage of FSC-certified plantations in the country today (over 80%
of the total forestry area is FSC-certified). The 20% uncertified plantations
are by and large managed by forestry companies with strong governance
systems in place as well as commercial farmers who are known for their
legally compliant forest operations.
The requirements stipulated in industry guidelines go beyond the law, but
reflect the industry commitment to manage forest resources in a responsible
manner.
The forestry industry voluntarily signed a memorandum of understanding
(MOU) with the government regarding the implementation of Wetland
Delineation Guidelines developed by the Department of Water Affairs and
Forestry in 2008, entitled Updated Manual for the Identification and
Delineation of Wetlands and Riparian Areas. Self-governance and
government enforcement have led – over the past 20 years – to the
expansion of unplanted, protected areas (buffer zones) in the South African
forestry industry, from about 10% to 30% of the total area managed or
owned as forestry land (reference: Forestry South Africa).
Impact: Commercial forestry is based exclusively on plantation forestry, and
the impact of not complying with the protection of sensitive areas can lead to
a reduction in available water resources and adversely affect biodiversity in
some areas.
In the case of natural forests, harvesting is prohibited, with the exception of
limited cutting occurring in the southern Cape area; an activity strictly
managed by the National Parks Board. None of this harvested wood enters
the traditional commercial forestry domain. No stakeholders raised concerns
regarding this criterion and the risk is considered low.
The South African Heritage Resources Agency (SAHRA) must be contacted
regarding any matters pertaining to the National Heritage Resources Act.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 15 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Grave sites may be found from time to time during forestry operations. The
South African Environmental Guidelines require that local communities be
consulted, with grave sites to be managed in cooperation with them; thus
protection measures are developed by the relevant community. All
companies record such grave sites internally on their GIS systems. Due to
the close interaction between forestry operations and communities in the
event of grave sites being found and maintained, there are no records and
no other evidence of disputes in this regard in South Africa. The risk is
negligible.
Based on the findings of low scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.10
Environme
ntal
requireme
nts
Applicable laws and regulations
National Environmental Management Act
(No. 107 of 1998) (NEMA), specifically
Section 24(2)(a) or (b)
http://www.saflii.org/za/legis/consol_act/ne
ma1998331.pdf
National Forests Act (No. 84 of 1998),
specifically Section 3
Conservation of Agricultural Resources
Act, No. 43 of 1983, specifically Sections
8.1 and 18.1
Legal Authority
Department of Environmental Affairs
Legally required documents or records
Water registration certificate
https://www.environment.gov.za/l
egislation/actsregulations
Updated Manual for the
Identification and Delineation of
Wetlands and Riparian Areas:
https://www.dwaf.gov.za/Docum
ents/Other/EnvironRecreation/w
etlands/DRAFT_3_Wetland%20
and%20Riparian%20Delineation
%20Guidelines%202008.pdf
Stakeholder 1 (Forestry South
Africa)
Low risk
The stated legislation under the National Environmental Management Act
defines when EIAs are required and how they should be
effected. The stated legislation under the National Forests Act defines how
(unplanted) buffer zones should be implemented in wetlands and water
courses. There is a risk that forestry companies do not comply with EIA
requirements and/or do not maintain buffer zones as stipulated in the
National Forests Act.
The forestry industry voluntarily signed a memorandum of understanding
(MOU) with the government regarding the implementation of Wetland
Delineation Guidelines developed by the Department of Water Affairs and
Forestry in 2008, entitled Updated Manual for the Identification and
Delineation of Wetlands and Riparian Areas. Self-governance and
government enforcement have led – over the past 20 years – to the
expansion of unplanted, protected areas (buffer zones) in the South African
forestry industry, from about 10% to 30% of the total area managed or
owned as forestry land, (reference: Forestry South Africa).
Impact: Commercial forestry is based exclusively on plantation forestry, and
the impact of not complying with the protection of sensitive areas can lead to
a reduction in available water resources and adversely affect biodiversity in
some areas. In the case of natural forests, harvesting is prohibited, with the
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 16 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
exception of limited cutting occurring in the southern Cape area; an activity
strictly managed by the National Parks Board.
No stakeholders raised concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings that the scale of non-compliance is negligibly small
and the impact is not significant, it is concluded that the combined risk in this
sub-category is considered low.
1.11
Health and
safety
Applicable laws and regulations
Occupational Health and Safety Act (No.
85 of 1993), specifically Section 7
Legal Authority
Stakeholder 1 (Forestry South
Africa)
Department of Labour
Legally required documents or records
N/A
Occupational Health and Safety
Act (No. 85 of 1993)
http://www.saflii.org/za/legis/num
_act/ohasa1993273/
Low risk
Description of possible risks:
The Occupational Health and Safety Act (OHSA) defines the legislative
requirements related to health and safety in the South African working
environment. There is a risk that forestry companies will not comply with
health and safety requirements stipulated in the OHSA.
Evaluation of risk:
- Scale: South African commercial forestry has a high level of self-regulation,
as reflected by the high percentage of FSC-certified plantations in the
country today (over 80% of the total forestry area is FSC-certified). The 20%
of uncertified plantations are managed by and large by forestry companies
and commercial farmers, who (according to stakeholder interviews) have
very strong governance systems in place. There is a strong safety culture in
South Africa, with all large forestry companies demonstrating a zero
tolerance towards unsafe forestry practices on their land..
All companies keep an internal record of their accident statistics. The
industry norm for managing accidents is the Disabling Injury Frequency Rate
(DIFR), but these figures are not collected within a centralised database.
Fatalities and injuries leading to hospitalisation need to be reported to the
Department of Labour, which then investigates these incidents.
Stakeholders raised no concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings that the scale of non-compliance is negligibly small
and the impact is not significant, it is concluded that the combined risk in this
sub-category is considered low. There is thus a very small probability of a
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 17 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
member of the forestry industry not applying the requirements regarding
H&S as stipulated in the OHSA.
1.12 Legal
employme
nt
Applicable laws and regulations
www.labour.gov.za/
Low risk
Basic Conditions of Employment Act (No.
75 of 1997), specifically Chapters 3, 4, 5
and 6
Annual Reports of the
Department of Labour:
http://www.labour.gov.za/DOL/do
cuments/annual-reports/annualreport-pfma/2013/annual-reportof-the-department-of-labour2012-2013
South Africa has labour legislation that exceeds the requirements stipulated
by the ILO. The Labour law is well implemented and functioning throughout
the South African working environment. Strong unions ensure that all
businesses in South Africa remain compliant; and a company cannot prohibit
its employees from joining a union. Furthermore, the Department of Labour
investigates all accidents and imposes penalties where a company is found
to be negligent.
Basic Conditions of Employment
Act (No. 75 of 1997), specifically
Chapters 3, 4, 5 and 6
http://www.labour.gov.za/DOL/do
wnloads/legislation/acts/basicconditions-ofemployment/Amended%20Act%
20%20Basic%20Conditions%20of
%20Employment.pdf
Stakeholders raised no concerns regarding this criterion.
There are no significant issues that would constitute specified risk.
Employment Equity Act (No. 55 of 1998),
specifically Chapters 2 and 3
Labour Relations Act (No. 66 of 1995),
specifically Chapters 2, 3,
4, 5, 6, 7 and 8
Legal Authority
Department of Labour
Legally required documents or records
Payroll of companies
www.labour.gov.za/
Employment Equity Act (No. 55
of 1998), specifically Chapters 2
and 3
https://www.saica.co.za/Technic
al/LegalandGovernance/Legislati
on/EmploymentEquityAct/tabid/3
041/language/enZA/Default.aspx
Labour Relations Act (No. 66 of
1995), specifically Chapters 2, 3,
4, 5, 6, 7 and 8
http://www.labour.gov.za/DOL/le
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 18 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
gislation/acts/labourrelations/labour-relations-act
Stakeholder consultation
meetings and interviews
Third parties’ rights
1.13
Customary
rights
Applicable laws and regulations
N/A
N/A
N/A
N/A
N/A
N/A
N/A. There is no legislation in South Africa
covering customary rights in forests.
Legal Authority
N/A
Legally required documents or records
N/A
1.14 Free
prior and
informed
consent
Applicable laws and regulations
N/A. There is no legislation in South Africa
covering 'free, prior and informed consent'
in connection with transfer – to the
organisation in charge of the harvesting
operation ¬ of forest management rights
and customary rights.
Legal Authority
N/A
Legally required documents or records
N/A
1.15
Indigenous
Peoples
rights
Applicable laws and regulations
N/A. There are no Indigenous Peoples in
the forest areas of South Africa.
Legal Authority
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 19 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
N/A
Sources of Information
Risk designation and determination
Legally required documents or records
N/A
Trade and transport
1.16
Classificati
on of
species,
quantities,
qualities
Applicable laws and regulations
N/A
N/A
N/A
N/A
Relevant websites:
* export permit:
http://www.services.gov.za/servi
ces/content/Home/OrganisationS
ervices/exportpermit/Exportpermi
ts/en_ZA
* import permit:
http://www.services.gov.za/servi
Low risk
N/A. There are no requirements relating to
classification of species, quantities and
qualities in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.17 Trade
and
transport
Applicable laws and regulations
N/A. No trading permits or transport
documents are required by law to
transport wood in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.18
Offshore
trading
and
transfer
pricing
Applicable laws and regulations
Income Tax Act, 1962 (Act 58 of 1962),
Section 31
2010 Taxation Laws Amendment Act
(TLAA),
In relation to transfer pricing, South Africa has had legislation in place since
1995; this has most recently been amended with an effective date of 1 April
2012, with more focus on the taxpayer being proactive in compliance.
The Income Tax Act requires connected parties to deal at arm’s-length in
respect of cross-border transactions. Taxpayers are required to determine
the taxable income that would arise from arm’s-length transactions, if
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 20 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
http://www.gov.za/sites/www.gov.za/files/a
7_2010.pdf
Legal Authority
South African Revenue Service (SARS)
Legally required documents or records
Yearly tax assessments
Sources of Information
ces/content/Home/OrganisationS
ervices/Tax/CustomDuties/applic
ationforregistrationofanimporter/
en_ZA
different from what would be reported. Companies that do not comply with
the requirements of off-shore trading will have adjustment to their taxable
income. Refer
http://download.pwc.com/ie/pubs/2012_international_transfer_pricing.pdf
Income Tax Act (No. 58 of
1962), specifically:
- Section 31
- Practice Note 7/1999
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
The South African Revenue Service (SARS) has been furnished with greater
powers under the Tax Administration Act; and increased audit activity –
across all industries – by experts within SARS' specialist Transfer Pricing
Unit has been observed as a result. SARS is actively auditing taxpayers on
their transfer pricing and has indicated that it will place greater scrutiny on
multinationals with connected-party entities; the organisation has a strict
requirement for documentation and supporting evidence. However SARS is
experiencing a resource issue, with protracted audit outcomes.
World Transfer Pricing 2014,
International Tax Review:
http://www.internationaltaxreview
.com/pdfs/wtp/world-transferpricing-2014.pdf
International Transfer Pricing
2013/14:
http://www.pwc.com/gx/en/intern
ational-transferpricing/assets/itp-2013- final.pdf
Transfer Pricing Country Profile
¬ South Africa
http://www.oecd.org/ctp/transferpricing/SouthAfrica_TPCountryP
rofile_Jan2013.pdf
1.19
Custom
regulations
Applicable laws and regulations
Customs and Excise Act (No. 91 of 1964)
– Tariff Classification Guideline
Relevant websites:
* export permit:
http://www.services.gov.za/services/conte
nt/Home/OrganisationServices/exportperm
it/Exportpermits/en_ZA
Risk designation and determination
http://www.sars.gov.za/
Customs and Excise Act (no. 91
of 1964)
– Tariff Classification guideline
http://www.vertic.org/media/Natio
nal%20Legislation/South_Africa/
ZA_Customs_Excise_Act_1964.
pdf
Furthermore, when transactions take place in African countries lacking a
transfer pricing regime, it is unlikely that mutual agreement procedures will
mitigate illegal transfer pricing.
South Africa is not a member of the OECD, but has exchange of information
relationships with 119 jurisdictions through 78 Double Taxation Conventions
(DTCs), 17 Tax Information Exchange Agreements (TIEAs) and 1
multilateral mechanism (http://www.eoi-tax.org/jurisdictions/ZA#agreements).
The introduction of the amendments in 2012 has led to stricter regulations on
transfer pricing. There are still challenges, but consultation with relevant
stakeholders raised no issues in the South African forestry sector, with the
regulation being well-audited. Thus the indicator is considered to be of low
risk.
Low risk
- Scale: The large forestry companies in South Africa are almost all listed on
the stock exchange and are required to undergo annual independent
financial audits. Regarding the other companies, there is currently no public
domain evidence of illegal activities related to import–export licensing being
relevant to any of the South African forestry companies. As a rule, forestry
companies who export apply for the required export documentation and
there is no evidence of companies in the forest industry acting i
Assessment for
South Africa
FSC-CNRA-ZAF V1-0 EN
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 1 of 75 –
Title:
Centralized National Risk Assessment for South Africa
Document reference
code:
FSC-CNRA-ZAF V1-0 EN
Approval body:
FSC International Center: Policy and Standards Unit
Date of approval:
17 December 2015
Contact for comments:
FSC International Center
- Policy and Standards Unit Charles-de-Gaulle-Str. 5
53113 Bonn, Germany
+49-(0)228-36766-0
+49-(0)228-36766-30
policy.standards@fsc.org
© 2015 Forest Stewardship Council, A.C. All rights reserved.
No part of this work covered by the publisher’s copyright may be reproduced or
copied in any form or by any means (graphic, electronic or mechanical, including
photocopying, recording, recording taping, or information retrieval systems) without
the written permission of the publisher.
Printed copies of this document are for reference only. Please refer to the electronic
copy on the FSC website (ic.fsc.org) to ensure you are referring to the latest version.
The Forest Stewardship Council® (FSC) is an independent, not for profit, nongovernment organization established to support environmentally appropriate,
socially beneficial, and economically viable management of the world’s forests.
FSC’s vision is that the world’s forests meet the social, ecological, and economic
rights and needs of the present generation without compromising those of future
generations.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 2 of 75 –
Contents
Risk assessments that have been finalized for South Africa ...................................... 4
Risk designations in finalized risk assessments for South Africa ............................... 5
Risk assessments ..................................................................................................... 6
Controlled wood category 1: Illegally harvested wood ........................................... 6
Overview ........................................................................................................... 6
Sources of legal timber in South Africa .............................................................. 7
Risk assessment ............................................................................................... 7
Recommended control measures .................................................................... 23
Controlled wood category 2: Wood harvested in violation of traditional and human
rights ................................................................................................................... 24
Risk assessment ............................................................................................. 24
Recommended control measures .................................................................... 24
Detailed analysis ............................................................................................. 25
Controlled wood category 5: Wood from forests in which genetically modified trees
are planted .......................................................................................................... 74
Risk assessment ............................................................................................. 74
Recommended control measures .................................................................... 75
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 3 of 75 –
Risk assessments that have been finalized for South
Africa
Controlled Wood categories
1 Illegally harvested wood
Wood harvested in violation of traditional and human
2
rights
Wood from forests where high conservation values are
3
threatened by management activities
Wood from forests being converted to plantations or
4
non-forest use
Wood from forests in which genetically modified trees
5
are planted
Risk assessment
completed?
YES
YES
NO
NO
YES
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 4 of 75 –
Risk designations in finalized risk assessments for South
Africa
Indicator
Risk designation (including functional scale when relevant)
Controlled wood category 1: Illegally harvested wood
1.1
Low risk
1.2
N/A
1.3
Low risk
1.4
Low risk
1.5
N/A
1.6
Low risk
1.7
Low risk
1.8
N/A
1.9
Low risk
1.10
Low risk
1.11
Low risk
1.12
Low risk
1.13
N/A
1.14
N/A
1.15
N/A
1.16
N/A
1.17
N/A
1.18
Low risk
1.19
Low risk
1.20
Low risk
1.21
N/A
Controlled wood category 2: Wood harvested in violation of traditional and human rights
2.1
Low risk
2.2
Low risk
2.3
Low risk
Controlled wood category 3: Wood from forests where high conservation values are
threatened by management activities
3.0
3.1
3.2
3.3
3.4
3.5
3.6
Controlled wood category 4: Wood from forests being converted to plantations or non-forest
use
4.1
Controlled wood category 5: Wood from forests in which genetically modified trees are
planted
5.1
Low risk
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 5 of 75 –
Risk assessments
Controlled wood category 1: Illegally harvested wood
Overview
Of South Africa’s forest, 10% is primary forest, 71% is naturally regenerated, and 19% comprises plantations. Commercial forestry in South Africa is based
exclusively on plantation forestry. Since its origins at the beginning of the 1900s, the industry has become well established, with a high level of self-imposed
internal regulation; reflected in over 80% of the commercial forestry area being FSC-certified. Two genera dominate the market, namely Eucalyptus and Pinus
species. Additionally, a fair amount of Acacia mearnsii is planted.
Although this risk assessment covers both natural forests and exotic commercial plantations, the actual situation in the country is such that natural forests are
protected, with no commercial activity and no communities depending on natural forests for their livelihoods.
Ownership of the South African commercial forest area is primarily private. The Department of Agriculture, Forestry and Fisheries owns some 35 000 hectares (3%) of a total of some 1,2 million hectares of plantation forestry in South Africa. Ownership of the private forest area can be divided into three
categories: the bulk of the area, owned by private companies; followed by farms planted by commercial farmers; and lastly a very small portion of community
land planted with trees in very small woodlots.
There are no permits required to harvest timber in South Africa. Any landowner has the right to harvest any timber on his land, based on his management
objectives and financial needs. Government regulation of private forests is achieved through the Department of Agriculture, Forestry and Fisheries' field
officials who focus on checking the planted areas on private land with regard to legality issues such as water registration requirements. There is no legislation
requiring the checking of any harvesting activity per se. As mentioned above, natural forests are fully protected in South Africa, with no incentive to harvest
them for commercial purposes on any large scale, as none of the natural wood species is usable or marketable on any significant scale within the commercial
forestry products produced in South Africa. Rather than using wood from natural forests for firewood, local communities use plantation wood and residues.
The list of sources provided in FSC-PRO-60-002a, section 3.3.3, has been reviewed in regards to the national legality risk assessment for South Africa. The
following sources have been used: World Bank Worldwide Governance Indicators and the Transparency International Corruption Perceptions Index. The
remaining sources were determined to be not relevant to the legality risk assessment for South Africa.
South Africa has an average governance score according to the World Bank Governance Index. On a range from -2.5 to +2.5, South Africa has a 2013 score
of 0.13 in relation to 'rule of law' and, on control of corruption, a 2013 score of -0.12. According to Transparency International, South Africa has a Corruption
Perception Index of 44 (2014).
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 6 of 75 –
In relation to tax issues, the South African Revenue Service (SARS) is not considered to be highly corrupt, and consultation with stakeholders through
interviews has confirmed the perception that the South African forest sector is well-regulated and enforced by the government. The South African forestry
industry has a high level of self-governance with a high level of certification and company due diligence.
Sources of legal timber in South Africa
Forest
classification type
Production
plantation
Natural forest
Permit/license type
N/A
A license needs to be obtained to cut, disturb,
damage or destroy any indigenous tree in a
natural forest. There is no commercial
harvesting of any significant scale of natural
forests in South Africa.
Main license requirements
(forest management plan,
harvest plan or similar?)
No harvesting license
required
None
Clarification
All forestry in South Africa is in the form of fast-growing, exotic
plantations in commercial operations.
A license is required to cut, disturb, damage or destroy any
indigenous tree in a natural forest, but these licenses have no
bearing on commercial forestry operations in South Africa, which
totally exclude natural forests.
Risk assessment
Indicator
1.1 Land
tenure and
managem
ent rights
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Legal rights to harvest
Low risk
CIPC website: www.cipro.co.za/
Applicable laws and regulations
National Water Act (No. 36 of 1998),
specifically Chapter 4
Restitution of Land Rights Act (No. 22 of
1994)
Extension of Security of Tenure Act 62 of
1997 (ESTA), Communal
Land Rights Act 11 of 2004 (CLARA)
Interim Protection of Informal Land Rights
Act, 1996 (Act No. 31 of
1996)
License Assessment Advisory
Committee (LAAC)
memorandum of agreement
Minutes of Unlawful Afforestation
Committee meetings
National Water Act (No. 36 of
1998) , specifically: Chapter 4
http://faolex.fao.org/docs/pdf/saf
123836.pdf
Companies Act (No. 71 of 2008),
specifically Sections 11–22
The Department of Land Affairs is responsible for ensuring that security of
tenure is provided for all. The Land Reform Programme consists of four
elements: Land Restitution, Land Redistribution, Land Tenure Reform, and
Development. The Programme aims to reverse the current land ownership
patterns that were evident with the first democratic government of 1994, and
were part of the legacy of the Native Land Act of 1913, which promulgated
into law on 19 June 1913 and formally adopted territorial segregation as a
principle of a post-Union South Africa land policy. The Restitution of Land
Rights Act of 1994 requires that a person, direct descendent of an estate or
community is entitled to restitution if dispossessed of a right in land, after 19
June1913, as a result of past racially discriminatory laws or practices and
has lodged a claim for restitution was first set to no later than 31 December
1998, but changed to 30 June 2019.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 7 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Land Reform (Labour Tenants) (Act No. 3
of 1996)
Prevention of Illegal Eviction from and
Unlawful Occupation of Land
Act 19 of 1998
Companies Act (No. 71 of 2008),
specifically sections 11–22
Tax Administration Act (No. 28 of 2011),
specifically Chapter 3 (sections 22–24)
Value-Added Tax Act (No. 89 of 1991),
specifically Part III (sections 23–26); also
Part A of Schedule 2 relating to Plants
(Item 5): Zero-rating
Legal Authority
Department of Water Affairs
(DWA) (National Water Act)
Companies and Intellectual
Property Commission
South African Revenue Service
Department of Land Affairs (Land tenure)
Forestry South Africa
Department of Agriculture, Forestry and
Fisheries
Institute for Commercial Forestry
Research
http://www.justice.gov.za/legislati
on/acts/2008-071amended.pdf
Tax Administration Act (No. 28 of
2011), specifically Chapter 3
(Sections 22–24)
http://www.sars.gov.za/AllDocs/L
egalDoclib/AABC/LAPD-LPrimAct-2012-01%20%20Tax%20Administration%20A
ct%202011.pdf
Value-Added Tax Act (No. 89 of
1991), specifically Part III
(sections 23–26). Also Part A of
Schedule 2 relating to Plants
(Item 5)
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Stakeholder 1 (Forestry South
Africa)
Department of Trade and Industry
Forestry and Fisheries
Sources of Information
Institute for Commercial Forestry
Research
http://www.icfr.ukzn.ac.za/resear
ch/sustainable-productivityresearch/
Chief Land Claims
Commissioner’s Annual Report
2012/2013:
http://www.ruraldevelopment.gov
.za/publications/annualreport/category/249-commissionon-restitution-of-land-rights
Risk designation and determination
The potential risks in South Africa are as follows:
- Disputes of land tenure rights
- Land managers are not operating within a legally registered entity
- Lack of tax registration
The introduction of the Restitution Programme in 1995 has contributed to
changing patterns of land ownership through the award of 3 million hectares
of land, 1,5 million hectares of which have been transferred to persons and
communities who qualified for restitution and opted for land restoration.
As evidence of enforcement of the Land Reform Programme, the Chief Land
Claims Commissioner's 2012/2013 Annual Report recorded that between
1965 and 2013, a total of 77,334 claims were settled. Of these, 71,292
claims (92%) were settled by payment of financial compensation to
claimants. The majority of beneficiaries have thus chosen financial
compensation as their preferred form of restitution. Had they chosen land
restoration, a further 1,992 million hectares would have been awarded to the
claimants. The land restitution system in South Africa is accepted by all
parties as being a fair and legitimate system and poses no risk in terms of
conflict.
South African commercial forestry has a high level of self-imposed, internal
regulation, as reflected by the high percentage of FSC-certified plantations in
the country today (over 80% of the total forestry area is FSC certified). The
non-FSC certified entities apply internal due diligence systems to maintain
international levels of responsible forest management.
The larger role players (including some 7% owned and managed by the
state) constitute about 76% of the total plantation forestry in the country.
Commercial timber farmers manage about 21% of the total area and
community growers the remaining 3%. All landowners and managers have to
be registered as water users under the National Water Act. A water license
can be issued only if a right to the land can be confirmed. Thus being
registered as a water user provides evidence of legality of land use and
management rights, and a water license can be retrieved for any forest
operation, thus making it easy to verify whether a company has legally
established management right to the area. The water registration is strongly
enforced and there are frequent field visits aimed at controlling the on-site
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 8 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Department of Rural Development and
Land Reform
The Eastern Cape Department of
Economic Development and
Environmental Affairs
Legally required documents or records
Receipt of payment of water registration
fees
Water license
Business registration document (CC or Pty
Ltd)
Tax clearance certificate
Receiver of Revenue to provide proof of
tax registration
Sources of Information
Risk designation and determination
water user.
The only entities potentially posing a risk of non-payment of water
registration fees are community forest owners. However, for areas under
10 ha, owners can apply for exemption from registering as a water user, and
thus the risk is low.
None of the forests that are today managed either by commercial farmers or
forestry companies were created by local communities. Community growers
manage about 3% of the total forest by area in South Africa, and small
grower cooperatives estimate that more than 95% of all commercial farmers
have registered as water users; thus the risk of not being registered and
operating without proper tenure rights is considered to be very low.
Stream flow reduction activities are carefully monitored by a joint
governmental committee – the Stream Flow Reduction Activity License
Assessment Advisory Committee (LAAC) – with membership from four
Government departments: the Department of Agriculture, Forestry and
Fisheries; the Department of Water Affairs; the Department of Rural
Development and Land Reform; and the Eastern Cape Department of
Economic Development and Environmental Affairs. There is also a subcommittee of LAAC called the Unlawful Afforestation Committee, which is
very active and credible in monitoring plantation owners for compliance with
their water registration requirements. Credibility of the Unlawful Afforestation
Committee is reflected in the support they have within NGO, industry and
Government organisations alike; as well as their track record of dealing with
water registration issues when they arise. This is reflected in the minutes of
Unlawful Afforestation Committee meetings.
Business registration in South Africa is very well policed and enforced by the
South African Revenue Service in particular. The evidence of this is the
significant increase in the number of registered tax payers - both companies
and individuals - since the advent of democracy in South Africa. The South
African Revenue Service (SARS) is known for its efficiency and
effectiveness in tax registration across the country. It is not possible to
acquire a tax clearance certificate if a company's tax affairs are not 100%
up-to-date and in order. The risk in terms of scale is thus negligible as the
occurrence is very improbable in the South African business environment.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 9 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
The impact of businesses operating illegally and the consequential nonpayment of tax – should it occur – would have a small financial impact due to
the low tariffs that need to be paid. However, the occurrence is negligible,
as stated above.
There is no evidence of transgression of land tenure rights in natural forests.
There were no concerns raised with regard to this sub-criterion during
consultations with stakeholders and local experts.
There are no significant issues that would constitute specified risk.
Based on the findings of low-scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.2
Concessio
n licenses
Applicable laws and regulations
N/A
N/A
National Forests Act (No. 84 of
1998), specifically Chapter 2
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Low risk
N/A. There is no legislation relating to
forest concessions in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.3
Managem
ent and
harvesting
planning
Applicable laws and regulations
National Forests Act, No. 84 of 1998,
specifically Chapter 2
Legal Authority
Department of Agriculture, Forestry and
Fisheries (DAFF)
Forestry South Africa Institute for
Commercial Forestry Research
Legally required documents or records
www.daff.gov.za/
Stakeholder 1 (Forestry South
Africa)
The National Forests Act requires that responsible forest management is
adhered to and that the general principles of forest management are thus
complied with; however these principles are very general and there is no
definition of responsible forest management for the company to comply with.
Commercial forestry in South Africa is based exclusively on plantation
forestry, with a high level of self-regulation within the industry. There is a
high percentage of FSC-certified plantations in the country today with over
80% of the total forestry area being FSC-certified. The 20% uncertified
plantations are by and large managed by forestry companies with very
strong governance systems in place.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 10 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
There are no specific documents required
in the Act.
Sources of Information
Risk designation and determination
The forestry industry, as part of its self-regulation, has developed and
implemented several rules and guidelines with which the whole industry is
expected to comply. These are the following:
- Forest Engineering Guidelines of South Africa
- Environmental Guidelines of South Africa
- Chainsaw Safety Handbook
- Cable Yarding Handbook
- Forest Roads Handbook
However these rules and guidelines are voluntary.
Stakeholders raised no concerns regarding this sub-criterion; and there are
no significant issues that would constitute specified risk. The law itself is very
general and cannot be enforced. As most forest entities are either FSCcertified (80%) or have implemented industry-specific guidelines, the scale of
non-compliance is considered low.
1.4
Harvesting
permits
Applicable laws and regulations
Legal Authority
National Forests Act (No. 84 of
1998), Section 7
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Department of Agriculture, Forestry and
Fisheries (DAFF)
Stakeholder 1 (Forestry South
Africa)
Legally required documents or records
Stakeholder 2 (Department of
Agriculture, Forestry and
Fisheries)
National Forests Act, No. 84 of 1998,
Sections 12 and 15
Single tree permit for a dead or dying tree
Low risk
Description of possible risks: Removal of single trees (not in a forest) that
are protected in the National Forest Act, also harvesting of natural forests.
Evaluation of risk:
Sections 12 and 15 of the National Forests Act list 46 protected trees in
South Africa. The Act requires a license to be issued for any tree that is not
in a forest and which is to be removed for whatever reason. Such licenses
do not relate to forestry. Section 7 of the National Forests Act names 26
forest biomes in South Africa, all of which are fully protected, unless it is in
the national or provincial interest to convert such a forest (e.g. the
construction of a national road between two provinces). The only exception –
that is a natural forest where dead and dying trees are being removed – is
the indigenous forest in the southern Cape that is being managed by the
South African National Parks Board (internal policy of SANParks), for which
licenses are issued by the Department of Agriculture, Forestry and Fisheries
(DAFF). This forest is FSC-certified. This activity is not related to commercial
forestry in the country and poses no risk of being mixed with commercial
plantation species (Eucalyptus, Pinus and Acacia spp.). Since 1994 (when
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 11 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
South Africa became a democracy), there has been no evidence of dead or
dying trees illegally entering the country's commercial timber chain.
There are no significant issues that would constitute specified risk relating to
licenses to cut, disturb, damage or destroy any indigenous tree in a natural
forest.
Based on the findings, it is concluded that the risk in this sub-category is low.
Taxes and fees
1.5
Payment
of royalties
and
harvesting
fees
Applicable laws and regulations
N/A
N/A
Applicable laws and regulations
www.sars.gov.za
Low risk
Value-Added Tax Act (No. 89 of 1991),
specifically Section 7(1)(a); sections 9–12
The risk posed here is that a company is not registered for VAT and
therefore does not pay VAT to the Receiver of Revenue.
South African Revenue Service
Value-Added Tax Act (No. 89 of
1991), specifically Section
7(1)(a); Sections 9–12
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Legally required documents or records
Stakeholder 3 (accounting firm)
N/A. There is no legislation requiring
specific fees to be paid to authorities
based on harvesting of forest products.
Legal Authority
N/A
Legally required documents or records
N/A
1.6 Value
added
taxes and
other sales
taxes
Legal Authority
Tax clearance certificate
Evaluation of risk:
Business registration in South Africa is very well policed and enforced by the
South African Revenue Service (SARS) in particular. The evidence of this is
the significant increase in the number of registered tax payers – both
companies and individuals – since the advent of democracy in South Africa
in 1994. SARS is known for its efficiency and effectiveness in revenue
collection across the country. It is not possible to acquire a tax clearance
certificate if a company's tax affairs are not 100% up-to-date and in order.
The risk in terms if scale is thus negligible as the occurrence is very
improbable in the South African business environment.
As a large company needs to claim VAT expenses, it is actually in the
company's interest to register for VAT and there is thus virtually no risk that
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 12 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
medium and large companies will not register for VAT. Furthermore, small
companies are exempted from registering and therefore charging VAT on
their invoices.
No stakeholders raised concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings of low scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.7 Income
and profit
taxes
Applicable laws and regulations
Income Tax Act (No. 58 of 1962),
specifically Section 12B First Schedule –
paragraphs 12(1)(g), 14, 15
Legal Authority
South African Revenue Service
Legally required documents or records
Tax clearance certificate
South African Revenue Service
(SARS) website:
www.sars.gov.za/
Income Tax Act (No. 58 of
1962), specifically: Section 12B
First Schedule, paragraphs
12(1)(g), 14, 15
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
Business Anti-corruption Portal –
Country Profile: South African
Tax
Administration:
http://www.business-anticorruption.dk/countryprofiles/sub-saharanafrica/south-africa/corruptionlevels/tax-administration.aspx
Stakeholder 1 (Forestry South
Africa)
Low risk
Description of possible risks:
The risk posed here is that a company does not pay the income tax it is
legally obliged to pay to the Receiver of Revenue.
Evaluation of risk:
- Scale: Tax collection systems in South Africa are considered robust and
well-implemented. Despite a CPI of 42 (below the threshold of 50), tax
officials are considered to be relatively uncorrupt (Business Anti-Corruption
Portal: http://www.business-anti-corruption.com). This subject was discussed
during stakeholder consultations, as part of the process to develop the
CNRA, with all stakeholders consulted confirming compliance. SARS is
known for its ability to police and enforce tax collection. The evidence of this
is the significant increase in the number of registered tax payers – both
companies and individuals – since the advent of democracy in South Africa.
The South African Revenue Service (SARS) is known for its efficiency and
effectiveness in revenue collection across the country. It is not possible to
acquire a tax clearance certificate if a company's tax affairs are not 100%
up-to-date and in order. Further consultation about this issue was carried out
with the Operations Director of Forestry South Africa who confirmed the
above. The risk in terms of scale is thus negligible as the occurrence is very
improbable in the South African business environment.
- Impact: The impact of non-registration for income tax can be significant
from the perspective of income to the state from large forestry companies.
Corporate governance prohibits large companies from not paying the
required income tax, so the probability of this happening is extremely
remote. The impact of community forestry not paying VAT is very low.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 13 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Stakeholders raised no concerns regarding this sub-criterion.
There are no significant issues that would constitute specified risk. Based on
the findings of low scale and manageable impact, it is concluded that the risk
is low in this sub-category.
Timber harvesting activities
1.8 Timber
harvesting
regulations
Applicable laws and regulations
Not applicable
The National Forests Act, Chapter 2,
requires that responsible forest
management is adhered to and that the
general principles of forest management
are thus complied with; however these
principles are not specified in the
legislation and there is no definition of
responsible forest management for the
company to comply with.
National Forests Act (No. 84 of
1998), Chapter 2
http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
N/A
The National Forests Act requires that responsible forest management is
adhered to and that the general principles of forest management are thus
complied with; however these principles are not specified in the legislation
and there is no definition of responsible forest management for the company
to comply with.
The forestry industry, as part of its self-regulation, has developed and
implemented several rules and guidelines with which the whole industry is
expected to comply. These are the following:
- Forest Engineering Guidelines of South Africa
- Environmental Guidelines of South Africa
- Chainsaw Safety Handbook
- Cable Yarding Handbook
- Forest Roads Handbook
Legal Authority
Department of Agriculture, Forestry and
Fisheries (DAFF)
However these rules and guidelines are voluntary. The law itself has no
specific requirements.
Legally required documents or records
As commercial forestry is exclusively based on plantation forestry, the
impact of not complying with the general statement of the National Forests
Act will be over-cutting of plantation forestry areas.
N/A. The National Forests Act does not
specify any required documents.
Natural forest areas (not commercial forestry) are mostly under the control of
the National Parks Board and the Department of Agriculture, Forestry and
Fisheries (DAFF).
1.9
Protected
Applicable laws and regulations
https://www.environment.gov.za/l
egislation/actsregulations
Low risk
The stated legislation requires that areas requiring protection be identified
and protected during forest operations. There is a risk that companies will
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 14 of 75 –
Indicator
sites and
species
Applicable laws and regulations, legal
authority, &
legally required documents or records
National Environmental Management Act
(No. 107 of 1998) (NEMA), specifically
Section 24(2)(a) or (b)
National Environmental Management:
Biodiversity Act (No. 10 of
2004), specifically Chapters 3, 4, 5 and 7
National Environmental Management:
Protected Areas Act (No. 57 of 2003),
specifically Chapters 2, 3 and 4
National Forests Act (No. 84 of 1998),
Chapter 3, Part 1 and Part 3
National Heritage Resources Act No. 25 of
1999
Legal Authority
Department of Environmental Affairs
Department of Agriculture, Forestry and
Fisheries - protection of trees
The South African Heritage Resources
Agency (SAHRA)
Legally required documents or records
Environmental authorisation from the
Department of Environmental Affairs
Sources of Information
National Environmental
Management Act (No. 107 of
1998) (NEMA), specifically
Section 24(2)(a) or (b)
http://faolex.fao.org/docs/pdf/saf
123691.pdf
National Environmental
Management Biodiversity Act
(No. 10 of 2004), specifically
Chapters 3, 4, 5 and 7
https://www.environment.gov.za/
sites/default/files/legislations/ne
mba10of2004_alienandinvasive_
speciesregulations.pdf
National Environmental
Management: Protected Areas
Act (No. 57 of
2003), specifically chapters 2, 3
and 4
https://www.environment.gov.za/
sites/default/files/gazetted_notic
es/nempaa_actno57of2003_prot
ectedareas.pdf
National Forests Act (No. 84 of
1998), Chapter 3, Part 1 and
Part 3 http://cer.org.za/wpcontent/uploads/2014/02/Nationa
l-Forests-Act-84-OF-1998.pdf
Risk designation and determination
not comply with legal requirements related to protecting sensitive sites
during harvesting operations.
Evaluation of risk:
- Scale: South African commercial forestry is based exclusively on
plantation forestry, with a high level of self-regulation, as reflected by the
high percentage of FSC-certified plantations in the country today (over 80%
of the total forestry area is FSC-certified). The 20% uncertified plantations
are by and large managed by forestry companies with strong governance
systems in place as well as commercial farmers who are known for their
legally compliant forest operations.
The requirements stipulated in industry guidelines go beyond the law, but
reflect the industry commitment to manage forest resources in a responsible
manner.
The forestry industry voluntarily signed a memorandum of understanding
(MOU) with the government regarding the implementation of Wetland
Delineation Guidelines developed by the Department of Water Affairs and
Forestry in 2008, entitled Updated Manual for the Identification and
Delineation of Wetlands and Riparian Areas. Self-governance and
government enforcement have led – over the past 20 years – to the
expansion of unplanted, protected areas (buffer zones) in the South African
forestry industry, from about 10% to 30% of the total area managed or
owned as forestry land (reference: Forestry South Africa).
Impact: Commercial forestry is based exclusively on plantation forestry, and
the impact of not complying with the protection of sensitive areas can lead to
a reduction in available water resources and adversely affect biodiversity in
some areas.
In the case of natural forests, harvesting is prohibited, with the exception of
limited cutting occurring in the southern Cape area; an activity strictly
managed by the National Parks Board. None of this harvested wood enters
the traditional commercial forestry domain. No stakeholders raised concerns
regarding this criterion and the risk is considered low.
The South African Heritage Resources Agency (SAHRA) must be contacted
regarding any matters pertaining to the National Heritage Resources Act.
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 15 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
Grave sites may be found from time to time during forestry operations. The
South African Environmental Guidelines require that local communities be
consulted, with grave sites to be managed in cooperation with them; thus
protection measures are developed by the relevant community. All
companies record such grave sites internally on their GIS systems. Due to
the close interaction between forestry operations and communities in the
event of grave sites being found and maintained, there are no records and
no other evidence of disputes in this regard in South Africa. The risk is
negligible.
Based on the findings of low scale and manageable impact, it is concluded
that the risk in this sub-category is low.
1.10
Environme
ntal
requireme
nts
Applicable laws and regulations
National Environmental Management Act
(No. 107 of 1998) (NEMA), specifically
Section 24(2)(a) or (b)
http://www.saflii.org/za/legis/consol_act/ne
ma1998331.pdf
National Forests Act (No. 84 of 1998),
specifically Section 3
Conservation of Agricultural Resources
Act, No. 43 of 1983, specifically Sections
8.1 and 18.1
Legal Authority
Department of Environmental Affairs
Legally required documents or records
Water registration certificate
https://www.environment.gov.za/l
egislation/actsregulations
Updated Manual for the
Identification and Delineation of
Wetlands and Riparian Areas:
https://www.dwaf.gov.za/Docum
ents/Other/EnvironRecreation/w
etlands/DRAFT_3_Wetland%20
and%20Riparian%20Delineation
%20Guidelines%202008.pdf
Stakeholder 1 (Forestry South
Africa)
Low risk
The stated legislation under the National Environmental Management Act
defines when EIAs are required and how they should be
effected. The stated legislation under the National Forests Act defines how
(unplanted) buffer zones should be implemented in wetlands and water
courses. There is a risk that forestry companies do not comply with EIA
requirements and/or do not maintain buffer zones as stipulated in the
National Forests Act.
The forestry industry voluntarily signed a memorandum of understanding
(MOU) with the government regarding the implementation of Wetland
Delineation Guidelines developed by the Department of Water Affairs and
Forestry in 2008, entitled Updated Manual for the Identification and
Delineation of Wetlands and Riparian Areas. Self-governance and
government enforcement have led – over the past 20 years – to the
expansion of unplanted, protected areas (buffer zones) in the South African
forestry industry, from about 10% to 30% of the total area managed or
owned as forestry land, (reference: Forestry South Africa).
Impact: Commercial forestry is based exclusively on plantation forestry, and
the impact of not complying with the protection of sensitive areas can lead to
a reduction in available water resources and adversely affect biodiversity in
some areas. In the case of natural forests, harvesting is prohibited, with the
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 16 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
exception of limited cutting occurring in the southern Cape area; an activity
strictly managed by the National Parks Board.
No stakeholders raised concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings that the scale of non-compliance is negligibly small
and the impact is not significant, it is concluded that the combined risk in this
sub-category is considered low.
1.11
Health and
safety
Applicable laws and regulations
Occupational Health and Safety Act (No.
85 of 1993), specifically Section 7
Legal Authority
Stakeholder 1 (Forestry South
Africa)
Department of Labour
Legally required documents or records
N/A
Occupational Health and Safety
Act (No. 85 of 1993)
http://www.saflii.org/za/legis/num
_act/ohasa1993273/
Low risk
Description of possible risks:
The Occupational Health and Safety Act (OHSA) defines the legislative
requirements related to health and safety in the South African working
environment. There is a risk that forestry companies will not comply with
health and safety requirements stipulated in the OHSA.
Evaluation of risk:
- Scale: South African commercial forestry has a high level of self-regulation,
as reflected by the high percentage of FSC-certified plantations in the
country today (over 80% of the total forestry area is FSC-certified). The 20%
of uncertified plantations are managed by and large by forestry companies
and commercial farmers, who (according to stakeholder interviews) have
very strong governance systems in place. There is a strong safety culture in
South Africa, with all large forestry companies demonstrating a zero
tolerance towards unsafe forestry practices on their land..
All companies keep an internal record of their accident statistics. The
industry norm for managing accidents is the Disabling Injury Frequency Rate
(DIFR), but these figures are not collected within a centralised database.
Fatalities and injuries leading to hospitalisation need to be reported to the
Department of Labour, which then investigates these incidents.
Stakeholders raised no concerns regarding this criterion. There are no
significant issues that would constitute specified risk.
Based on the findings that the scale of non-compliance is negligibly small
and the impact is not significant, it is concluded that the combined risk in this
sub-category is considered low. There is thus a very small probability of a
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 17 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
member of the forestry industry not applying the requirements regarding
H&S as stipulated in the OHSA.
1.12 Legal
employme
nt
Applicable laws and regulations
www.labour.gov.za/
Low risk
Basic Conditions of Employment Act (No.
75 of 1997), specifically Chapters 3, 4, 5
and 6
Annual Reports of the
Department of Labour:
http://www.labour.gov.za/DOL/do
cuments/annual-reports/annualreport-pfma/2013/annual-reportof-the-department-of-labour2012-2013
South Africa has labour legislation that exceeds the requirements stipulated
by the ILO. The Labour law is well implemented and functioning throughout
the South African working environment. Strong unions ensure that all
businesses in South Africa remain compliant; and a company cannot prohibit
its employees from joining a union. Furthermore, the Department of Labour
investigates all accidents and imposes penalties where a company is found
to be negligent.
Basic Conditions of Employment
Act (No. 75 of 1997), specifically
Chapters 3, 4, 5 and 6
http://www.labour.gov.za/DOL/do
wnloads/legislation/acts/basicconditions-ofemployment/Amended%20Act%
20%20Basic%20Conditions%20of
%20Employment.pdf
Stakeholders raised no concerns regarding this criterion.
There are no significant issues that would constitute specified risk.
Employment Equity Act (No. 55 of 1998),
specifically Chapters 2 and 3
Labour Relations Act (No. 66 of 1995),
specifically Chapters 2, 3,
4, 5, 6, 7 and 8
Legal Authority
Department of Labour
Legally required documents or records
Payroll of companies
www.labour.gov.za/
Employment Equity Act (No. 55
of 1998), specifically Chapters 2
and 3
https://www.saica.co.za/Technic
al/LegalandGovernance/Legislati
on/EmploymentEquityAct/tabid/3
041/language/enZA/Default.aspx
Labour Relations Act (No. 66 of
1995), specifically Chapters 2, 3,
4, 5, 6, 7 and 8
http://www.labour.gov.za/DOL/le
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 18 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
Sources of Information
Risk designation and determination
gislation/acts/labourrelations/labour-relations-act
Stakeholder consultation
meetings and interviews
Third parties’ rights
1.13
Customary
rights
Applicable laws and regulations
N/A
N/A
N/A
N/A
N/A
N/A
N/A. There is no legislation in South Africa
covering customary rights in forests.
Legal Authority
N/A
Legally required documents or records
N/A
1.14 Free
prior and
informed
consent
Applicable laws and regulations
N/A. There is no legislation in South Africa
covering 'free, prior and informed consent'
in connection with transfer – to the
organisation in charge of the harvesting
operation ¬ of forest management rights
and customary rights.
Legal Authority
N/A
Legally required documents or records
N/A
1.15
Indigenous
Peoples
rights
Applicable laws and regulations
N/A. There are no Indigenous Peoples in
the forest areas of South Africa.
Legal Authority
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 19 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
N/A
Sources of Information
Risk designation and determination
Legally required documents or records
N/A
Trade and transport
1.16
Classificati
on of
species,
quantities,
qualities
Applicable laws and regulations
N/A
N/A
N/A
N/A
Relevant websites:
* export permit:
http://www.services.gov.za/servi
ces/content/Home/OrganisationS
ervices/exportpermit/Exportpermi
ts/en_ZA
* import permit:
http://www.services.gov.za/servi
Low risk
N/A. There are no requirements relating to
classification of species, quantities and
qualities in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.17 Trade
and
transport
Applicable laws and regulations
N/A. No trading permits or transport
documents are required by law to
transport wood in South Africa.
Legal Authority
N/A
Legally required documents or records
N/A
1.18
Offshore
trading
and
transfer
pricing
Applicable laws and regulations
Income Tax Act, 1962 (Act 58 of 1962),
Section 31
2010 Taxation Laws Amendment Act
(TLAA),
In relation to transfer pricing, South Africa has had legislation in place since
1995; this has most recently been amended with an effective date of 1 April
2012, with more focus on the taxpayer being proactive in compliance.
The Income Tax Act requires connected parties to deal at arm’s-length in
respect of cross-border transactions. Taxpayers are required to determine
the taxable income that would arise from arm’s-length transactions, if
FSC-CNRA-ZAF V1-0
CENTRALIZED NATIONAL RISK ASSESSMENT FOR SOUTH AFRICA
2015
– 20 of 75 –
Indicator
Applicable laws and regulations, legal
authority, &
legally required documents or records
http://www.gov.za/sites/www.gov.za/files/a
7_2010.pdf
Legal Authority
South African Revenue Service (SARS)
Legally required documents or records
Yearly tax assessments
Sources of Information
ces/content/Home/OrganisationS
ervices/Tax/CustomDuties/applic
ationforregistrationofanimporter/
en_ZA
different from what would be reported. Companies that do not comply with
the requirements of off-shore trading will have adjustment to their taxable
income. Refer
http://download.pwc.com/ie/pubs/2012_international_transfer_pricing.pdf
Income Tax Act (No. 58 of
1962), specifically:
- Section 31
- Practice Note 7/1999
http://tools.sars.gov.za/WebTool
s/LNB/sarsLegislation.asp
The South African Revenue Service (SARS) has been furnished with greater
powers under the Tax Administration Act; and increased audit activity –
across all industries – by experts within SARS' specialist Transfer Pricing
Unit has been observed as a result. SARS is actively auditing taxpayers on
their transfer pricing and has indicated that it will place greater scrutiny on
multinationals with connected-party entities; the organisation has a strict
requirement for documentation and supporting evidence. However SARS is
experiencing a resource issue, with protracted audit outcomes.
World Transfer Pricing 2014,
International Tax Review:
http://www.internationaltaxreview
.com/pdfs/wtp/world-transferpricing-2014.pdf
International Transfer Pricing
2013/14:
http://www.pwc.com/gx/en/intern
ational-transferpricing/assets/itp-2013- final.pdf
Transfer Pricing Country Profile
¬ South Africa
http://www.oecd.org/ctp/transferpricing/SouthAfrica_TPCountryP
rofile_Jan2013.pdf
1.19
Custom
regulations
Applicable laws and regulations
Customs and Excise Act (No. 91 of 1964)
– Tariff Classification Guideline
Relevant websites:
* export permit:
http://www.services.gov.za/services/conte
nt/Home/OrganisationServices/exportperm
it/Exportpermits/en_ZA
Risk designation and determination
http://www.sars.gov.za/
Customs and Excise Act (no. 91
of 1964)
– Tariff Classification guideline
http://www.vertic.org/media/Natio
nal%20Legislation/South_Africa/
ZA_Customs_Excise_Act_1964.
Furthermore, when transactions take place in African countries lacking a
transfer pricing regime, it is unlikely that mutual agreement procedures will
mitigate illegal transfer pricing.
South Africa is not a member of the OECD, but has exchange of information
relationships with 119 jurisdictions through 78 Double Taxation Conventions
(DTCs), 17 Tax Information Exchange Agreements (TIEAs) and 1
multilateral mechanism (http://www.eoi-tax.org/jurisdictions/ZA#agreements).
The introduction of the amendments in 2012 has led to stricter regulations on
transfer pricing. There are still challenges, but consultation with relevant
stakeholders raised no issues in the South African forestry sector, with the
regulation being well-audited. Thus the indicator is considered to be of low
risk.
Low risk
- Scale: The large forestry companies in South Africa are almost all listed on
the stock exchange and are required to undergo annual independent
financial audits. Regarding the other companies, there is currently no public
domain evidence of illegal activities related to import–export licensing being
relevant to any of the South African forestry companies. As a rule, forestry
companies who export apply for the required export documentation and
there is no evidence of companies in the forest industry acting i