Major changes are on the horizon for South African consumers who make purchases from online retailers such as Shein and Temu. Effective July 1, 2024, the taxation of small clothing parcels from international e-commerce platforms will be standardized to align with the rates applied to larger shipments. This adjustment is intended to create a more level playing field for local brick-and-mortar retailers.
Presently, South Africa employs varying tax structures based on the value of imported clothing parcels. Packages exceeding R500 incur a 45% import duty in addition to VAT, while those below this threshold are subject to a 20% import duty without VAT. This discrepancy has enabled customers to secure cost-effective deals on apparel items from platforms like Shein and Temu.
However, concerns have been raised by South African businesses regarding the exploitation of tax loopholes by these companies, which allegedly subdivide large orders into smaller packages to circumvent higher taxes. In response to this practice, the South African Revenue Service (SARS) and Customs authorities will revise their enforcement strategies.
Effective July 1, all imported clothing items entering South Africa, irrespective of their value, will be subject to identical import duties as larger consignments. This policy adjustment is a direct response to multiple complaints from local enterprises accusing Shein and Temu of manipulating the taxation system. It has been reported that these entities strategically break down bulk orders into smaller parcels to exploit lower tax rates, consolidating them into a single shipment before reaching South African customers. Such tactics have conferred the aforementioned companies with an unfair pricing advantage over domestic retailers.
Source: businesstimes, dailyinvestor
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