- The South African Revenue Service (SARS) is moving forward with tax changes on imported goods from Chinese eCommerce companies Shein and Temu, which could lead to significant price increases.
- However, a lack of clarity on the new tax rules has left consumers and industry experts uncertain about how the charges will be applied.
- SARS has yet to confirm its de minimis threshold, a value below which imports may be exempt from customs duties. This threshold, crucial for calculating taxes, is commonly used globally to streamline imports.
South African consumers currently report inconsistent tax rates on their orders, leading to confusion over Sars’ approach.
For years, Temu and Shein have reportedly managed low import taxes by splitting larger orders into smaller parcels, which previously allowed them to avoid higher tariffs.
However, South Africa never officially implemented this de minimis exemption; instead, it operated under a 2007 rule permitting a 20% flat duty with no VAT on parcels valued under R500.
This approach has proven problematic, especially with imported clothing, where local retailers face a 45% import duty plus 15% VAT — an effective tax rate exceeding 60%.
This tax structure aims to protect South Africa’s textile industry, which supports an estimated 60,000 to 80,000 jobs.
Following complaints from the local retail sector, Sars initially planned to impose a 45% tax on all clothing orders from Shein and Temu starting July 2024. When that didn’t happen, Sars announced a phased plan, beginning with a 15% VAT in addition to the 20% duty on small orders, to be implemented by August 2024.
SARS plans to fully adopt the World Customs Organisation (WCO) e-commerce guidelines by November 2024, categorising goods into four groups to standardise customs processing. These categories range from items without commercial value to high-value goods that follow regular customs procedures.
This implementation aims to give consumers more predictability when ordering from foreign platforms like Shein and Temu.
Reports of fluctuating import taxes continue, with MyBroadband noting a Temu order valued at R212 being taxed 34%, while a R1,308 clothing order faced only a 12% tax.
Give it a try, you can unsubscribe anytime. Privacy Policy.
This lack of transparency frustrates consumers who struggle to predict taxes on their orders. Unlike most retailers like Amazon, who include VAT and import duties at checkout, Shein and Temu do not provide upfront tax estimates, leaving South African customers unsure about potential charges.
