Big changes are coming for South African shoppers who buy from online stores like Shein and Temu.
Starting July 1, 2024, taxes on small clothing packages from international e-commerce sites will be the same as those for larger shipments. This change is to level the playing field for local retailers.
Currently, South Africa has different tax rates based on the value of imported clothing packages. For packages over R500, there’s a 45% import duty plus VAT. Packages under R500 have about a 20% import duty and no VAT. This has allowed shoppers to get cheaper deals on fashion items from sites like Shein and Temu.
However, South African businesses have complained that these companies are exploiting tax loopholes by breaking up large orders into smaller packages to avoid higher taxes. In response, the South African Revenue Service (SARS) and Customs will change their approach.
From July 1, all clothing items imported into South Africa, regardless of their value, will be subjected to the same import duties as larger shipments.
This policy change is in response to numerous complaints from South African businesses, which have accused Shein and Temu of manipulating the system. These companies were reportedly breaking up large orders into smaller packages to benefit from the lower tax rates, only to consolidate them into a single shipment before delivering them to South African customers. This loophole provided Temu and Shein with an unfair pricing edge over local retailers.
Source: businesstimes, dailyinvestor
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