The South African Revenue Service (SARS) will impose VAT on e-commerce platforms like Shein and Temu, in addition to the current 20% duty, starting 1 September 2024, with permanent changes expected in November.
SARS delayed a 45% import duty plus VAT to reduce Shein and Temu’s pricing advantage over local retailers.
SARS, in a 9 August 2024 statement, reaffirmed its commitment to supporting trade and economic growth by “making it simple and easy to facilitate an increased movement of goods.”
SARS raised concerns about e-commerce imports, especially clothing, noting that some importers, including China’s Shein and Temu, have not paid the necessary customs duties and VAT, creating unfair competition for local businesses.
Due to the “immense scale” of e-commerce, a “concession” allowed importers to pay a flat 20% rate for goods under R500 instead of customs duties and VAT.
To address concerns and clarify e-commerce imports, SARS will change following the World Customs Organization (WCO) framework to adapt to the evolving trade landscape.
In the early 1990s, the global increase in shipping small or low-value goods via couriers and express mail led the WCO to create the “WCO Guidelines on Immediate Release.”
These guidelines help WCO member Customs administrations standardize eCommerce processing by requiring operators to provide information to Customs before goods arrive. The goods are categorized into four groups:
- Category 1 – Documents and correspondence with no commercial value, not taxed, and released immediately with a simple declaration.
- Category 2 – Low-value consignments below a certain threshold, not taxed, and cleared quickly with basic documentation.
- Category 3 – Low-value dutiable consignments that exceed the threshold, requiring a simplified declaration or manifest for release.
- Category 4 – High-value consignments not in the other categories, including restricted items, requiring standard release procedures and payment of duties and taxes.
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