SARS guns for Temu and Shein, prices to increase significantly

SARS guns for Temu and Shein in a big way from 1 July 2024 onwards, as the way Customs and Excise handles small orders will see a big shake up. According to Daily Investor, prices from these online stores are about to increase significantly starting from next month onwards.

That’s right, while everyone thought a Takealot versus Amazon battle would dominate Mzansi’s eCommerce space, it’s two companies from the Far East that stole the limelight. But not for much longer, as the South African Revenue Service guns for Temu and Shein and the way its handles small orders below R500 coming into the country.

SARS GUNS FOR TEMU AND SHEIN

From Monday 1 July 2024, items valued at less than R500 will carry the same duties as bigger orders. Therefore, just like anything above R500 coming into South Africa, a 45% import duty plus value-added tax (VAT) applies. Moreover, many local South African companies have accused Shein and Temu of abusing this rule by breaking up larger orders into smaller quantities and packages.

Therefore, after paying less customs duties and taxes, they then recombine smaller packages into the original order and ship it to the client. It is this practice that has given Temu and Shein an unfair price advantage over South African retailers, say labour experts.

NOT PAYING CORRECT DUTIES

Michael Lawrence, executive director of the National Clothing Retail Federation (NCRF), says they’re not paying the correct duties and VAT on their imports. “Our concern with offshore eCommerce services is they’re not paying the correct duties and VAT. Our national revenue and local producers suffer as a result,” said Lawrence.

The Foschini Group (TFG) has its own online retail platform called Bash. And TFG’s CEO, Anthony Thunstrom, says South African retailers have been working hard with SARS to better understand the discrepancy. They approached the revenue service to ensure they’re competing on a level playing field. As SARS guns for Temu and Shein, Thunstrom described it as a big move that would help safeguard the South African clothing retail industry.

Temu has said the displayed prices of its goods do not include import duties and taxes. And that local authorities will impose the applicable taxes upon arrival of the package. Shein said it works with local agents to declare items according to World Customs Organisation Harmonized System (WCO HS) codes, and its orders do not benefit from any favourable tax treatment.