Shein and Temu purchases in South Africa set for BIG tax hike

Items of clothing bought from international e-commerce retailers in small quantities (under R500) will from 1 July 2024 be taxed at the same rate as large quantities.

The change comes as the South African government looks to impose measures to help level the playing field for local retailers.

Purchases from Chinese retailers Shein and Temu face higher taxes

Going forward, small-volume orders of clothing from Chinese retailers like Shein and Temu will be slapped with higher taxes than is currently the case, according to the Sunday Times.

The Foshini Croup (TFG) CEO Anthony Thunström told the publication that the South African Revenue Service (SARS) has committed to taxing ALL clothing imports with an import duty of 45% plus VAT from next month.

The change comes after local clothing retailers and stakeholders accused the Chinese companies of exploiting a tax loophole that have kept their import prices low, according to MyBroadband.

The so-called de minimis rule had allowed South Africa’s buyers of Shein and Temu clothing to get parcels of under a value of R500 through customs with only a 20% import duty and 0% VAT.

Mzansi retailers complained – rightly so – that they’ve had to pay the 45% plus VAT rate for imported clothes, putting them at a distinct disadvantage compared to their Chinese counterparts.

EXAMPLE

By way of an example, a current order amounting to R500 from Shein or Temu would only attract an addition charge of R100 (20% import duty) and no VAT.

That would mean a total cost of R600.

However, from 1 July onwards, that same order would require paying R225 (45% import duty) giving a total of R725.

VAT at 15% would add a further R108.75 resulting in a total cost of R833.75.

That represents an increase of R233.75 – or 39%.