No date set for Shein and Temu 45% tax in SA

The South African Revenue Service (Sars) has confirmed that the 45% tariff on imported clothing has yet to be implemented.

Consumers importing clothes from the likes of Shein and Temu will in the future pay the correct tax of 45% on their orders.

Siphithi Sibeko, Sars’ spokesperson told The Citizen that there has never been a set implementation date for the tax.

“The official date for the implementation of the 45% tariff has never been set. We are still in talks and the official date will be communicated.”

Official date to be set

Sibeko said there still needs to be more talks with stakeholders before they can impose the tax. “Clear communication about the official date will be made after we have concluded the consultations.”

He said imposing the tax is the correct thing to do.

Retailers and textile industry stakeholders said Shein and Temu are exploiting a tax loophole in South Africa to keep their import prices low. The two online stores have been using the de minimis rule which allowed parcels with clothing under R500 through customs paying only 20% import duty and no VAT.

This is different from local retailers having to pay 45% customs duty as well as 15% VAT for imported clothes. Sars is set to have consumers who import clothing from the two online stores pay the normal 45% customs duty, even if the parcel is under R500.

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More engagements with stakeholders

The South African eCommerce International Association (Saeia) has since welcomed the news that the 45% tariff will not be implemented this month.

Dudley Filippa, the association’s Chairperson said the tariff will not be implemented this month as the Sars is to hold further engagements with the relevant stakeholders about imposing the tax.

“We fully support Sars’ mandate to collect legally prescribed tariffs due to the state. However, it is equally important that internal systems and software tools are sufficiently geared for the new process.”

Filippa said Sars, in correspondence with the Freight Forward industry said the further engagements to be held are to ensure trade and systems readiness across the sector.

“According to Sars, its current administrative practices were designed at a time when eCommerce volumes were low. However, the recent boom of eCommerce has necessitated a review of Sars tax rules and processes to effectively collect duties and taxes on eCommerce goods.”

Filippa explained that eCommerce contributes greatly to South Africa’s GDP by creating employment, empowering independent couriers, and stimulating new markets for SMEs.

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Shein’s first pop-up store

While talks are ongoing about the implementation of the 45% tax on Temu and Shein’s orders, the latter is set to hold its first-ever pop-up store at Mall of Africa in Gauteng.

However, products will not be allowed to be bought. Customers will only be able to fit the items in the store and then order online.

Head of Shein South Africa, Crystal Chen says consumers will be able to order the clothes they fitted, online at a discount at the store. “With QR codes connecting the in-store experience to the online platform, shoppers can easily transition from browsing to purchasing directly from the Shein app, ensuring a seamless shopping journey.”