E-commerce is climbing the ladders as a growing industry. It is considerate that the vast majority of South Africans have seen, heard or been inundated by the continued advertisements of for instance Temu and Shein. It has become easy for any-one to shop like a billionaire by importing clothing or other goods from countries where the cost to manufacture these items are much lower. You merely need to get the items through the process of customs.
This has however become more difficult as of late. Most customers have had an experience, or you might have heard from a friend or family member, about the delay in shipping of packages due to customs control. Custom and import tax are regulated through the Customs and Excise Act 91 of 1964. The usual tax implications on import duty were that imported parcels which fell to a value of under R500.00 were taxed on a lower scale being only 20% on the import duty and zero on the VAT implications. This was comparative to the larger shipments which were usually taxed on a 45% scale, and with an added 15% VAT implication. This too has changed since SARS has started a re-assessment on the situation.
Your smaller Shein and Temu parcels were taxed in accordance with what is referred to as the “de minimis rule” (Roughly translated to mean of low significance). The hold up at the importation of goods were mostly an administrative exercise of ensuring compliance. The question many would-be importing shoppers came to face with was whether they had to be registered as an importer themselves. SARS gave some clarity in relation hereto, extending a notice which read that only if your importation exceeded certain requirements did you yourself personally have to register as an importer.
This being one of the smaller issues faced by Shein and Temu going up against the South African Revenue Service. Online “fast-fashion” shopping has become a leading business in the clothing industry. Online stores like Temu and Shein make up about one fifth of the fast fashion industry, and continues to gain traction. This has had a harsh impact on local retailers who are unable to compete and meet the same prices on clothing. This was one of the factors taken into consideration by SARS when it announced an intention to increase the import duty and tax implications of clothing parcels. SARS indicated that as of 1 July 2024 it would require that clothing parcels imported, carrying a value of less than R500.00, would be taxed on the same scale as bigger parcels. This did not occur however, and SARS gave a notice during August 2024 that the implementation as planned, is delayed.
The surrounding reasons for such drastic measures are best described through the foreword of the Customs and Excise Act. “To provide for the levying of customs and excise duties, the prohibition and control of the importation or manufacture or certain goods and for matters incidental thereto”. The changes in tax flows from the difficulty placed upon local retailers to compete. Local retailers have always been charged at the rate of 45% and 15% added VAT upon importation. This makes keeping a competitive edge virtually impossible against the virtual online powerhouses.
