Johannesburg – South Africa’s tax authority, SARS, is set to tighten the screws on online retail giants like Shein and Temu, introducing new rules to level the playing field for local businesses.
From September 1, a flat 20% VAT customs duty will be imposed on all imported goods, regardless of value. This marks a departure from the previous R500 threshold, which had been exploited by some online retailers to avoid paying full taxes.
The move comes after local businesses complained bitterly about unfair competition from foreign counterparts who were able to undercut prices due to lower tax burdens.
SARS Commissioner Edward Kieswetter explained that the changes are in line with global standards and aim to address concerns over the “immense scale of trade via e-commerce.” The revenue service has accused some importers of “not paying the obligatory Customs duties and VAT,” creating an uneven playing field.
To further streamline the import process, SARS will also implement a new categorization system based on the World Customs Organization (WCO) framework. This will see goods divided into four categories, with varying duty rates and declaration requirements.
The new rules are expected to have a significant impact on the local retail industry, which has been struggling to compete with the low prices offered by online giants. While the changes may lead to higher prices for consumers, they are seen as necessary to protect domestic businesses and ensure fair competition.
SARS has committed to working with the Department of Trade, Industry, and Competition to support local businesses and create a more conducive environment for economic growth. The tax authority also plans to leverage technology to improve efficiency and reduce compliance burdens for legitimate traders.
