Tax Turmoil: Uncertainty Surrounds International E-commerce Imports to South Africa
Since the implementation of South Africa’s customs import system late last year, uncertainty has plagued the country’s international e-commerce imports due to changes in tax practices.
Shein and Temu: Alleged Dubious Tax Practices
Local retailers have been vocal in their allegations that Chinese retailers Shein and Temu have been exploiting loopholes in the tax system.
Split Consignments: Evading Import Taxes?
It has been claimed that Shein and Temu break down their shipments into multiple, smaller consignments to avoid paying import taxes on individual items.
Sars’ Special Concession
A source close to the Chinese retailers revealed that they utilized a special concession granted by the South African Revenue Service (SARS), which allowed logistics companies to pay a flat duty rate of 20% without VAT on items worth below R500.
Full Declaration Value Threshold
As of 1 July 2024, SARS was set to start imposing a full 45% tax on clothing items under R500, but later held off the plan on order ‘until further notice’.
Levying Additional Tax
As an interim measure, SARS instead started levying a 15% VAT in addition to the 20% flat duty on all imports with values under R500, effective 1 September 2024.
Upcoming Changes to the Customs System
SARS announced its intention to reconfigure the 20% flat rate for low-value orders into the World Customs Organisation’s (WCO) framework, effective 1 November 2024.
Confusion Surrounds the De Minimis Value
South Africa’s de minimis value remains unclear, as SARS has not published the value it intends to use, making it difficult for online shoppers to estimate their import tax.
Tax Details Vary on Shein and Temu Orders
Despite claims that all orders of clothing are subject to a 45% duty rate, research by MyBroadband found that the taxes on various Shein and Temu orders varied widely, defying expectations.
An Overview of Tax Detail Calculations
The table below summarizes the tax details for multiple Shein and Temu orders made after 1 November 2024.
| Store | Clothing Included | Order Value | Import Taxes Payable | Tax as Percentage of Order Value |
|---|---|---|---|---|
| Temu | Yes | R536 | R168.80 | 32% |
| Shein | No | R692 | R178.21 | 26% |
| Temu | No | R404 | R90.50 | 22% |
| Temu | No | R553 | R118.00 | 21% |
| Temu | No | R1,096 | R165.50 | 15% |
| Temu | No | R411 | R45.04 | 11% |
