- South African Revenue Service (SARS) and Customs will implement new rules on small online orders coming into the country effective July 1, 2024.
- Online shoppers in the country are kicking against the regulation, calling for its abolition.
- Announced earlier this month, the new regulation mandates that clothing items valued under R500 ($27.48) will be charged the same import duties as those above R500.
Currently, orders for clothing items valued above R500 are charged a 45% import duty plus a 15% value-added tax (VAT).
On the other hand, packages valued below that figure carry only about 20% of import duty with an exemption from VAT.
Per the new regulation, the distinction between clothing orders below and above R500 will be discontinued. South African online shoppers haven’t welcomed this development by SARS.
For them, the VAT waiver, otherwise known as a de minimis exemption, was a booster that enabled them to buy clothing and other “small items” at factory prices via various eCommerce platforms like Shein and Temu because they couldn’t afford local businesses.
Over 17,000 South Africans have appended their signatures to an online petition on Change.com that opened on June 10, 2024, protesting the imminent enforcement of the regulation and submitting the adverse effects it can bring for individuals, local couriers, cargo businesses, and the South African eCommerce economy.
While the petition acknowledges the importance of the impending taxation in funding essential services, it maintains that the abrupt increase is unfair and will impact people, especially given the economy where households already struggle with food inflation and high living costs.
“This is not fair on consumers; the government does not care about us citizens; they just want to eat up all of our money,” the petition notes.
In April 2024, local retailers, under the banner of E-commerce Forum South Africa (EFSA), expressed their frustrations about the anti-competitive prices of some Chinese eCommerce brands and how they continue to capitalise on the import tax loopholes.
The adjustment in regulation is aimed at levelling the playing field to favour local retailers who raised concerns regarding Chinese high fashion eCommerce brands exploiting the tax loopholes to ship in smaller quantities to benefit from lower import duties.
The government aims to streamline the eCommerce market’s tax structure with the possibility of increasing import revenues.
Shoppers in the country, however, argue that the implications for small businesses and consumers — especially those who purchase inexpensive clothing from international vendors — although not entirely clear yet, would be devastating.
Source
techpoint.africa
