Business
SARS to Increase Import Taxes on Temu and Shein Orders in South Africa: What You Need to Know
SARS to Raise Import Taxes on Shein and Temu Orders in South Africa
As e-commerce giants like Shein and Temu gain popularity in South Africa, the South African Revenue Service (SARS) is set to introduce new tax regulations on imported goods, potentially impacting the final prices for South African shoppers. Here’s a breakdown of what to expect.
E-commerce Taxes Set to Increase for Shein and Temu
SARS recently announced plans to update its tax policies on imported goods, particularly focusing on orders from popular Chinese retailers like Shein and Temu. While previously orders were subject to a 20% flat duty without VAT for orders under R500, SARS is now implementing a phased approach to increase VAT and standardize duties.
In July 2024, SARS announced a 45% tax on clothing imports from Shein and Temu, similar to the duty local clothing retailers pay to protect the domestic textile industry. Although the full implementation of this measure was delayed, SARS introduced an interim step in August, applying a 15% VAT on top of the existing 20% duty on orders below R500.
WCO Guidelines and Tax Categories for E-commerce Orders
SARS intends to follow the World Customs Organisation’s (WCO) guidelines for processing e-commerce goods, dividing imports into four distinct categories:
- Category 1: Non-commercial correspondence and documents with immediate clearance.
- Category 2: Low-value consignments below a “de minimis” threshold, typically duty-free.
- Category 3: Low-value dutiable consignments above the de minimis threshold but below the full declaration threshold.
- Category 4: High-value consignments requiring a full declaration and subject to regular duties and taxes.
This categorization will impact all e-commerce goods, including orders from Temu and Shein, depending on the value of the parcel. However, SARS has yet to define the specific de minimis and full declaration thresholds, leaving consumers uncertain.
Example of Variable Import Taxes on Temu Orders
South African consumers have reported varying taxes on Temu orders, often seeing unexpected rates based on item type and parcel value. Here’s a comparison of recent taxes on Temu orders:
| Order | Order Value | Total Tax Due | Effective Tax Rate |
|---|---|---|---|
| Temu order (non-clothing) | R212.00 | R71.84 | 34% |
| Temu order with clothing 1 | R229.00 | R137.65 | 60% |
| Temu order with clothing 2 | R1,308.00 | R155.55 | 12% |
These examples illustrate significant tax variation, which consumers find confusing without clear guidance from SARS.
Protecting Local Industry and Ensuring Fair Taxation
The recent shift in import tax regulations aims to support local industries and level the playing field. South African clothing retailers are currently charged a 45% import duty and 15% VAT, amounting to over 60% in tax. By extending similar taxes to imported clothing items from e-commerce retailers, SARS aims to safeguard jobs and competitiveness within the country.
What South African Shoppers Should Know
While consumers await SARS’ announcement of the exact de minimis amount and clarification on the full declaration threshold, shoppers should anticipate potential taxes on imports from Shein and Temu. Currently, neither Shein nor Temu offers transparent tax estimates for South African customers, unlike Amazon, which includes import fees in its pricing.
As SARS moves forward with its phased import tax changes, South African consumers should stay informed about potential costs associated with online purchases. Clearer information is expected by November 2024, aligning with the WCO’s guidelines to standardize e-commerce import taxes. For now, shoppers should be prepared for possible VAT and duty charges on items from Temu and Shein as the tax regime evolves.
