SARS Declares War on Shein and Temu: The Battle for South Africa’s E-commerce Dominance
In a shocking move, the South African Revenue Service (SARS) has announced a brutal crackdown on low-cost e-commerce clothing importers, specifically targeting China’s Shein and Temu. The tax authority claims that these companies have been exploiting a loophole to avoid paying customs duties and VAT, giving them an unfair advantage over local businesses.
The War on Shein and Temu
SARS has accused Shein and Temu of using a "concession" to import low-value items without paying the same taxes as other clothing retailers in South Africa. This alleged tax evasion has resulted in unfair competition, threatening the livelihoods of local businesses and workers.
The Battle for E-commerce Supremacy
The tax authority has announced a series of measures to level the playing field and protect South African industries. From September 1, SARS will introduce VAT on goods imported via e-commerce platforms, and from November 1, the 20% flat rate will be reconfigured to "appropriate rates" in line with the World Customs Organisation (WCO) regime.
The WCO Framework
The WCO guidelines aim to standardize the processing of e-commerce goods, based on the principle of providing information to customs in advance of the arrival of goods. The guidelines categorize goods into four distinct categories, with different procedures for each.
Category 1: Correspondence and Documents
- No commercial value, not subjected to duties and taxes, immediate release on the basis of a consolidated declaration.
Category 2: Low-Value Consignments
- Below a specified de minimis threshold, no duties and taxes are collected, and immediate clearance and release against a manifest.
Category 3: Low-Value Dutiable Consignments
- Goods above de minimis, but below full declaration value threshold, dutiable and the use of a simplified declaration.
Category 4: High-Value Consignments
- Requires a full good declaration, including payment of duties and taxes.
The War Rages On
SARS Commissioner Edward Kieswetter has vowed to work with the department of trade, industry & competition and other industry players to build public trust and level the playing field. The tax authority will also make greater use of data, artificial intelligence, machine learning, and algorithms to facilitate trade while minimizing risks to the economy.
The Battle for South Africa’s E-commerce Dominance
The war between SARS and Shein and Temu has far-reaching implications for South Africa’s e-commerce landscape. Will local businesses be able to compete with the low-cost giants, or will the tax authority’s measures be enough to level the playing field? Only time will tell.
