The majority of surveyed South Africans do not feel it’s imperative for the South African Revenue Service (SARS) to impose higher import taxes on smaller clothing items bought from international online shopping retailers.
This emerged from a survey ITWeb conducted on social media platform LinkedIn on 8 August.
The poll asked the respondents: SARS is planning to implement higher import taxes on smaller clothing items bought via global e-commerce platforms. Do you believe SARS should introduce higher import duties, or cancel the decision?
According to the survey results, 34% of respondents support the idea of implementing the import duties, while 66% oppose it.
From 1 July, SARS was expected to commit to taxing clothing items manufactured internationally and bought from international e-tailers, such as Temu and Shein, in small quantities (under R500) at the same rate as large quantities (R500 and above).
An import duty of 45% plus value-added tax (VAT) was expected to be applied to such purchases from last month.
The new law comes as SARS looks to impose measures to ensure local firms manufacturing or selling locally-produced clothing items can compete on a fair basis with global online retailers.
In a turn of events, SARS announced in a statement last week that it will not increase the 20% concession to 45%, but rather it will introduce VAT on these goods from 1 September. This is in addition to the current 20% flat rate, as an “immediate interim measure aimed at protecting South African businesses”.
In the statement, SARS explains: “SARS noted legitimate concerns that have been expressed in the importation of several goods, especially clothing, via e-commerce, by a number of importers who have not been paying the obligatory customs duties and VAT on these imports, resulting in unfair competition with other industry players.”
According to SARS, to address these concerns and provide clarity for traders involved in the importation of goods via e-commerce, it has made several changes, in line with the World Customs Organisation (WCO) framework, to deal with the already changing trade landscape.
The changes to be implemented are:
- The introduction of VAT in addition to the current 20% flat rate customs duty by 1 September as an immediate interim measure.
- The reconfiguration of the current 20% flat rate into the WCO regime with appropriate duty rates, by 1 November.
SARS commissioner Edward Kieswetter says SARS will partner with the Department of Trade, Industry and Competition, as the custodian of the country’s trade policy and development, as well as other industry players, to build public trust by seeking opportunities to level the playing field to protect local industries and create business opportunities for economic growth.
A local customer of Shein and Temu tells ITWeb: “We are not happy about the added tax that we will now have to pay for clothes purchased overseas. This is not fair on consumers who have been bargaining on the discounts offered via Chinese online platforms.
“We know our local retailers are expensive and many people cannot afford to buy from them on a regular basis. The global e-commerce platforms are also creating jobs in South Africa; for example, via courier services and independent sellers who run their own businesses.”
ITWeb previously reported on the frustration felt by local clothing retailers, which accused global online sites of offering “unreasonably cheap” prices, with some saying their sales have declined by almost 30% from the beginning of the year, when Temu made its debut in SA.
The Southern African Clothing and Textile Workers Union and National Clothing Retail Federation have over the past two years been complaining to the Department of Trade, Industry and Competition about Shein’s alleged tax aversion tactics.
Shein and Temu have denied the allegations.
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