Confusion persists about the taxes on imports from Chinese e-retailers like Shein and Temu. At the heart of this issue is the principle of ‘de minimis non curat lex,’ or simply ‘de minimis,’ which means the law ignores trivial matters. In the context of imports, this principle generally exempts low-value goods from taxes in many countries.
However, South Africa’s approach is different. The country’s de minimis threshold is set at zero, meaning all imported goods, regardless of value, are subject to import duties and VAT. This has significant implications for consumers purchasing from international online retailers.
In 2007, the South African Revenue Service (SARS) introduced a ‘concession list,’ providing special exemptions to standard customs duties. One key exemption was for bulk import clearances through OR Tambo airport, allowing a flat 20% duty on dutiable goods, excluding VAT. This primarily benefited couriers dealing with large volumes of imports.
Changes in Import Tax Regulations
From July 1, 2024, the exemption for clothing and footwear will no longer apply. All such imports will incur a 45% import duty plus a 15% VAT, regardless of the parcel’s value. This change aims to level the playing field between local retailers and individual consumers importing goods.
Import Tax Rates Before and After July 1, 2024
| Item | Before July 1, 2024 | After July 1, 2024 |
|---|---|---|
| Clothing & Footwear | 20% duty, no VAT | 45% duty + 15% VAT |
| Other goods | Variable | Variable |
This policy shift has raised concerns among consumers, leading to a failed petition to reverse the decision. The argument from SARS is that the tax ensures fairness, as local retailers already pay these duties when importing goods for resale. By bypassing traditional retail channels, consumers buying directly from manufacturers via e-retailers like Shein and Temu were previously benefiting from a significant price advantage.
Impact on the Market
The rise in online shopping has been notable. Data shows that imports from online retailers surged from around R19 million in January 2022 to R120 million in December 2023, a staggering 539% increase. Despite this growth, these online imports still only represented 5.66% of the total R1.91 billion in clothing imports for December 2023.
| Period | Online Retailer Imports | Total Clothing Imports | Percentage of Total |
|---|---|---|---|
| January 2022 | R19 million | – | – |
| December 2023 | R120 million | R1.91 billion | 5.66% |
The convenience and lower prices offered by online retailers continue to attract consumers, even with the newly imposed taxes. This trend indicates that e-commerce is likely to grow, presenting a challenge for traditional retailers who must adapt to remain competitive.
Even with the 45% duty and VAT, goods from online retailers often remain cheaper than similar items from local stores. This price difference, coupled with the convenience and variety offered by online shopping, suggests a continuing shift toward e-commerce.
The removal of the concession aims to level the playing field for traditional retailers, who must adapt to this evolving landscape. The window provided by this policy change may offer them some respite to adjust their business models in response to the growing dominance of online retail.
As this market evolves with new players entering it, the removal of the concession offers traditional retailers a critical period to adjust their strategies. Whether through price adjustments, enhancing in-store experiences, or developing their online presence, retailers will need to innovate to meet the changing demands of consumers.
Who do you think benefits from this new TAX hike? Business or the consumer?
