E-commerce giants Temu and Shein, popular in South Africa for their low prices, face challenges due to new tax regulations implemented by the South African Revenue Service (Sars). These changes aim to close tax loopholes that allowed these companies to undercut local retailers.
E-commerce platforms Temu and Shein were popular in South Africa in 2024 due to their low prices, but their dominance could be challenged in 2025 due to changes in import tax rules by the South African Revenue Service (Sars). Their popularity disrupted the local e-commerce market, leading to accusations of exploiting tax loopholes by local retailers.
These loopholes allowed companies like Temu and Shein to charge a flat duty of around 20% on orders under R500, while local retailers were charged a higher duty of 45% plus 15% VAT. Sars acknowledged the issue, stating that the import loopholes resulted in a fiscal loss of R3.5 billion. Commissioner Edward Kieswetter announced plans to close these loopholes and align Sars' practices with the World Customs Organization (WCO) framework. Starting in September 2024, VAT was added to the flat 20% duty on Temu and Shein orders. Further changes were implemented in November 2024, categorizing imports and applying different duty rates. However, MyBroadband analysis has found that there is confusion regarding the tax applied to orders from these companies, with varying duty rates observed.
ECOMMERCE TEMU SHEIN SOUTH AFRICA TAXES
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