SA fashion industry welcomes new tax on international online retailers
The SA Revenue Service (Sars) has issued an import duty for international online retailers like Shein and Temu.
Shein is a global fashion and lifestyle online retailer and Temu is an online marketplace offering heavily discounted consumer goods, imported from China.
According to an article published by “MyBroadband”, Sars is committed to taxing all clothing parcels with an import duty of 45% plus VAT from July 1, 2024.
This means that clothing parcels below R500, which used to be taxed between 14% and 19%, will now be taxed the same as large orders: that is 45%.
This means that consumers will be coughing up more for international online shopping even on smaller orders.
Local retailers, like Foshini Group (TFG), competing with Shein and Temu, are pleased as the change will benefit the economy.
“It’s a big move, and I think it will help local industry, including local production and jobs,” TFG CEO Anthony Thunström told “Business Times”.
While this is great news for South African businesses, consumers are unhappy because they will have to pay more than usual for their items.
@Afro_wylin commented: “I’m fascinated at the idea of increasing tax on Shein and Temu items because why do they assume consumers will magically go back to retail stores in South Africa?
“People flocked online to avoid those prices, why would anyone go back just because they increased customs?”
Another X user, @Sonaleeey, said: “Customs duty/VAT used to put people off buying stuff from overseas, but then South African stores aren’t nice.
“Like, no I don’t want to pay R700 for a dress (I’m looking at Cotton On), and no, I don’t want a shirt that says girl boss swag (I'm looking at Mr Price).”
However, the difference between local retailers and international online stores is that shopping locally benefits the South African economy and creates jobs in the country, while international online retailers benefit from South African consumers without paying reasonable tax in South Africa.
Also, the tax imposed on Shein and Temu is not unfair because that is what giant retailers like Mr Price and Woolworths are paying.
Happy MaKhumalo Ngidi, the chief marketing officer of Proudly South African, which advocates for local brands, welcomed the new tax law, saying it would make a difference to the South African economy.
“This is great news for the clothing and texting industry, and it’s great news for South African designers and brands. It’s been a long time coming.
“This development, kicking in this July, with online platforms such as Temu and Shein, taxed accordingly, is a great starting point for local products. It creates an environment that is a bit more consecutive and a bit more competitive,” said Ngidi.
“We understand that these two platforms have been an option for many South Africans who feel that these clothing items are a lot more affordable, they are okay with the quality and they would want to argue that the quality is just as good as local quality but at cheaper costs.
“We understand that many consumers look at it that way but, for the industry, the designers have suffered for many years when they failed to compete with these cheap imports.
“The fact that this has been now signed into law and that all the policymakers and the authorities implement this soon is really great news for the locals and the industry.
“We agree that it may not deal with all the fundamentals at a go, but I think it’s safe to say that it will make a difference, and it’s a good place to start.”
South African designer Mzukisi Mbane, of Imprint ZA, agrees with Ngidi that the tax on retailers like Shein and Temu is a step in the right direction.
“It’s a good thing because it’s a step towards better control. It’s not only fashion that is suffering, but everything produced locally. No one ever speaks about the effect it has on us because it sets us back when consumers don’t buy locally.
“We have to educate the consumer on why certain products manufactured locally are costly compared to the ones they buy from online retailers that don’t pay the same amount of tax,” said Mbane.
