South Africa to Enforce VAT on Low-Value E-Commerce Imports. South Africa’s tax authority has announced that importers of low-value parcels destined for the country will soon be required to pay value-added tax (VAT).
This decision comes as a measure to protect the domestic clothing industry, which faces intense competition from international e-commerce giants like Shein.
The South African Revenue Service (SARS) noted that the move aligns with actions taken by other regions, such as the European Union, which is considering the removal of its duty-free limit as part of a broader customs reform.
SARS explained that many importers have been bypassing the mandatory customs duties and VAT on certain goods, particularly clothing, imported via e-commerce. This has led to “unfair competition” for local businesses.
Previously, due to the high volume of e-commerce imports, SARS allowed a “concession” for goods valued at less than 500 rand ($27.25), where importers paid a flat rate of 20% in lieu of customs duties and were exempt from the 15% VAT.
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However, starting September 1, SARS will introduce VAT in addition to the existing 20% flat rate on these low-value parcels as an interim measure to address the competition concerns and bring clarity to the e-commerce sector.
Further changes include reconfiguring the 20% flat rate to align with the World Customs Organisation’s regime, applying appropriate duty rates by November 1.
Brick-and-mortar retailers and e-commerce businesses in South Africa have been urging regulators to impose a 45% import duty on all clothing imports, regardless of price, to create a level playing field.
Shein, a China-founded e-commerce giant, attributes its success to its “on-demand business model and flexible supply chain” and plans to go public in Britain soon.
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