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Currently, clothing orders valued above R500 in South Africa are subject to a 45% import duty plus a 15% value-added tax (VAT). Conversely, packages valued below R500 incur only about 20% import duty and are exempt from VAT.
Under a new regulation proposed by the South African Revenue Service (SARS), this distinction between clothing orders below and above R500 will be removed. This change has sparked significant opposition from South African online shoppers.
The VAT waiver, known as the de minimis exemption, has allowed consumers to purchase clothing and other small items at factory prices through eCommerce platforms like Shein and Temu, which many find more affordable than local businesses.
An online petition on Change.com, launched on June 10, 2024, has garnered over 17,000 signatures from South Africans protesting the impending regulation. The petition highlights the adverse effects the regulation could have on individuals, local couriers, cargo businesses, and the South African eCommerce economy.
While acknowledging the necessity of taxation to fund essential services, the petition argues that the abrupt increase is unfair, particularly in an economy where households already struggle with food inflation and high living costs. “This is not fair to consumers; the government does not care about us citizens; they just want to take all of our money,” the petition states.
In April 2024, local retailers, represented by the E-commerce Forum South Africa (EFSA), voiced their frustrations about the anti-competitive pricing of some Chinese eCommerce brands. They pointed out that these brands exploit import tax loopholes by shipping smaller quantities to benefit from lower import duties.
The regulatory adjustment aims to level the playing field for local retailers who have been disadvantaged by these loopholes. The government’s goal is to streamline the eCommerce market’s tax structure and potentially increase import revenues.
However, South African shoppers argue that the implications for small businesses and consumers — especially those purchasing inexpensive clothing from international vendors — could be devastating, although the full impact remains unclear.
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