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SARS introduces new tax on Shein and Temu packages, causing confusion on start day

Shein, a Chinese fast fashion retailer, has grown to become the world’s largest fashion retailer as of 2022. With its trendy and affordable clothing options, Shein has gained immense popularity among consumers worldwide. However, in South Africa, Shein and other similar retailers have been facing scrutiny over the low tariffs they pay on small cut-price clothing imports.

The South African Revenue Service (SARS) has been in discussions about imposing higher tariffs on imported clothing, textiles, and footwear costing under R500 from brands like Shein and Temu. Currently, these retailers pay duties of 20% or less on clothing parcels sent to customers in South Africa if the price is under R500. This has put local retailers and the clothing industry at a disadvantage, as they struggle to compete with the flood of cheap imports.

SARS spokesperson Siphithi Sibeko stated that consultations are still ongoing with the industry before implementing the new tariff regulations. The agency wants to ensure that all stakeholders are involved in the decision-making process to avoid any confusion or rush to comply with the new rules. The aim is to create a level playing field for local retailers and protect the interests of the clothing sector workers.

The move to increase tariffs on small cut-price clothing imports has been welcomed by organized labor in the industry and local retailers. They see it as a necessary step to address the unfair advantage that online fast fashion retailers like Shein and Temu have enjoyed due to lower tariffs. Once implemented, parcels of imported clothing, textiles, and footwear costing R500 or less will be taxed at 45%, plus VAT, leveling the playing field for all retailers.

The issue of charging higher tariffs for imports is a complex one, with various stakeholders involved in the decision-making process. Sibeko emphasized the importance of consulting with all parties before finalizing the tariff regulations to ensure a fair and transparent system. The goal is to protect the local clothing industry and promote fair competition in the market.

In conclusion, the discussions around imposing higher tariffs on small cut-price clothing imports from retailers like Shein and Temu highlight the challenges faced by the South African clothing industry. By addressing the issue of low tariffs on cheap imports, the government aims to support local retailers and create a more equitable market environment. The outcome of these discussions will have a significant impact on the future of the clothing sector in South Africa.

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