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New tax laws for fashion

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Batches of parcels brought into the country from Chinese retailers that are below R500 will be taxed at the same rate that local clothing retailers have to pay.

Temu and Shein. Picture: File

THE South African apparel industry has welcomed the government’s new regulations on de minimus rules that will make it more costly for Chinese fast fashion giants like Temu and Shein to bring in goods at a lower cost.

Batches of parcels brought into the country from Chinese retailers that are below R500 will be taxed at the same rate that local clothing retailers have to pay.

This will be 45% plus Valued Added Tax (VAT), reports IOL.

The SA apparel industry has in the past accused these retailers of using an extremely high number of small orders in order to pay lower duties.

Michael Lawrence, executive director of the National Clothing Retail Federation (NCRF), said he was pleased over the news and that it was urgently needed.

The NCRF represents local retailers such as TFG, Truworths, Woolworths, Mr Price, and Cotton On.

Over the past two years, the NCRF and Southern African Clothing and Textile Workers Union (Sactwu) have been lobbying SARS to take action against Shein and Temu.

Before the government’s new regulations on de minimus rules, IOL reached out to Temu for comment on the allegations made by NCRF.

A spokesperson said that Temu’s “great prices” come from supply-chain efficiencies.

“Our competitive prices come from supply chain efficiencies and operational expertise, not from circumventing rules or exploiting tax loopholes,” the representative said.

IOL has reached out to Temu again, as well as Shein, to get further comment on the government’s new regulations, but has not received any response.

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