Home South African Chinese retailers like Shein and Temu set to face new tax regulations

Chinese retailers like Shein and Temu set to face new tax regulations

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

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THE SOUTH African apparel industry has welcomed the government’s new regulations on de minimus rules that will make it more costly for Chinese retailers 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).

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 some of the bigger local retailers such as TFG, Truworths, Woolworths, Mr Price and Cotton On.

Over the past two years, the NCRF and the Southern African Clothing and Textile Workers Union (Sactwu) have been lobbying for the South African Revenue Service (Sars) to take action against online platforms Shein and Temu.

Lawrence told News24 that he thinks these foreign retailers could also be exploiting loopholes around gifts.

Gifts are duty-free if you bring them into the country.

“Sars is going to have to apply its mind to that as well,” he said.

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

It sent a number of questions around the issue and were told by a Temu spokesperson 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.

Temu and Shein had not responded to media enquiries regarding the government’s new regulations by the time of publication.

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