A petition against the new tax rules has already been signed by more than 24 000 people.
Thousands of people have signed a petition opposing the SA Revenue Service decision to close a loophole in the tariff on clothes imported from outlets such as Shein and Temu.
Before 1 November, importers had to pay a 45% tariff on clothes above R500, as well as Vat. But a “concession” was applied for goods valued at less than R500, with importers paying a flat rate of 20% instead of a tariff, and no Vat. Exporters could therefore break up their orders into “small parcels” valued below R500 and escape the 45% duty and Vat.
This allowed retailers such as Shein and Temu to sell their products more cheaply, undercutting local retailers, and undermining local factories.
As of November, imports under R500 are also subject to the 45% tariff and Vat. Announcing the change, Sars said it had noted “legitimate concerns” which had been expressed about the import of goods, especially clothing, by importers who had not been paying customs duties and Vat, resulting in unfair competition.
As a result, Sars said, Vat would be introduced on these imports, and the duty would be reconfigured from 1 November.
In 2019, South Africa adopted a Retail-Clothing, Textile, Footwear and Leather Masterplan to strengthen local factories and increase jobs in the industry. As a result, more than 20 000 jobs have been created, and there has been an increase in locally-sourced clothing, accessories and footwear by almost 60%.
The Masterplan also includes measures to minimise customs fraud, which is one of the biggest challenges facing clothing manufacturers. Goods are misclassified or under-invoiced to evade tariffs and then sold at deflated prices, undermining local factories. Under the Masterplan, Sars has increased inspections and seizure of goods.
Michael Lawrence, executive director of the National Clothing Retail Federation, said that illegal activity is difficult to quantify, but that there are differences of billions of rands between exports declared in China and imports declared in South Africa. He said he supported the new tariffs.
But Free Market Foundation policy officer Zakhele Mthembu told GroundUp that people who relied on cheap clothing will not be able to afford those products anymore.More than 24 000 people have signed a petition on change.org, calling on Sars not to implement the change.
“South Africans cannot afford this, we buy from Shein and Temu because we cannot afford clothes from local businesses, the point of Shein and Temu is affordability,”
the petition reads.
Shein and Temu operate their manufacturing primarily in China, where workers are paid very low wages in poor working conditions compared to South Africa.
Shein was founded in Nanjing, China, in 2008. It specialises in fast fashion. Temu, also a Chinese company, started in 2022. Both are online marketplaces, exporting products from China directly to consumers across the planet. Their Wikipedia pages list numerous controversies and criticisms of the companies, particularly with regard to labour practices.
Source: Ground Up
