What SA's tax crackdown on Shein and Temu means for the consumer

Motheo Khoaripe speaks to Jean Louis Nel, tax attorney at Van Huyssteens Commercial Attorneys. 

Listen to their conversation in the audio clip below.

A recent court judgement in South Africa will see Chinese retailers Shein and Temu pay standard import taxes on goods under R500.

This comes after local retailers and stakeholders in the textile industry accused the Chinese companies of exploiting a tax loophole in the country that kept their import prices low. 

The so-called de minimis rule allowed the likes of Shien and Temu to get clothing parcels of under R500 through customs with a 20% import duty and 0% VAT. 

Retailers complained that they always had to pay 45% plus 15% VAT for imported clothes, putting them at a disadvantage to direct-from-China importers, like Temu and Shein. 

The change will come into effect on 1 July.

In the past, an item that cost R120 on either Shein or Temu, would cost the consumer R166 going forward. 

Speaking to Motheo Khoaripe on The Money Show, Jean Louis Nel, tax attorney at Van Huyssteens commercial attorneys says the local industry felt that these Chinese online retailers were destroying their businesses. 

"...obviously retailers are aggrieved by this, because any imports that they bring into South Africa is at a value of 45%, plus 15% VAT."

- Jean Louis Nel, tax attorney - Van Huyssteens commercial attorneys

"...it does place local retailers under a lot of pressure, because goods are imported at a lower value. Clients or consumers would be inclined to pay less for goods as opposed to going to a store and paying a bit more."

- Jean Louis Nel, tax attorney - Van Huyssteens commercial attorneys 

"If goods are imported, the lower tariff price is paid. It does force local retail stores to drop their prices...but I do believe that would eat into their profit margin."

- Jean Louis Nel, tax attorney - Van Huyssteens commercial attorneys 

"If one considers some of the prices on Temu or Shein, it's still relatively cheaper to import as opposed to buying locally."

- Jean Louis Nel, tax attorney - Van Huyssteens commercial attorneys 

Listen to interview in the audio player above for the full interview.