The South African Revenue Service has announced fresh tax measures against low-cost e-commerce clothing importers.

The tax authority said late on Thursday that had “noted legitimate concerns” regarding the importation of clothing via e-commerce platforms. It said “a number of importers” – it didn’t name them – have not been paying “obligatory” customs duties and VAT on these imports, “resulting in unfair competition with other industry players”.

Sars explained that the concerns stem from the fact that, due to the “immense scale” of trade via e-commerce, customs implemented a “concession” for goods valued at less than R500, in terms of which importers paid a flat rate of 20% in lieu of customs duties and VAT. Some importers, including China’s Shein and Temu, have been utilising this dispensation to import low-value items and allegedly avoid the import taxes paid by other clothing retailers in South Africa.

“To address these concerns and to provide clarity for traders involved in the importation of goods via e-commerce, Sars will make several changes in line with the World Customs Organisation (WCO) framework to deal with the already-changing trade landscape”, the taxman said.

In the early 1990s, the WCO developed a set of release and clearance procedures known as the “WCO Guidelines on Immediate Release”, it explained.

“These guidelines aimed to assist WCO member customs administrations in standardising the processing of e-commerce goods, based on the principle of information being provided by the operator to customs in advance of the arrival of the goods, and the universal categorisation of goods in four distinct categories.”

From 1 September, Sars will introduce VAT on these goods, in addition to the current 20% flat rate, as an “immediate interim measure” aimed at protecting South African businesses.

‘Appropriate rates’

Then, from 1 November, it will reconfigure the 20% flat rate in line with the WCO regime, with “appropriate rates”, it said, without providing specifics. This reconfiguration will happen for three of the four WCO guideline categories, which are:

Category 1: Correspondence and documents – no commercial value, not subjected to duties and taxes, immediate release on the basis of a consolidated declaration that may be oral or written (a manifest, a waybill or an inventory of such items).
Category 2: Low-value consignments below a specified de minimis threshold for which no duties and taxes are collected, and immediate clearance and release against a manifest, a waybill, a house waybill, a cargo declaration or an inventory of items.
Category 3: Low-value dutiable consignments (simplified goods declaration) – goods above de minimis, but below full declaration value threshold, dutiable and the use of a simplified declaration, or release against a manifest with subsequent simplified clearance, and so on.
Category 4: This is for high-value consignments, which require a full good declaration. These are consignments not falling under the three categories described above and includes consignments containing goods that are subject to restrictions. Normal release and clearance procedures, including payment of duties and taxes, apply.

Read: Shein and Temu threaten South African jobs, Takealot alleges

Sars commissioner Edward Kieswetter said the tax authority will work with the department of trade, industry & competition and other industry players to “build public trust by seeking opportunities to level the playing field to protect local industries and create business opportunities for economic growth”.

Sars will make “greater use of data, artificial intelligence, machine learning and algorithms to better facilitate trade while minimising risks to the economy”, Kieswetter said. – © 2024 NewsCentral Media