Shein and Temu: New tax regulations 'level the playing field'
New regulations to manage customs duties loopholes have come into effect.
Shein app on a smartphone. (Photo by Romain Longieras / Hans Lucas / Hans Lucas via AFP)
Pippa Hudson speaks with consumer journalist Wendy Knowler.
Listen below.
Temu and Shein have been using loopholes to avoid paying customs duties when shipping products into South Africa.
They used the 'De Minimus' rule allowed for exports under R500, and only paid 20% customs duties without VAT.
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This disadvantaged local retailers who had to pay up to 45% customs duty on imports and 15% VAT.
“You can see the playing field is not level.”
- Wendy Knowler, Consumer journalist
This meant South African consumers were buying significantly more imported products compared to locally produced clothing.
The government has now put in regulations to combat this and change the way VAT is calculated.
VAT is now being added to the 20% flat rate as a temporary measure.
In November this will be restructured to align with World Customs Organisation categories.
Scroll up to the audio player to listen to the interview.