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SARS: increased Import duties & VAT on small amounts of clothing from international e-commerce retailers
- 20 June 2024
- SARS Issues
- South African Accounting Academy
The price South Africans pay to get their products from Temu and Shein is set to increase significantly starting next month.
This is because SARS and Customs are set to change how they handle small orders coming into the country.
The recent notice issued by SARS regarding internation online retail is also in context of the rise in the use of other platforms like Temu and Shein, which provide low-cost retail options for delivery to South Africa.
To date, parcels shipped to South Africa with a value under R500 have been treated differently and carried far smaller customs duties.
Temu and Shein have been exploiting a tax loophole to deliver high volumes of low-cost orders.
The ‘de minimis rule’ allowed these companies to get clothing parcels under R500 through customs with a 20% import duty and 0% VAT. Many South African companies accused Shein and Temu of abusing this rule by breaking up larger orders into smaller quantities and packages.
From 1 July 2024, clothing items imported into the country valued at less than R500 will carry the same duties as bigger orders.
Clothing imports above R500 in South Africa are subject to a 45% import duty plus value-added tax (VAT).
Click here to access articles on this issue:
- https://www.citizen.co.za/business/personal-finance/soon-pay-correct-tax-shein-temu/
- https://businesstech.co.za/news/business/776771/sars-clarifies-new-rules-for-buying-from-amazon/
- https://www.businesslive.co.za/bd/companies/retail-and-consumer/2024-06-18-analysis-understanding-the-new-taxes-on-shein-and-temu-items-in-sa/
Relevance to Auditors, Independent Reviewers & Accountants:
- The Income Tax, VAT and Customs & Excise Acts are pieces of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
- As an auditor, independent reviewer and accountant, you need to consider INFO.
- Tax practitioners play a critical role in bridging the gap between taxpayers and SARS. As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies and tax practitioners to keep abreast of such changes in so that companies continue to meet their tax obligations.
- As a taxpayer, you also need to comply with relevant conditions when buying clothing items from international online retailers.
Relevance to Your Clients:
- Taxpayers have a duty to comply with the Income Tax, VAT and Customs & Excise Acts, otherwise they could face fines and penalties.
- As legislation, regulations and tax law are continuously changing and evolving, it is of utmost importance for companies to continue to meet their tax obligations.
- As a taxpayer, your clients also need to comply with relevant conditions when buying clothing items from international online retailers.