The South African Revenue Services (SARS) has issued interim tax changes on the importation of clothing through e-commerce by several importers on 8 August 2024.
SARS observed that many importers have been evading the mandatory customs duties and VAT on these imports, leading to unfair competition within the industry.
This interim measure aims to protect the local clothing industry, which is facing intense competition from international e-commerce platforms like Shein.
The South African Revenue Service announced that it has “acknowledged valid concerns regarding the importation of various goods, particularly clothing, through e-commerce by certain importers who have not been paying the required customs duties and VAT.”
Previously, to manage the high volume of e-commerce imports, SARS implemented a “concession” for goods valued at less than ZAR 500 (USD 27.25), allowing importers to pay a flat rate of 20% instead of customs duties, with no VAT of 15% applied.
These guidelines aimed to assist WCO member Customs administrations in standardising the processing of eCommerce 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 categorization of goods in four distinct categories:
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, etc.
Category 4 – High value consignments (full goods declaration) – 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.
The changes to be implemented:
- The introduction of VAT in addition to the current 20% flat rate Customs duty by 1 September 2024 as an immediate interim measure.
- The reconfiguration of the current 20% flat rate into the WCO regime for the first three broadband categories with appropriate duty rates, by 1 November 2024.
