TEMU AND SHEIN ORDERS TO FACE BIG TAX INCREASE

Ordering items from fast fashion online retailers has become the norm. Platforms like Temu and Shein offer mostly clothing items at a fraction of the price and local consumers are loving it.

Now, from 1 July all clothing parcels will face an import duty of 45% VAT.

The change is due to local clothing retailers and stakeholders in the textile industry accusing the two famous Chinese companies of exploiting a tax loophole. This loophole has allowed the companies to keep their import prices low and therefore their clothing prices as well.

The loophole is known as the de minimis rule and it has allowed clothing parcels with a total value of less than R500 to enter the country through customs with a 20% import duty and 0% VAT.

Local clothing retailers complained to SARS that they have to pay 45% plus a VAT amount. They claim that this puts them at a disadvantage to direct-from-China importers.

MyBroadband reports that this development only impacts clothing imports and that as it stands, there have been no adjustments in import duties for other goods like small electronics, which are cheap and popular on Temu.

Image credit: EWN