In a move likely to affect thousands of online shoppers, the South African government is planning to scrap the VAT exemption on low-value imported goods
Image: Pexels
In a move likely to affect thousands of online shoppers, the government is planning to scrap the VAT exemption on low-value imported goods, including items from popular online retailers like Shein and Temu.
This change forms part of the 2025 Draft Taxation Laws Amendment Bill (TLAB), recently published by the National Treasury and the South African Revenue Service (SARS) for public comment.
"It is proposed that the current tax-free limit on imported goods to be removed, meaning that from now on, low-value imports will be subject to VAT," the document notes.
If passed, all goods brought into South Africa, regardless of value, will be subject to the standard 15% Value-Added Tax (VAT). Previously, items valued below R500 could enter the country without VAT and were instead subject to a flat 20% customs duty.
IOL previously reported that, as South Africa continues to battle high unemployment, a report by the Localisation Support Fund (LSF) found that Shein and Temu may have cost the country more than 8,000 potential jobs between 2020 and 2024.
The report looked at the impact of foreign e-commerce retailers on South Africa’s clothing, textile, footwear, and leather (R-CTFL) sector.
"In 2024, Shein and Temu collectively achieved approximately R7.3 billion in sales, accounting for 3.6% of the total R-CTFL market and 37% of the sector’s e-commerce sales," the report noted.
"This rapid growth has come at a notable cost to the local economy. The estimated displacement is estimated to include R960 million in lost local manufacturing sales, 2,818 associated manufacturing jobs that may have materialised, and 5,282 unmaterialised retail jobs from 2020 to 2024.
According to the report, this disruption was largely driven by Shein and Temu’s highly digitised and cost-efficient business models, which allow them to offer a wide variety of products at ultra-low prices that local retailers struggle to match.
Last month Shein acknowledged its growing presence in the country and outlined its business approach.
The company also summarised its business model as “customer-driven” and “on-demand,” leveraging digital supply chain technology to adapt procurement decisions according to customer preferences and purchases.
"We operate a customer-driven, on-demand business model. Instead of trying to forecast trends and customer demand, SHEIN leverages digital supply chain technology to adapt our procurement decisions according to our customers’ preferences and purchases".
Meanwhile, Temu has said it has expanded the range of quality products available to South African consumers.
"Temu has expanded the range of quality products available to South African consumers, giving them greater choice and access to items that meet their needs."