The South African Revenue Service (SARS) has committed to taxing all clothing imports with a 45% duty plus VAT from next month, ending the de minimis loophole, according to local news reports.
This means that items packed in small quantities will be taxed at the same rate as large quantities. Reports claim the aim is to curb tax loopholes exploited by international platforms and end any unfair advantage for online fashion retailers based abroad.
Rael Levitt, CEO of Inospace, a logistics park provider in South Africa, believes the new measures will support the dynamics of the free market and benefit entrepreneurs.
He said: “It is vital that local businesses are given a fair chance to compete. These new regulations are a necessary step to ensure that South African businesses can operate on a level playing field.”
According to Reutersthe CEO of fashion retailer TFG, Anthony Thunström, along with other local clothing retailers, has been working with the South African Revenue Service (SARS) and customs authorities “to ensure that pure imports attract similar duties as the products we import into the country “.
In the U.S., a bipartisan coalition hopes to close the de minimis import loophole, which allows packages valued at $800 or less to reach American consumers without the need for taxes, fees or inspections.
However, a recent study from economists at Yale and UCLA finds that lifting the de minimis exemption for U.S. imports would disproportionately impact low-income families, as Customs and Border Protection announces stricter enforcement of the rules.
Singapore-based ultra-fast fashion giant Shein is often cited as one of the biggest beneficiaries of the de minimis loophole. However, in July last year, the retailer told the American Apparel & Footwear Association (AAFA) that it wanted to work with Congress on de minimis policy reforms.
Shein executive vice chairman Donald Tang wrote in a letter to the AAFA: “In fact, we think the waiver needs a complete makeover.”
GlobalData retail analyst Neil Saunders told Just Style exclusively at the time that the intervention could be seen as an attempt by Shein to make it look like part of the solution to some of the problems surrounding the de minimis rule, rather than part of the problem.
“South Africa de minimis loophole levels the playing field for retail” was originally created and published by Just Style, a brand owned by GlobalData.
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