SARS Commissioner Edward Kieswetter announced that the revenue service is intensifying its efforts to address tax evasion by international online retailers, resulting in fiscal losses exceeding R3 billion over the years.
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This move follows growing backlash from local retailers and labour groups, who accuse Chinese platforms like Shein and Temu of exploiting tax loopholes to offer lower prices.
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Kieswetter explained that SARS is updating its tax rules and administrative processes to better collect taxes from these platforms and their users.
He noted, ‘Our current administrative practices were designed at a time when ecommerce was low. It was a couple of people buying from Amazon.com or Alibaba. It was below the radar, and under a certain value, we did not collect the taxes. But ecommerce has gone through the roof in the last few years. The world has changed, and now we are playing catch-up to modernize our administration processes and apply the law.’
As of 1 July, new regulations taxed parcels from Shein and Temu at the same rate as local clothing retailers, which is 45% plus VAT.
While Kieswetter did not specifically name these platforms, he emphasised that the new rules are necessary to combat the ‘unfair advantage’ online retailers have over high-street retailers.
‘It is not a new law [to tax these parcels]. We are simply saying that the loss to the fiscus, because of the way we have administered in the past, has reached a volume that is so high. We estimate about R3.5 billion in [lost taxes],’ he stated.
The popularity of these platforms in South Africa is evident, with Temu currently being the third-most downloaded free app on the Apple App Store in the country.
SARS aims to ensure a level playing field for all retailers by closing these tax loopholes and enforcing fair taxation.
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