End of tax loophole for Shein starting to have impact, say SA retailers
South Africa's closure of a tax loophole that benefited global discount e-commerce retailers Shein and Temu is starting to show positive signs as some consumers reject the higher prices, the CEOs of local fashion retailers Mr Price and TFG said on Friday.
Last November South Africa's tax authority ended the practice known as de minimis , which allowed companies to drop-ship packages valued at less than R500 from suppliers in China to consumers in South Africa, paying a flat rate of 20% in lieu of customs duties and no VAT of 15%.
Other markets including the US, UK and EU are also closing or planning to close loopholes that have given low-cost online platforms such as Shein and Temu, owned by PDD Holdings', pricing advantages.
'There's nothing punitive about them. It's just levelling the playing field so everybody trading in South Africa and importing products pays the same duties,' TFG CEO Anthony Thunström told Reuters in an interview after the company's earnings release.
Thunström and Mr Price CEO Mark Blair said it was difficult to get official data to quantify the exact impact on the fast-fashion giants. 'But our understanding is that the closure of that loophole has significantly slowed down some of the international pure play online into South Africa,' Thunström said.
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