The South African Revenue Services (SARS) is updating its tax systems to clamp down on global online retailers and ecommerce platforms that have unfair low price advantages in the local market.
Commissioner Edward Kieswetter told News 24 that international online retailers have cost the revenue service fiscal losses in excess of R3 billion in unpaid taxes in recent years.
Kieswetter said SARS is updating its tax rules and administration processes to enable the revenue service to effectively collect taxes from these platforms and their local customers.
His remarks follow the growing outcry by retailers and trade unions which have vehemently complained that Chinese online shops like Shein and Temu have exploited loopholes in the country’s tax rules to keep unfairly prices low.
Both stores have grown in local popularity in recent years and Temu is now the third-most downloaded free app in the Apple App Store.
“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,” Kieswetter said
"The world has changed, and now we are playing catch-up to modernise our administration processes and apply the law.”
SARS recently announced that it will apply new rules to global platforms, which will impact both Shein and Temu from 1 July. Parcels supplied by these online retailers will be taxed at 45% plus VAT.
Kieswetter said the new rules will combat the unfair advantage online retailers have benefitted from until now.
