South Africa’s decision to close a major tax loophole used by global e-commerce giants Shein and Temu is beginning to pay off, according to local fashion retailers Mr Price and TFG (The Foschini Group).
Last year, the South African Revenue Service (SARS) ended the “de minimis” rule, which allowed overseas sellers to ship goods under R500 with minimal import duties (20% flat rate) and zero VAT (15%). Now, all imports are subject to standard customs duties and VAT—just like local businesses.
“There’s nothing punitive… it’s just levelling the playing field,” said TFG CEO Anthony Thunström.
Early Results: Higher Prices = Slower Sales for Shein & Temu
- Consumer pushback: Local CEOs say there’s growing social media backlash over rising prices on Shein, suggesting the rule change is working.
- Sales impact: TFG believes the policy has slowed down international online-only players.
- Growth in local e-commerce: Mr Price noted their online sales slightly outpaced in-store sales, hinting at a shift toward local platforms.
Why It Matters
Local retailers have long pushed for fair trade policies. Some even advocated for a 45% import duty across all clothing imports, regardless of price, to protect domestic businesses and jobs.
While it’s still too early for concrete data, the shift signals that South Africa is joining a global trend to regulate cheap cross-border e-commerce and support local industries.