Shein, Temu Exploit South African Tax Loopholes To Beat Local Firms

Low-cost Chinese fashion and general merchandise online retailers Shein and Temu have taken advantage of loopholes to undercut South African e-commerce companies unfairly, Naspers-owned Takealot Group said, Duncan McLeod reported for South Africa’s TechCentral.

Temu and Shein have been accused in the US of exploiting de minimis tax rules that allow them to ship in millions of packages tax-free by misdeclaring the value of their goods as lower than $800.

In notes accompanying Naspers’s annual results for the year ended March 31, 2024, Takealot accused Shein and Temu – and others like them – of threatening South Africa’s “reindustrialization and localization efforts.”

Takealot added: “These platforms contribute to a market imbalance by flooding the market with inexpensive imports. This influx is particularly noticeable in the local apparel sector due to Shein, and in the wider general merchandise market, affected by both Shein and Temu. Such trends pose significant challenges to the development and sustainability of domestic industries.”

Takealot accused the companies of “exploiting outdated regulations and loopholes by using shipping methods that allow them to offer products at exceptionally low prices while avoiding duties, taxes, and other government fees imposed on conventional retailers.”

It added that “collectively, this hinders government initiatives focused on revenue generation and collection, and undermines South Africa’s sense of sovereignty,” it added.

“It is imperative that policymakers craft regulations to level the playing field, ensuring all participants adhere to the same standards and practices and contribute fairly to the national economy.”

Temu and Shein have been accused in the US of exploiting de minimis tax rules that allow them to ship in millions of packages tax-free by misdeclaring the value of their goods as lower than $800. The very same thing they are doing in South Africa.