SA's largest apparel businesses and union representatives have welcomed the government clampdown on de minimus rules that have allowed Chinese retailers like Shein and Temu to bring goods into the country at a lower cost than rivals, reports Fin24.

From 1 July, parcels Chinese retailers brought in below R500 would be taxed at exactly the same rate that local clothing retailers paid, namely 45% plus VAT. 

This comes amid accusations they have essentially been using an extremely high number of small orders in order to pay lower duties.

‘What we would say about this is ... at last,’ said Michael Lawrence, executive director of the National Clothing Retail Federation (NCRF) yesterday.

He was referring to a battle of at least two years by the federation and the Southern African Clothing and Textile Workers Union (Sactwu), who have been lobbying for the SARS to take action against the likes of online Chinese platforms Shein and Temu.

The NCRF, which represents top retailers including Foschini owner TFG, Truworths, Woolworths, Mr Price, and Cotton On, as well as Sactwu, say more may need to be done. 

They believe Chinese retailers may also be exploiting loopholes around gifts, which are duty-free, to bring clothing into the country.

‘SARS is going to have to apply its mind to that as well,’ he said.

According to Fin24, Lawrence emphasised that before government re-evaluated the de minimus rules, Chinese retailers were paying duties of 20% and less on goods they brought into SA, which allowed them to significantly undercut local retailers.

The de minimus rules changes were flagged by TFG CEO Anthony Thunstrom at the group's full-year results presentation on Friday, when he said the retailer, together with its peers, had been ‘working very closely with SARS and customs over the past six months to ensure that we do operate on level playing fields’.

Referring to concerns about how some of these foreign players have been able to exploit tax loopholes when they bring goods into SA, Thunstrom said the good news was that SA's authorities were looking seriously at these practices.

Sactwu national industrial policy officer Etienne Vlok said it is definitely a ‘step in the right direction’ and would help to start ‘levelling the playing fields’.

Vlok said the union is ‘cautious about being too excited at the moment because we want to see the detail’.

Full Fin24 report