Bad news about cheap Temu and Shein imports

South African Revenue Service (Sars) commissioner Edward Kieswetter has issued a notice of intention to withdraw all customs concessions, including reduced taxes and simplified clearance processes.

If implemented, the change could mean that products from Chinese retailers Shein and Temu can no longer be cleared at customs using a simplified process with a 20% flat duty rate.

MyBroadband first learnt that this concession, implemented in 2007, was one of the main mechanisms the e-commerce giants used to import their goods into South Africa.

The mechanism, which only applies to shipments valued under R500, was intended to help logistics companies cope with an influx of imports as international e-commerce activity began accelerating.

We have seen a letter from Kieswetter to Sars-registered clients and traders dated 20 March 2025 with the subject line “Intentions of the Sars Commissioner to withdraw all concessions.”

The communique states that the commissioner is aware that certain clients and traders continue to operate their businesses under the auspices of certain concessions Customs and Excise Offices previously granted.

These include certain deviations, agreements, or special allowances in the Customs and Excise Act that prescribe straightforward tax rates or simpler customs clearance processes.

Kieswetter said these practices have been reviewed in the past, and he now intends to formally withdraw all concessions certain clients rely on.

The commissioner explained that many concessions had been overtaken by legislative, policy and procedure development and technological advances.

“Some concessions date back 20 years and were granted for a specific purpose at the time, that are no longer applicable,” Kieswetter said.

“The commissioner must therefore ensure through this process that all activities related to the Act are in fact compliant with the provisions of the Act and not ultra vires (beyond legal power) thereto,” Kieswetter stated.

Kieswetter said businesses directly impacted by any concession not addressed in the legislation, policy, procedure, or technological systems changes should make submissions to Sars explaining why the concession should not be withdrawn.

Our source also found it interesting that the letter was signed by the commissioner himself rather than by Sars’s head of customs.

Businesses have 21 business days from 20 March 2025 to respond, meaning the deadline for submissions should be 24 April 2025, taking into account several public holidays over the next few weeks.

“Upon receipt of your evidence and/or submissions, the commissioner will take a decision as to whether the relevant provisions of the Customs Act had been complied with or not and will advise you of his decision,” the letter stated.

“Should you fail to timeously respond to this letter, a decision will be taken on the available evidence and submission.”

A source familiar with customs practices told MyBroadband that the withdrawal would not only have a significant impact on e-commerce but could also negatively affect other industries.

For example, wine producers in the Cape will no longer be allowed a concession to clear goods up to 14 days after leaving port.

“This will definitely cause a number of headaches for the industry if the concessions are withdrawn. Expect that these specific industries will take the matter further,” the source said.

While the development goes well beyond addressing gaps in import rules that local players believe have been exploited by the Chinese retailers, Temu and Shein have no doubt played a part in spurring the taxman into action.

Following calls from local retailers and the textile industry in early 2024, Sars said it would start applying the full 45% tax on all clothing imports regardless of declared value.

However, this plan was delayed indefinitely and an interim measure was put in place whereby customs would start charging 15% VAT on top of the 20% flat duty from September 2024.

Thereafter, the intention was to rework the 20% duty into the World Customs Organisation’s (WCO’s) guidelines from November 2024.

However, Sars has yet to confirm whether this was implemented as planned.

The WCO guidelines prescribe four broadband categories for goods to determine how they should be taxed and whether they can be imported with a simplified clearance process.

To classify a shipment, Sars must first set a de minimis amount and minimum declaration threshold.

Despite repeated requests for comment on what these amounts are, the taxman has failed to provide any details about the changes.

The fact that the commissioner has only sent a notice of intention to withdraw the concession this month suggests that the alignment with WCO guidelines has also been delayed.