Global fashion giant Shein is facing serious turbulence in South Africa as tax authorities clamp down on decades-old loopholes that once helped fuel the online retailer’s meteoric rise.
The South African Revenue Service (SARS) has made it clear: the days of lenient customs treatment for international e-commerce players are numbered, as first reported by BusinessTech.
Shein, along with fellow Chinese retailer Temu, has relied heavily on a 2007 concession that allowed packages under R500 to clear customs with a simplified 20% duty – a workaround originally introduced to ease pressure on courier systems during the e-commerce boom.
But this flat-rate shortcut, SARS now says, is outdated and being misused. By breaking up bulk orders into smaller packages, importers have allegedly manipulated the system to dodge the standard 45% import tax on clothing – a tactic that local retailers have long decried as unfair and anti-competitive.
In a March 2025 notice, SARS Commissioner Edward Kieswetter announced plans to scrap these and all other concessions deemed ‘ultra vires’ or outside legal bounds, citing evolving policy, law and technology. Stakeholders have until 23 April 2025 to appeal or propose changes.
‘The withdrawal of concessions could lead to increased costs for businesses that previously benefited from special allowances,’ PwC said in response to the overhaul.
While a 15% VAT was temporarily added to the 20% flat rate in 2024 to slow down the abuse, SARS is now aiming to eliminate the loophole altogether. This will force importers to comply with the full customs and excise regulations – a major financial shakeup for companies that built their models around these shortcuts.
The impact is already visible. According to Slant Research, Shein’s market share in South Africa has tumbled since late 2024. Their data shows a surge in median payment values to Shein’s logistics partners, such as Buffalo International and Meili Logistics, starting in September 2024, indicating higher tax compliance costs being passed along the chain.
Yet, intriguingly, Slant’s findings also suggest that enforcement may be uneven. Payments to logistics firms are reportedly shrinking as a proportion of overall transactions, hinting that some importers may be skirting the updated rules – or that Shein is scaling down.
As pressure mounts and SARS takes aim at long-standing customs breaks, Shein may soon find itself priced out of the rapid-growth lane, giving local fashion retailers a fighting chance to reclaim home turf.
Compiled by: Aiden Daries
First published by Cape{town}etc
