One of South Africa's Tax policy called "De Minimis" has been put to stop in the country. The tax policy is identified as a loophole that gives ways to foreign e-commerce companies like Temu and Shein to sell their cheap products in the country.
Now, that De Minimis Tax Policy has been ended by the South African Revenue Service, foreign companies products have started seeing surge in prices, leading to consumers rejecting the higher prices. This is as well benefiting local retailers as consumers will revert back to locally made products.
The South African's De Minimis Tax Policy is more like a President Donald Trump's tariffs which he imposed on almost all countries so that citizens can go back to home-made products. The idea is to impose border charges on foreign products coming into the country so that such products can have surge in prices.
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The De Minimis Tax Policy was ended in last year November and it has started showing positive results now as some consumers are rejecting the higher prices of foreign companies products.
Before it was ended, the De Minimis Tax Policy allowed companies to ship and dropship packages valued under R500 from Chinese suppliers to South African consumers with a fixed 20% rate tax instead of standard customs duties charges. In fact, no 15% VAT were charged then.
Now the story has changed. Foreign companies like Temu and Shein will now start paying more on standard customs duties and the 15% VAT that weren't included before will now be added.
Meanwhile, it's important to note that other market including the US, UK, China, and EU are also ending or planning to end tax loopholes that have allowed low-cost online retailers like Shein and Temu to gain pricing advantages over the local competitors.
