New measures will level playing field for e-commerce entrepreneurs

Photo by Brooke Cagle on Unsplash

Starting next month, clothing items bought from international e-commerce retailers and packaged in small quantities will be taxed at the same rate as large quantities.

This measure is expected to curb tax loopholes exploited by international platforms and foster fair competition.

Rael Levitt, CEO of Inospace, expressed strong support for the new measures. “we are fully supportive of free market dynamics, especially when they benefit entrepreneurs,” said Levitt.

“It is crucial that local businesses are given a fair chance to compete. These new regulations are a necessary step to ensure that South African companies can operate on a level playing field.”

Inospace, which manages 50 micro logistics parks across the country, is deeply embedded in the last-mile delivery sector.

With 70% of its 1,500 clients involved in e-commerce, the company has been proactive in developing a range of facilities to support this growing industry.

These include pick and pack fulfillment services, flexible warehousing, and a range of logistics facilities. Additionally, Inospace provides technology that offers the most competitive and optimal courier rates, further supporting its clients’ logistics and operational needs.

Outgoing Minister of Trade, Industry, and Competition, Ebrahim Patel, emphasised the importance of equality of treatment in the marketplace.

“Everyone has to pay the full customs duties and the full VAT,” Patel stated. “This ensures that South Africa is not left poorer as a result of any gaps in our regulatory environment.”

Several local retailers have welcomed the move, noting that international platforms such as Temu and Shein have been using tax loopholes by bringing in products in small quantities to avoid higher import duties.

South Africa imposes a 45% import duty plus VAT on imported clothing packages worth over R500, but parcels below this amount were previously subject to minimal duty. From July 1, these parcels will now attract the same 45% duty plus VAT, ensuring fair treatment for all retailers.

Anthony Thunström, CEO of TFG, recently highlighted the collaborative efforts with the South African Revenue Service (SARS) and customs authorities.

“We have been working closely with SARS and customs to ensure we operate on a level playing field,” said Thunström. “Over the last few months, there has been significantly better enforcement from SARS and customs.”

Levitt, the founder of Inospace, echoed this sentiment, noting the importance of supporting local entrepreneurs in the fast-growing and highly competitive e-commerce sector.

“At Inospace, our focus on the e-commerce sector for smaller companies remains central to our organisation,” said Levitt. “We are committed to the growth of local industrial entrepreneurs. These new measures will help protect our clients and ensure they can compete fairly in the market.”

While the Trade and Industry Ministry has been known to micromanage and create red tape, Levitt praised this legislation as a critical intervention.

“This piece of legislation is crucial in protecting local businesses from unfair competition and supporting the development of a robust e-commerce sector in South Africa,” he said.