Chinese e-commerce majors Shein and Temu should be forced to set up bases in SA through local offices and distribution centres so that the fiscus and economy benefit from their operations, Takealot has told the SA Revenue Service (Sars).
Business Day has seen the VAT amendments submissions made by Naspers-owned Takealot to the tax agency, which call for a level playing field between domestic companies and international players.
Takealot in submissions penned by Tshepo Marumule, group head of public policy, said while discussion around imposing 45% tariffs, plus VAT, on small, low-cost imports was a step towards protecting SA’s e-commerce industry, further measures were needed to level the playing field in the industry.
Takealot has proposed that all offshore e-commerce firms operating within the borders of the country must establish a physical local office so that it is easier for authorities to enforce SA’s regulations and laws.
The company is also calling on authorities to demand that international players establish local distribution centres, employ locals and partner with local small, medium and micro enterprises (SMMEs).
Another proposal put forward by Takealot is that all international e-commerce businesses must establish a local business account with an SA bank as a measure of monitoring financial transactions and ensure that all revenue generated within the country is subject to local taxation.
“Implementing these conditions will not only create a fairer competitive environment but will also ensure that international e-commerce players contribute their fair share to the SA, given that their business is incumbent on the spending power of SA consumers,” Takealot’s submission says.
“A local presence, local representatives and a local financial footprint will all enable local agencies (such as Sars and the department of employment & labour) to enforce compliance with local laws, including the collection of tariffs, VAT on imports and ensure acceptable workers’ conditions.
“These measures will ensure that the SA e-commerce industry and other sectors impacted by international e-commerce are all competing with these players on a level playing field. In the long term, these conditions will help to foster a more sustainable and balanced e-commerce ecosystem in SA.”
SA’s e-commerce industry is said to be worth as much as R107bn annually, representing 6.3% of total retail value.
Under the current system parcels from companies such as Shein and Temu, valued at under R500, benefit from a 20% flat rate import duty with no additional VAT.
The framework, rooted in an old Sars concession, was initially designed to ease the customs process by simplifying the declarations for low-value shipments.
This system allowed courier companies to manage consolidated shipments with a flat monthly fee, mitigating the workload on customs authorities. Takealot said this deprived the fiscus and the people of SA of much-needed income.
“Non-resident platforms optimise distorted VAT obligations to the detriment of local entities whose operations result in localised benefits for South Africans. For example, for every R100 spent on Takealot Group activities, R82 stays in the SA economy as salaries for households, profits for businesses and taxes for the government,” it said.
“Allowing non-resident platforms to continue to extract value and exploit loopholes in the VAT and customs obligations directly erodes the tax base as well as the value generated by entities who invest in local infrastructure.”
Other jurisdictions across the world have begun tightening their regulations to ensure Shein and Temu’s activities benefit domestic economies.
In Austria, trade associations last month filed a complaint against Temu with the Austrian Federal Competition Authority.
The complaint said 30,000 packages arrived every day from Temu, which were not tax compliant and caused damage to the local economy and jobs.
In Poland, a report by the Chamber of Digital Economy recommended that the EU and its member states conduct a comprehensive analysis to determine the full extent of party-state apparatus support for the e-commerce sector in China and its impact on Chinese companies building an unfair competitive advantage over European companies.
Swiss authorities have also been asked to probe Temu’s “unfair market practices”.
“The absence of regulatory interventions specifically targeted at B2C [business-to-customer] digital trade into SA from non-resident digital e-commerce operators/digital platforms is a missed opportunity — to ensure a level playing field for local enterprises, to expand the base of SMMEs which will further benefit South Africans and to progress the objectives of re-industrialisation of the SA economy,” Takealot said.
Takealot last month sold its online fashion retailer Superbalist while Zando quit its online retail business in SA.
With Nompilo Goba
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