South Africa: Shein Temu SA Import Tax Changes Drive Local Fulfillment

• Shein and Temu are shifting to local fulfilment in South Africa due to stricter customs enforcement and a crackdown on low-value import customs SA.
• Regulatory interventions by SARS, including closing tax loopholes, have significantly slowed cross-border e-commerce growth, impacting Shein Temu SA import tax changes.
• Shein's annual growth slowed to 11% in 2025, while Temu experienced a 42% average monthly decline, according to the Online Retail in South Africa 2026 report.
• Local retailers previously reported sales drops of 15-20% and accused these platforms of anti-competitive practices and exploiting tax loopholes.
• Despite the slowdown, cross-border orders still accounted for 18.6% of all South African e-commerce transactions in 2025.

The South African Revenue Service's (SARS) e-commerce import regulations, particularly the closure of tax loopholes and intensified customs enforcement, are central to this market recalibration.

International e-commerce giants Shein and Temu are fundamentally altering their operational strategies in South Africa, moving towards local fulfilment and supply chains. This strategic pivot comes as the nation's tighter customs regime has diminished the appeal of direct imports, effectively closing avenues for tax arbitrage that previously benefited these platforms. A significant finding from the "Online Retail in South Africa 2026" report, a collaborative effort by World Wide Worx, Mastercard, Peach Payments, and Ask Africa, highlights this shift.

The report, which synthesises retailer financial disclosures up to fiscal year 2026, Statistics South Africa retail data through mid-2026, and consumer research from Ask Africa’s Target Group Index based on 23,910 interviews conducted between January and December 2025, indicates that regulatory interventions by the South African Revenue Service (SARS) have had a more profound impact on the local e-commerce sector than initially anticipated. This has led to a significant slowdown in cross-border e-commerce growth during 2025.

Specifically, the study reveals a marked deceleration for Shein and Temu, the two international platforms at the heart of concerns regarding offshore e-commerce's effects on domestic retailers. Shein experienced an annual growth slowdown of between 30% and 50%, settling at 11% in 2025, while Temu recorded an average monthly decline of 42%. Overall, South Africa's cross-border e-commerce growth rate plummeted to 7% in 2025, a stark contrast to the 30% to 50% annual growth observed prior to 2024. Despite this, approximately 19 million cross-border platform orders were placed in 2025, constituting 18.6% of all South African e-commerce transactions, indicating the sector's continued substantial presence.

The South African Revenue Service's (SARS) e-commerce import regulations, particularly the closure of tax loopholes and intensified customs enforcement, are central to this market recalibration. These measures directly address long-standing grievances from local retailers, who have accused multinational platforms like Shein, which launched in South Africa in 2020, and US-based Temu, which entered the market in January 2024, of engaging in anti-competitive practices.

The Ecommerce Forum South Africa (EFSA) previously informed ITWeb about numerous complaints from its members. These included allegations of misleading advertisements, anti-competitive pricing strategies, and the exploitation of import tax loopholes. Local online retailers reported a substantial drop in sales, ranging from 15% to 20% in 2024, as consumers gravitated towards the low-cost 'fast fashion' offered by Shein and Temu.

Alastair Tempest, CEO of EFSA, articulated the core concerns: the inability of South African businesses to compete with extremely low prices, the use of vast advertising budgets to stifle competitors, and a perceived disregard for South African laws that allegedly grants these international players unfair advantages and reduced overheads. These issues have prompted calls for government intervention to safeguard South African businesses and the manufacturing sector.

The shift in strategy by Shein and Temu, driven by the stricter regulatory environment, signals a maturing phase for online retail in South Africa. Arthur Goldstuck, Managing Director of World Wide Worx and the principal analyst for the report, observed that while Shein and Temu might not hold the consumer mindshare often attributed to them by media, the closure of tax loopholes, enhanced customs enforcement, and the resilience of local retailers have collectively moderated their market impact.

Goldstuck suggests that the growth of these platforms is now expected to slow, fostering a dynamic of coexistence with established local players rather than outright displacement. However, the fact that 18% of all e-commerce transactions last year were still cross-border underscores their significant, albeit evolving, role in the market. The "Online Retail in South Africa 2026" report explicitly links the recent decline in cross-border sales to these regulatory interventions, highlighting a pivotal moment for South Africa's cross-border e-commerce tax landscape.

Lawyers advising e-commerce clients, particularly those involved in cross-border trade into South Africa, must review their clients' import and tax compliance strategies. The closure of tax loopholes and stricter customs enforcement by SARS necessitates a shift away from tax arbitrage models towards full compliance with local regulations, potentially requiring local fulfilment or revised pricing structures.

Source: Original reporting via ITWeb