All good things must come to an end, but all bad things can continue forever.” This is according to the ‘King of Horror’, American author Stephen King. Whether ‘a good thing’ has indeed come to an end would depend on your personal interests. This would also depend on whether you are reading this column before September 1. Oddly, this date marks 85 years since the start of World War II, and it is also the day on which the South African Revenue Service (Sarts) will declare war on e-commerce imports.

On August 6, in a notification of intent, the revenue service stated in a media release titled ‘Changes to customs import system’ that it “remains committed to providing clarity and certainty in the implementation of its mandate of promoting legitimate trade for the economic development of the country in an era of rapidly expanding e-eommerce”. It continued: “This will be achieved by making it simple and easy to facilitate an increased movement of goods.”

Whether any tax change makes things “simple and easy“ and facilitates the “increased movement of goods” is another matter. The Sars change is arguably not just about “providing clarity and certainty” but also addressing tax avoidance and even tax evasion.

The revenue service continued: “Pursuant to the above mandate, Sars noted legitimate concerns that have been expressed in the importation of several goods, especially clothing, via e-commerce by a number of importers who have not been paying the obligatory customs duties and value-added tax (VAT) on these imports, resulting in unfair competition with other industry players. “The concerns stem from the fact that, due to the immense scale of trade via e-commerce, Sars Customs implemented a ‘concession’ for goods valued at less than R500, in terms of which importers paid a flat rate of 20% in lieu of customs duties, and no VAT.”

Spoiler alert: imported e-commerce goods will become at least 15% more expensive. To further justify the ʻclarityʼ to traders, Sars stated that it “will make several changes in line with the World Customs Organisation (WCO) framework to deal with the already changing trade landscape”, known as ‘WCO Guidelines on Immediate Releasec, with four distinct categories:

Category 1: No commercial value, not subjected to duties and taxes, immediate release on the basis of a consolidated declaration that may be oral or written (a manifest, a waybill or an inventory of such items).

Category 2: Low-value consignments below a specified de minimis threshold for which no duties and taxes are collected and immediate clearance and release against a manifest, a waybill, a house waybill, a cargo declaration, or an inventory of items.

Category 3: Low-value dutiable consignments (simplified goods declaration) – goods above de minimis but below the full declaration value threshold, dutiable, and the use of a simplified declaration, or release against a manifest with subsequent simplified clearance, etc.

Category 4: High-value consignments (full goods declaration) – consignments not falling under the three categories described above and include consignments containing goods that are subject to restrictions. Normal release and clearance procedures, including payment of duties and taxes, apply.

Letʼs cut to the chase and look at the changes that Sars intends to implement. Starting on September 1, as an ‘immediate interim measure’, VAT will be introduced in addition to the current 20% ad valorem flat customs duty rate. Then, by November 1, the current 20% ad valorem rate will be reconfigured into the WCO regime for the first three broadband categories, with the appropriate customs duty rate.

The Sars commissioner concluded by saying that the revenue service “will partner with the Department of Trade, Industry and Competition, as the custodian of the country’s trade policy and development, as well as other industry players, to build public trust by seeking opportunities to level the playing field to protect local industries and create business opportunities for economic growth. “Sars will resort to greater use of data, artificial intelligence, machine learning and algorithms to better facilitate trade, while minimising risks to the economy”.

The end of an era. But will it be the start of a new one?