Why a dollar to rand comparison of electronics does not work

Posted by Minnaar Pieters 18 Sep 2009

I stand corrected.

In my previous post I spoke about the prices of new iPods in South Africa, and I requested feedback on why these prices can possibly be so high. In fact, I really wanted to be proved wrong in my assumption of price gouging, and wanted to get off my high horse.

Well, thanks to twitter, I got some feedback on what type of import taxes are being charged in SA for electronic goods. Here are some important factors to take into account in these comparisons:

Dollar vs Euro vs Pounds: Most electronics distributors in SA get their stock from european headquarters, therefore dollar comparisons will not be fair. For example, Apple Europe is headquartered in Paris, whereas Dell is headquartered in England and Wales. A Euro currency comparison will lead to a much more comparitive price.

VAT: Anything sold in SA typically is taxed with 14% VAT.

Sales Tax: When purchasing anything in the US, a sales tax is typically added to anything, and not quoted on websites. Some states have higher ones than others. For example, when purchasing something in California, a sales tax of 10.75% is added. Good to know.

Import duty on electronics: When reaching the South African customs a typical charge of around 10% - 20%, depending on the type of device. (There are some people who told me that there is no import taxes on electronics to SA though.)

Video device charge: South African customs have started charging additional taxes for portable video devices of around 20 - 24%. Whether this replaces the traditional import tax or is bundled on top of it, I could not get a clear answer.

Like I said, I am not perfectly sure if some of these taxes cancel each other out, but it does give me some understanding. Adding all these costs together does seem to make the current iPod prices a little more fair. In fact, when taking into account VAT, import duty and a possible video device tax on european prices, the cost of a 16GB Nano is already R2700.

Thanks for the feedback everyone. I am getting off my high horse for now.

Unlike Julius Malema, I can, and will admit I was wrong.
blog comments powered by Disqus
My photo
I am a R&D Analyst in Stellenbosch South Africa who has a immense passion for all things tech related. I embrace technology, open source and web standards, and I participate and contribute to the social web.