South Africa’s e-commerce laws

South Africa’s e-commerce sector is governed by laws and regulations spanning at least nine different Acts, from the National Land Transport Act to the Protection of Personal Information Act.

The Mapungubwe Institute for Strategic Reflection (Mistra) and Naspers have warned that lawmakers and regulators can sometimes be slow to adapt to the fast-evolving nature of digital innovations.

Mistra and Naspers detailed their findings about South Africa’s legislative landscape for digital platforms in their new report, Our Digital Horizon.

“The rapid pace of digital transformation is ushering in highly personalised services and innovative business models that often challenge existing regulatory frameworks,” the report stated.

“The swift adoption of technology in financial services also introduces systemic risks to the stability of the financial system,” it continued.

“Additionally, the rise of gig work is reshaping traditional notions of labour rights and job security, while the growth of global platforms brings about complexities in tax compliance and revenue collection.”

However, the report said these challenges present significant opportunities for economic growth.

“By collaboratively updating regulatory frameworks to better accommodate these new business models, we can support innovation while safeguarding against risks,” it said.

“Proactive and flexible regulation can help create a more secure and efficient digital economy, benefiting both businesses and consumers.”

Mistra and Naspers said the regulatory environment in South Africa is still evolving to fully address the complexities of the digital economy.

“As digitalisation accelerates, there is a need for a comprehensive vision that encompasses all aspects of the digital commerce landscape,” the report said.

It highlighted that freelance workers, especially those engaged in last-mile deliveries, find themselves in a grey area regarding their classification under labour laws.

“This uncertainty leaves them uncertain about their rights and protections.”

The report used the example of a recent ruling by the UK Supreme Court mandating that Uber drivers be classified as workers, and are entitled to minimum wages and paid holidays.

“This decision highlights the need for clear guidelines that protect workers while adapting to modern employment models.”

To address these challenges, the report said South Africa could consider developing a regulatory framework that recognises the diverse nature of gig and freelance work.

“This could involve setting clear definitions and protections for different types of workers, ensuring that they receive fair treatment and benefits,” it stated.

“By establishing a forward-thinking regulatory approach, South Africa can better support its growing digital economy and ensure that all workers are fairly represented and protected.”

The report also said that the treatment of platform sellers based in foreign countries remains a headache for the South African Revenue Service (SARS) as they are unable to apply the principle of permanent establishment on income tax.

“Similarly, Shein and Temu have been taking advantage of loopholes created by the 2007 tax concession, which allows courier companies to pay a 20% flat rate on high-value, low-volume shipments instead of a full customs tax and VAT.”

The report argued that the potential for regulatory arbitrage poses significant challenges, particularly for digital platforms in sectors like financial services, where some platforms have circumvented established regulations.

“This has been evident in areas such as crowdfunding, on-demand early-wage access, and crypto investments,” it said.

“Additionally, the Competition Commission has yet to establish clear guidelines for when various platform segments should be subject to restrictions under the Competition Act.”

Mistra and Naspers said these gaps in regulation can create an uneven playing field, potentially disadvantaging both local and incumbent platforms.

“To address these challenges, there is an opportunity for the development of collaborative and forward- looking regulatory frameworks,” the report stated.

“Regulatory sandboxes could be employed to allow platforms to operate within a controlled, temporary regulatory environment while innovations are assessed.”

The report also advocated fostering cooperation between digital platforms and regulatory bodies through information-sharing agreements.

It said this could help keep regulations aligned with emerging market trends and innovations.

“By engaging in such collaborative approaches, South Africa can ensure a balanced regulatory environment that supports innovation while maintaining fair and effective oversight,” it said.

The following table from the Our Digital Horizon report summarises the various laws and regulations governing digital platforms in South Africa.