Fast fashion giant Shein has been accused of benefitting from a tax loophole that allows the company to avoid taxes on UK imports, as highlighted by Superdry’s chief executive. Julian Dunkerton raised concerns over an exemption on import duties for low-value parcels, stating that this gives Shein an unfair advantage in the market. Parcels with a value below £135 sent directly to UK customers are currently not subject to import tax, unlike larger consignments from other fashion companies that are taxed upon arrival.
Shein, a Chinese-founded company valued at 66 billion US dollars, has made waves in the fast fashion industry by shipping affordable clothing directly from Chinese factories to consumers in the UK and US. The company attributes its success to an efficient supply chain rather than tax exemptions, claiming to adhere fully to UK tax regulations. Dunkerton criticised the current tax rules, stating that they do not account for a company like Shein with a billion-pound turnover in the UK operating without paying taxes.
A Treasury spokesperson defended the customs and tax regime, stating that it aims to balance reducing burdens for businesses and consumers purchasing lower-value goods from overseas with protecting UK businesses’ interests. With Shein considering a potential listing on the London Stock Exchange, scrutiny over its business practices in the UK has intensified. The company initially planned for an IPO in New York but shifted focus to London following criticism from US officials.
Liam Byrne, the Labour chairman of the Business Select Committee, has called for increased oversight of Shein and urged the Government to prohibit the import of products manufactured using forced labour in China. Concerns have been raised about due diligence issues related to Shein’s potential listing. Shein is yet to respond to these allegations.