The CEO of clothing retailer Superdry, Julian Dunkerton, has criticised rival Shein for allegedly evading taxes, calling on the government to take action. Dunkerton argued that Shein benefits from an unfair advantage since low-value parcels shipped directly from overseas to customers are exempt from import duties.
While Shein did not comment on the allegations, it has previously attributed its success to an “efficient supply chain” rather than tax breaks. The Treasury stated that tax policies must strike a balance between consumer and retailer interests. However, Dunkerton, in an interview with BBC, contended that addressing this tax “loophole” would benefit the UK.
“The rules weren’t made for a company sending individual parcels [and] having a billion-pound turnover in the UK without paying any tax,” Dunkerton said, emphasising that allowing Shein to operate in this manner effectively permits tax avoidance.
Currently, shipments valued under £135 sent directly to UK consumers are exempt from import duties, while larger consignments are not. This exemption has had limited impact in the past, but with the rise of global online marketplaces, UK retailers are increasingly undercut by low-cost Chinese competitors, leading to potential tax revenue losses.
Dunkerton, while speaking to BBC, criticised Shein as an “environmental disaster,” advocating for the imposition of import duties, VAT, and possibly an environmental tax. Shein has stated that it fully complies with UK tax obligations.
Originally founded in China and now based in Singapore, Shein is reportedly preparing for a potential stock market share sale, which has drawn increased scrutiny of its practices. Earlier this year, it filed initial documents for a London listing, following criticism over a potential New York listing related to its ties to the Chinese government and allegations of forced labour, which the company denies.
Shein claims its “test and repeat” strategy minimises waste by producing items in small batches and reordering based on customer demand. However, critics argue that its low prices and gamified social media strategy encourage a throwaway culture.
The US and EU are already considering tightening tax regulations to encompass direct-to-consumer businesses like Shein and Chinese competitor Temu. In response to claims of tax exemption benefits, Shein asserts that its success is rooted in offering affordable fashion.
An HM Treasury spokesperson noted that the customs and tax regime aims to reduce burdens for businesses and consumers purchasing lower-value goods from abroad while considering UK business interests. They also stated that VAT is uniformly charged on goods, regardless of origin or value.