Fast fashion giant Shein has been accused of transferring the “vast bulk of income” to its parent Singaporean company in order to reduce its tax bill in the UK.
Shein, which had hoped for a London listing that would value it at as much as £50bn, paid only £9.6m in corporation tax although it made £2bn in sales last year, The Guardian reported.
Equating to 25% of the £38.2m in pre-tax profits it made in the UK in 2024, that is in line with the UK corporation tax rate. However, campaigners argued it was low relative to Shein’s £2bn sales because about 84% of the sales figure is transferred to parent group’s Roadget Business Pte Ltd in Singapore as a “purchasing” cost.
Fair Tax Foundation chief executive Paul Monaghan said: “Very little surplus is left in the UK to be subject to corporate income tax.”
Recalling how businesses such as Amazon, Apple and Microsoft faced criticism more than a decade ago for transferring earnings to low tax countries, Monaghan said: “This feels like a new wild west for tax. The fast-fashion industry now is reminiscent of the worst excesses of big tech’s anti-tax measures in previous decades.
“Questions need to be asked as to how much of the economic value that Shein Distribution UK Ltd generates from its UK sales is actually being booked as profit in the UK and is subject to corporate income tax, and how much is being booked as profit in the tax haven Singapore.”
A Shein spokesperson told The Guardian that the claims were “preposterously wrong and collapse under the most basic scrutiny”.
The person said: “As is standard in international commerce, our UK business purchases products for resale from our principal at prices consistent with prevailing market conditions and arm’s length principles, just as any independent third party would.
“This approach ensures that our transactions are fair, reasonable, and in line with global practices. These are among the most fundamental and widely accepted practices in global commerce, something these campaigners should already understand.
“That we operate in a low-margin, high-volume industry should be obvious to anyone who has done even minimal research on our sector.
“Shein complies with the relevant laws and regulations of each market we operate in. We pay all relevant taxes in UK, where applicable.”
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