Temu accused of paying ‘negligible’ tax in the UK despite ‘enormous sales’

According to a September 16 filing on Companies House for Temu’s UK registered company Whaleco, the retailer reported revenues doubling to $63.2m (£46.6m) and profit before tax of $3.9m (£2.88m) in the year to December 31, 2024.

However, the Fair Tax Foundation alleges that the retailer actually moved more than $750m (£553.27m) of UK sales through its holding company Whaleco Technology in Ireland last year, before moving those revenues on again through tax havens in Singapore and ultimately the Cayman Islands.

“Serious questions need to be asked as to why Temu has such a negligible economic and tax footprint in the UK despite its enormous sales,” said the Fair Tax Foundation’s chief executive Paul Monaghan.

“There’s now been two years without corporation tax being paid on trading activities. The registered office in London is essentially a shell, with no staff and no long-term assets. It looks like UK customer activity is instead being shunted to Ireland and from there to Singapore, where the corporation tax paid on $1.8bn (£1.33bn) of revenue is just $1.7m (£1.25m), or less than 0.1%.

“Temu’s ultimate parent company, PDD Holdings, is listed on the United States’ Nasdaq and has a market worth of $188.3bn (£138.9bn), but it resides in the Cayman Islands”.

Monaghan believes that much of the retailer’s true UK revenues will end up on the books of Temu’s Irish registered company, which isn’t expected to report its numbers until next month.

“The only tax Temu has paid in the UK is a bit of interest on the money they’ve decided to park here because they’re getting a good interest rate,” Monaghan said. “They’re not paying any corporation tax whatsoever on their trading activities in the UK”.

Monaghan equated the tactics being used by Temu, transferring earnings to holding companies in multiple, low-tax countries in a “funnel of tax havens”, with the activities of the US big tech firms such as Amazon, Apple and Microsoft in the 2010s, and more recently with fast-fashion competitor Shein.

“There are particular attributes for tax havens that mean that if you get a couple of them together, the benefits are synergistic,” Monaghan said. “It’s not just you get a bit of tax break here, a bit of tax break there. If you get the right combination together in the right way, then it becomes like a super tax reduction. And that’s why you see the same combinations of countries now being used so often.”

A Temu spokesman denied the allegations and said that the Fair Tax Foundation “significantly underestimates the tax” it pays in the UK. 

The spokesman said: “The Fair Tax Foundation analysis significantly underestimates the taxes Temu pays in the UK, as it does not take into account customs duties, VAT, and other levies.

“In 2024 alone, Temu paid hundreds of millions of pounds in UK taxes, and this figure will rise even further in 2025. We believe this number is already significantly bigger than many of our peers.

“However, Temu is still a new entrant to the UK market, with low profit margins as we reinvest heavily in the UK and pass savings on to consumers. As our business matures, we expect profit margins to improve and our (corporate) income tax payments to increase.

“What will remain constant is our focus on making quality products affordable and accessible to UK consumers. Our commitment is long-term, and we’re confident people will see that through our actions.”

Government intervention?

When asked what the UK government could do to stop these forms of tax avoidance, Monaghan said they could look to do what they did in the 2010s with the big US tech firms.

“There were massive investigations by the government, whether it was in Italy or France or in the UK, which ultimately resulted in back pay being found and paid by these businesses,” he said. “Those investigations ultimately resulted in a change of practice”.

Monaghan also said that the government needed to commit to a full review of de minimis, the threshold of which is currently set at £135 – exempting goods valued at or below that amount from paying import duties when shipped into the UK.

“The UK and other European governments need to move quickly to not only protect their tax base, but allow existing retailers to compete on a level playing field,” he said.