Shein’s UK arm has been accused of transferring the “vast bulk of income” to its Singaporean parent to reduce its British tax bill, according to the Fair Tax Foundation. The fast-fashion retailer paid just £9.6m in corporation tax despite generating £2bn in sales last year, equivalent to 25% of its £38.2m pre-tax profits.
Campaigners argue the tax bill is low because about 84% of sales (£1.72bn) is transferred to parent company Roadget Business Pte Ltd in Singapore as a “purchasing” cost, leaving little surplus in the UK to be taxed. Paul Monaghan, CEO of the Fair Tax Foundation, 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.”
Singapore’s corporate tax rate is 17%, lower than the UK’s 25%, and special incentives can reduce it to as low as 5%. Accounts for Shein’s Singapore operation show an average tax rate of 9.4% from 2021 to 2023. The ultimate owner of the Singapore business is based in the Cayman Islands, a tax haven.
A Shein spokesperson rejected the allegations as “preposterously wrong”, stating that its UK business purchases products for resale at arm’s length prices, consistent with global practices. “Shein complies with the relevant laws and regulations of each market we operate in. We pay all relevant taxes in UK, where applicable,” the spokesperson added.
The concerns add to scrutiny over Shein’s use of the de minimis rule, which allows overseas sellers to send goods valued at £135 or less directly to UK shoppers without customs duty. Monaghan estimates Shein would have paid up to £200m in customs duty without this break. Chancellor Rachel Reeves is reviewing the rule amid similar moves by the US and EU to phase out such exemptions.
