Julian Dunkerton, Superdry’s CEO, has called attention to Shein’s tax practices, labeling them as unfair positioning in the UK market.
- Shein utilizes a UK tax loophole exempting goods under £135 from import duty, benefiting its growth.
- The fast fashion giant is exploring a UK distribution center to enhance its operational foothold.
- Dunkerton emphasizes the need for Shein to contribute more to UK taxes, including import duty and VAT.
- Industry experts discuss the implications of outdated tax regulations on digital business models.
Julian Dunkerton, CEO of Superdry, has publicly criticized Shein, accusing the Chinese fast fashion retailer of exploiting tax loopholes in the UK. According to Dunkerton, Shein benefits from a regulation that exempts goods under £135 from import duty, a loophole not intended for companies with extensive UK turnovers. He told the BBC, “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’s statements reflect concerns over tax fairness and market competition.
In August, news surfaced that Shein was considering establishing its first UK warehouse in the Midlands area. The site, encompassing potentially 300,000 to 400,000 square feet within the ‘golden logistics triangle,’ could significantly bolster Shein’s UK operations. This move is seen as a step forward for Shein as it prepares to list on the London Stock Exchange and seeks to deepen its market penetration.
Dunkerton stresses that Shein must pay more in taxes, advocating for the imposition of import duty, VAT, and possibly an environmental tax. This push aligns with broader industry and governmental concerns about tax policy adaptations necessary for global digital enterprises. Shein’s spokesperson highlighted the company’s adherence to current laws and its efficient supply chain model as keys to success, not tax loopholes.
Expert commentary by Mark Tan, a corporate tax partner at Spencer West LLP, underscores the debate surrounding tax laws designed for physical, not digital, business models. Tan explains that, historically, tax regimes have struggled to adapt to the ecommerce landscape, allowing companies like Shein to avoid a substantial tax presence in high-revenue jurisdictions. This discrepancy raises questions about how contemporary tax structures serve modern business landscapes.
Shein’s financial maneuvers include an impending prospectus for review by the UK Financial Conduct Authority, ahead of a rumored listing on the London Stock Exchange. If approved, this could see Shein trading by year-end, further complicating tax discussions as the firm entrenches itself within the UK market.
Julian Dunkerton’s call for fair taxation on Shein highlights significant challenges in adapting tax policies for the digital age.
