Fast-Fashion Giant Faces Scrutiny Over Complex Tax Structures and Minimal UK Tax Payments Despite £2 Billion in Sales
Fast-fashion behemoth Shein is facing mounting scrutiny over its tax arrangements in the UK, as campaigners and tax transparency advocates accuse the company of shifting the majority of its UK income to Singapore to reduce its British tax liability. The allegations come amid growing concerns about the practices of major global retailers operating in the UK while paying disproportionately low amounts in corporation tax.
According to recently filed financial accounts for Shein Distribution UK Ltd, the company generated £2 billion in UK sales in 2024 but paid just £9.6 million in corporation tax—a figure that critics say is unreasonably low relative to its revenues.
£1.72 Billion in "Purchasing Costs" Redirected to Singapore
Campaigners from the Fair Tax Foundation argue that around 84% of Shein's UK revenue—approximately £1.72 billion—is being transferred to its parent company in Singapore, Roadget Business Pte Ltd, listed as a "purchasing cost." This accounting move, they claim, significantly reduces the taxable profits remaining in the UK, with only £38.2 million reported in pre-tax profits last year.
Paul Monaghan, CEO of the Fair Tax Foundation, described the situation as "a new wild west for tax," comparing Shein's structure to infamous tax avoidance strategies used by tech giants like Amazon, Apple, and Microsoft a decade ago.
"Very little surplus is left in the UK to be subject to corporate income tax," said Monaghan. "Questions need to be asked about how much of the economic value generated by Shein UK is truly being taxed in the UK, and how much is diverted to tax havens like Singapore."
Singapore: Low Tax Rates and Corporate Incentives
Singapore’s appeal to multinational companies is no secret. With a headline corporate tax rate of 17%, and special tax incentives that can reduce effective tax rates to as low as 5%, Singapore remains a top destination for global businesses looking to minimise tax obligations.
According to the Fair Tax Foundation, Shein’s Singapore entity, Roadget Business Pte Ltd, paid an average corporate tax rate of just 9.4% between 2021 and 2023. The foundation claims Shein is taking full advantage of these low rates through inter-company transactions that divert profits out of the UK.
Shein Responds: “Preposterously Wrong” Claims
In response to the allegations, a Shein spokesperson strongly rejected the accusations, stating that its practices are consistent with international norms and fully compliant with UK tax laws.
"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," said the spokesperson. "That we operate in a low-margin, high-volume industry should be obvious to anyone who has done even minimal research on our sector."
The company also defended its global structure, noting that having a parent company based in a tax haven like the Cayman Islands is “standard and widely used across industries.”
De Minimis Rule: Another Tax Loophole Under Fire
The controversy surrounding Shein’s tax arrangements in the UK isn’t limited to corporate profits. Campaigners are also highlighting Shein’s use of the de minimis rule—a loophole that allows overseas sellers to ship items worth £135 or less to UK consumers without paying any customs duty.
Monaghan estimates that Shein could have paid up to £200 million in customs duty if not for this tax break, calling it an unfair advantage over UK-based retailers who must pay full import duties and VAT.
In light of these concerns, UK Chancellor Rachel Reeves is reportedly reviewing the de minimis rule. The review follows similar moves by other major economies:
- The United States revoked its own de minimis exemption for Chinese-made goods in May 2025, with a broader ban on all low-value imports set to come into effect this month.
- The European Union announced earlier this year that it will phase out its exemption for low-value parcels.
According to data obtained by the BBC via a Freedom of Information request, Chinese shipments accounted for £3 billion worth of low-value parcels delivered to the UK last year—more than half of all such parcels.
Concerns Mount as Shein Eyes Hong Kong IPO
The tax revelations arrive at a critical time for Shein, which had previously considered a £50 billion IPO on the London Stock Exchange. However, amid regulatory hurdles and political scrutiny in the UK, the company is now expected to list in Hong Kong instead.
Critics argue that the move further underscores Shein’s preference for markets with more lenient oversight, particularly concerning tax and corporate governance.
The Bigger Picture: Fast Fashion and Global Tax Avoidance
Shein is just the latest in a string of multinational companies accused of exploiting international tax loopholes to reduce their obligations in high-tax jurisdictions. As governments around the world crack down on base erosion and profit shifting (BEPS), campaigners are calling for tighter rules to ensure corporations pay their fair share where value is created.
"This is not just a Shein problem. It’s a fast-fashion problem. It’s a global tax justice problem," said Monaghan. "Until these loopholes are closed, UK taxpayers and domestic businesses will continue to shoulder an unfair burden."
Conclusion
As Shein continues to expand its reach into Western markets, its financial strategies and tax structures are under intense scrutiny. The fast-fashion giant maintains that it complies with all relevant laws, but critics argue that compliance is not the same as fairness—especially when billions in sales lead to relatively small tax payments in the country where those sales are made.
With the UK government reviewing tax exemptions and rising pressure from campaigners, Shein may soon face tougher regulatory scrutiny—not just on how it manufactures and sells its products, but on where it pays tax on the profits it earns.
