The global fashion retailer SHEIN is under scrutiny again, this time facing allegations that its UK division has been shifting a vast bulk of income to its Singaporean parent company to minimize its British tax burden. The controversy erupted just as SHEIN seeks an IPO and new legitimacy in Western markets, putting the spotlight on its corporate structure and tax practices.
Allegations of Tax Avoidance
On September 6, several sources reported that watchdogs and UK tax experts accused SHEIN of transferring significant UK revenues to its Singapore headquarters in order to benefit from lower corporate tax rates. The practice allegedly allows SHEIN to pay just £9.6 million in UK corporation tax despite reporting over £2 billion in UK sales last year, according to the Fair Tax Foundation.
The Corporate Structure & Regulatory Loopholes
SHEIN, which originated in China but is now officially headquartered in Singapore, has faced similar tax scrutiny worldwide. Its agile structure lets the company exploit various tax regimes by booking revenues and purchases outside the high-tax jurisdictions where most of its sales occur. UK law requires foreign sellers shipping consignments under £135 to collect value-added tax (VAT) on behalf of HMRC, but questions linger about how effectively SHEIN and similar retailers comply.
A SHEIN spokesperson responded to the controversy:
“Allegations of tax evasion in the UK are absurd, and even the most basic scrutiny would make the accusations invalid.” The spokesperson further insisted, “The UK branch purchases products from clients at prices that comply with current market conditions and fair trading principles, ensuring that the Company’s transactions are fair, reasonable and in line with global practices… Shein also adheres to the relevant regulations in each market and pays all related taxes in the UK.”
Meanwhile, the Treasury defended its regime:
“Our customs and tax regime balances reducing burdens for businesses and consumers buying lower-value goods from overseas with the interests of UK businesses. Goods worth up to £135 can be imported without incurring customs duty, but VAT is charged at the same rate as it would be for domestic goods.”
Reaction from Industry and Watchdogs
Tax campaigners and industry insiders say the current UK system creates a competitive imbalance. According to Dan Neidle of Tax Policy Associates,
“It’s sensible to have import duty exemptions to protect small businesses and consumers from customs charges and bureaucracy. But it’s not right that these exemptions enable billion-pound businesses to escape import duties and gain a competitive advantage over other retailers.”
The debate has broader industry implications. SHEIN’s model, which has propelled it to become the UK’s 11th largest apparel retailer in just a few years, combines direct shipping from factories (often splitting orders to stay below customs thresholds) and swift product cycles. Competitors, both UK-based and multinational, are now pressing for reforms to prevent lost tax revenue and ensure fair play.
What’s Next for Shein?
As SHEIN eyes a high-profile public offering, possibly moving away from London towards Hong Kong due to regulatory complexities, its tax practices are under ever more intense scrutiny. Politicians, retailers, and watchdogs warn that such processing of income—routing it through a low-tax hub like Singapore—may become unsustainable as governments tighten loopholes.
SHEIN, meanwhile, maintains that its “on-demand business model and flexible supply chain” keep prices affordable and reduce waste.
“This reduces wastage of materials and lowers our unsold inventory. We pass these savings on to our customers, and this has driven our success around the world,” the company explained in a public statement.
