Julian Dunkerton, CEO of Superdry, criticises tax advantages for Shein.
- Dunkerton highlights Shein’s exploitation of a UK tax loophole.
- Shein looks for a UK warehouse as it eyes the London Stock Exchange.
- Dunkerton urges import duty, VAT, and environmental tax for Shein.
- Legal experts caution against simplistic interpretations of Shein’s business.
Julian Dunkerton, the CEO and founder of Superdry, has voiced concerns over the current tax regulations that allow Chinese retailer Shein to benefit from a significant tax loophole in the United Kingdom. He claims this loophole enables Shein to avoid paying import duty on goods under £135 sent directly to UK customers. “We’re allowing somebody to come in and be a tax avoider, essentially,” Dunkerton stated, pointing to Shein’s substantial turnover within the UK without equivalent tax contributions.
In a move to expand its global reach, Shein is reportedly seeking to establish its first UK warehouse in the Midlands. This development coincides with the company’s plans to list on the London Stock Exchange, marking a significant milestone in its growth strategy. The proposed warehouse, sized between 300,000 to 400,000 square feet, would be strategically located in the ‘golden logistics triangle’, enhancing Shein’s distribution capabilities in the region.
Dunkerton has been vocal in his advocacy for imposing additional taxes on Shein, arguing, “Personally, I would force them into paying import duty, VAT, and possibly even an environmental tax.” His stance reflects a broader call for the reevaluation of tax governance as it pertains to international e-commerce giants, challenging them to contribute more fairly to the economies where they operate.
Shein, however, maintains its compliance with existing regulations. A company spokesperson emphasised that Shein’s success stems from its ability to offer fashionable products affordably, facilitated by its on-demand business model and efficient supply chain. “We look forward to working with policy makers and industry peers to review current frameworks,” the spokesperson added, highlighting the retailer’s commitment to ongoing dialogue with regulatory bodies.
Mark Tan, an international corporate tax partner at Spencer West LLP, described Dunkerton’s comments as a ‘bold statement’. He cautioned, “Without fully understanding the details of Shein’s business model, it is difficult to comment accurately on such things.” Tan pointed out that tax regimes were designed for traditional businesses with physical presences, a model that does not align with modern digital commerce platforms like Shein.
The debate underscores the need for updating tax frameworks to address the challenges posed by digital commerce.
