Shein denies accusation of avoiding UK tax by moving income to Singapore

Shein has been accused of avoiding paying current UK tax by moving a major portion of its income to Singapore where the Chinese company is now based. 

The digital fashion retail giant has rejected the accusations lodged by the Fair Tax Foundation, which has been questioning its tax arrangements, reported the Guardian.

Shein’s UK division has been accused of transferring the “vast bulk of income” to its Singaporean parent in order to cut its British tax bill. The company paid just £9.6 million in corporation tax despite enjoying over £2 billion in sales last year.

The report said the payment is equivalent to 25% of the £38.2 million in pre-tax profits it made in the UK in 2024, according to accounts filed at Companies House, in line with the UK corporation tax rate.

However, campaigners said the bill was low relative to Shein’s sales because about 84%, or £1.72 billion, of the sales figure is transferred to its parent group’s Roadget Business Pte in Singapore as a “purchasing” cost.

“Very little surplus is left in the UK to be subject to corporate income tax,” Paul Monaghan, the chief executive of the Fair Tax Foundation, told the newspaper. “The UK accounts reveal substantial related party transactions with its immediate parent in Singapore, which transfer the vast bulk of income back to Singapore as a ‘purchasing cost’, leaving relatively little surplus in the UK to be taxed.

“Singapore not only operates a lower headline corporate income tax rate than the UK, 25% versus 17%, but also offers special incentives to attract corporates to establish there and these can see profits taxed at rates as low as 5%, and we know from previous Shein disclosures that Roadget Business Pte Ltd avails themselves of these.”

Accounts for the Singapore operation reveal it paid tax at an average rate of corporation tax of 9.4% in the three years from 2021 to the end of 2023, according to the Fair Tax Foundation.

A spokesperson for Shein said the allegations were “preposterously wrong and collapse under the most basic scrutiny”.

“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, just as any independent third party would,” the spokesperson said.

“That we operate in a low-margin, high-volume industry should be obvious to anyone who has done even minimal research on our sector.

New filings for retailer’s UK operation, Shein Distribution UK Ltd, seen by the BBC, confirmed sales grew 32.3% to £2.05 billion in 2024. It also reported a pre-tax profit of £38.3 million for the year, up from £24.4 million  in 2023.