The EU is planning to impose a customs duty on cheap goods in a move that is likely to impact imports from online retailers and harm Shein’s hoped-for £50bn London listing.
It comes amid growing demand from retailers based in mainland Europe, the UK and US about rising competition from Chinese-linked marketplaces Shein and Temu, which exploit a loophole that excludes low-value items from being taxed.
The threshold for import duty in the EU is €150 (£127) and in the UK it is £135, allowing retailers to ship products directly from overseas to customers in those markets without paying any import duty. Items valued at £39 or less in the UK do not attract VAT.
A European Commission spokesperson said: “In May last year we put on the table customs reforms for a simple, smarter and safer customs union. What we have proposed now is there is no exemption any more for packages valued at below €150.”
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The proposal must first be discussed and accepted by the European parliament, which sits again later this month. A report in The Financial Times estimated that last year 2.3bn items below the threshold were imported into the EU.
Shein boss Donald Tang, who is on a “fact-finding” mission in Europe, said he is “pro-reform” of the import duty threshold and told Politico: “We want to have fair competition around the world” and said the tax break was “not foundational to our success”.
Shein said in a statement that it was “fully compliant with UK tax policies and pays applicable taxes including corporation tax, VAT and employment taxes”.
“Shein’s success comes from our ability to produce fashionable products for our customers. We keep prices affordable through our on-demand business model and flexible supply chain.
“This reduces inefficiency, takes out wastage of material, and lowers our unsold inventory. We pass this advantage to our customers, and this has driven our growth.”
On Tuesday, Sainsbury’s boss Simon Roberts called on a new government to look at unfair taxes including business rates and import duty.
“I want to make sure that the loopholes that are currently in place are closed for some of the businesses that aren’t paying tax in the right way, so it’s a level playing field for everybody,” he said.
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