Shein has reported a 20% rise in global revenues to $37bn (£27.7bn) but profits have fallen as the fast-fashion retailer faced increased costs, even before it felt the impact of recent changes to US tax laws.
The Singaporean parent company of the rapidly growing retailer said pre-tax profits had fallen by 13% to $1.3bn last year from $1.5bn in 2023 after an increase in selling and marketing costs, according to new accounts.
Shein is thought to be trying to list on the Hong Kong stock exchange after efforts to list in the US and UK for an estimated £50bn valuation went awry.
The China-founded online seller warned that changes to US tariff policies since April this year and their “frequent evolution” had “increased the level of uncertainties in the global economy”.
It warned: “The ongoing evolution of trade policies continues to introduce complexities for businesses that may affect the group’s and the company’s future financial condition and operations.”
Shein, which makes its revenues from selling goods and from fees on marketplace sellers, is thought to have taken a big hit to trade in the US this year after Donald Trump’s administration closed a loophole that allowed goods worth less than $800 to be imported and sent directly to shoppers without certain checks and duty.
The de minimis exemption, which had been in place since 1938, was intended to foster growth for importers of small goods, latterly including e-commerce marketplaces. However, the exemption had been criticised for enabling the rapid growth of cheap imports from China via Shein and Temu.
Income tax paid by the group remained steady at about $188m, although that included $6.1m deferred and adjusted tax relating to prior years.
Shein’s UK arm has been accused of transferring the “vast bulk of income” to its Singaporean parent to cut its British tax bill.
The company paid £9.6m in corporation tax in the UK despite making £2bn in sales last year.
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Paul Monaghan at the Fair Tax Foundation said: “It’s still the case that Shein aggressively avoids tax, facilitated by a chain of companies in Singapore, the British Virgin Islands and the Cayman Islands.
“The move of its headquarters to Singapore has seen profits taxed at 5%-8% over the past four years, with tax relief relocation perks benefiting them by US$74.4m in Singapore in 2024 alone.”
The company paid no dividend in 2024 after a $484.5m payout in 2023.
Shein said in a statement: “The claim that Shein is avoiding tax is wholly false. Like any other international company, Shein pays all applicable taxes, including, but not limited to, VAT, corporate tax, and labour taxes, as required, and operates in compliance with the relevant laws and regulations of every market where we operate.”