Tax evasion by global e-commerce platforms – such as Shein, Temu and AliExpress – is a serious challenge for European governments and local entrepreneurs. This results in losses for state budgets and hinders fair competition. The new regulations aim to limit this practice and protect the European market.
See also: Delivery problems with Shein and Temu? China stops production. This is how logistics works
As FashionNetwork.com explains, Chinese e-commerce giants Shein and Temu, instead of delivering shipments directly to France, send them to Belgium and the Netherlands to avoid local fees. Amazon previously used a similar strategy during the pandemic. As a result, 50 fewer cargo planes arrive in Paris each week.
How do Temu and Shein avoid taxes in Europe?
An EU tax aimed at suppliers from outside Europe is to come into force from autumn. As FashionNetwork.com explains, the fees are to be 3 euros customs fee and 2 euros handling fee for each product category. This is intended to discourage mass imports of cheap goods, primarily from China and Asian markets.
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The French Minister of Trade described the actions against tax fraud as a “surrender war”. Serge Papin, whose words are quoted by FashionNetwork.com, believes that the tax introduced by France and Italy on small shipments from outside Europe has an impact on Chinese platforms. “In Italy, we are also seeing a 30 percent decline in the turnover of Chinese platforms.”
Polish tax evasion. This is how Temu and Shein want to get out of paying tribute
Although the authorities of the countries are trying to prevent the evasion of tax systems by Chinese sales platforms, e-commerce giants are trying to act pre-emptively. Interestingly, Poland has become one of the “lockkeys” that can help circumvent the upcoming fee increases.
“Shein is implementing a large-scale plan to circumvent this tax and will continue to flood the European market, destroying jobs, small businesses and the climate,” explains Yann Rivoallan, president of the French Federation of Women's Clothing, quoted by FashionNetwork.com.
See also: People are buying massively on Temu. There is one catch
Shein is building a huge logistics center in Wrocław, located 175 kilometers from the German border and 130 kilometers from the Czech border.
Shein will import its products wholesale locally and then ship them as individual parcels throughout Europe.
Shein and Temu versus European tax systems
Bulk imports would require Shein to pay import duties, calculated mainly on the low value of the products, but would essentially avoid the small parcel tax, to the detriment of tax revenues in the recipient countries.
The French Minister of Trade notes that it is a slightly different model – than simply bypassing tax rules – if companies “create jobs, if they invest, if they comply with our Consumer Code.”
