GETTING AROUND TAX LOOPHOLE
As an alternative of bringing bulk shipments into US warehouses, Shein and Temu ship small particular person orders on to American buyers, permitting them to legally skip import duties. It is because US regulation exempts shipments below US$800 from tax.
Utilizing the tax loophole saves overseas e-commerce platforms tens of millions of {dollars} in import charges, which the White Home has mentioned undercuts American employees, retailers and producers.
Because the US prepares for the busiest procuring season of the 12 months, it desires to close the loophole referred to as the de minimis exemption. Such a transfer will pressure retailers like Shein and Temu – two of the quickest rising retailers within the nation – to pay duties on items of any worth.
Proposals made by lawmakers in September to that finish won’t go into impact instantly – they are going to be topic to suggestions from the business earlier than being finalised within the coming months.
MINIMAL IMPACT
In response to the proposals, each Shein and Temu mentioned that the import loophole was not central to their success.
Shein mentioned that its progress was anchored in its “on-demand enterprise mannequin”, whereas Temu mentioned its “progress isn’t depending on this coverage”.
In the identical vein, consultants mentioned the influence on the companies could also be minimal.
“As a buyer, if I am shopping for a T-shirt for US$3 (and) I’ve to pay duties, the duties could also be 10 per cent (or) 20 per cent. No large deal. In that case, the worth continues to be a lot decrease than different retailers’,” mentioned distinguished professor on the UCLA Anderson College of Administration Christopher Tan.
Nevertheless, the US can also be involved about one other problem with reference to Temu: Information privateness issues.
