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Germany supports terminating EU tax break that helps Shein and Temu


Retail

Germany EU tax Shein and Temu

With their low-cost clothing, accessories, and electronics made in China, online retailers Shein and Temu have been able to capture market share. Germany is in favor of a revision to import taxes in the European Union that would eliminate the exemption for inexpensive packages.

Shein and Temu's detractors in the US have already voiced their displeasure, claiming that they take advantage of an import tax exemption to undercut competitors and evade goods inspections by customs. Through this method, the two companies are able to provide smart watches for $25 and gowns for as little as $8 to customers worldwide. Shein is currently intensifying plans for a London listing, following opposition from US politicians to a New York float. Packages worth less than 150 euros ($163) that are ordered online from a non-EU nation are now exempt from customs taxes.

Handelsverband Deutschland (HDE), the leading retail association in Germany, has been putting pressure on the German government, claiming that the exemption has led to a sharp rise in the number of small packages entering the EU through internet retailers such as Shein and Temu and that customs officials are ill-equipped to verify that all the goods adhere to EU regulations. According to the HDE and Reuters, Germany's finance minister Christian Lindner has indicated that his country will back the removal of the 150-euro duty-free cap at the European level. Germany's finance ministry, alluding to a more comprehensive reform plan that includes eliminating the duty-free limit, said it was pleased that the European Commission had presented suggestions to modify European customs legislation to meet the demands of e-commerce.

Temu, a competitor that is owned by Pinduoduo Holdings, a Chinese online retailer, has refuted claims that duty-free shopping is the primary factor in its expansion.


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