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UK Government Reviews Tax Rules for Low-Value Imports
Rachel Reeves has initiated a review of the tax framework governing imports of low-value goods, aiming to address concerns about Chinese companies undercutting UK retailers through the sale of inexpensive products on online platforms.
The Chancellor is contemplating adjustments to the existing regulations that permit goods valued at £135 or below to enter the UK without incurring customs duties. Items frequently sold on e-commerce giants like Amazon, Shein, and Temu fall under this category.
This review is prompted by mounting pressure from major retail players such as Sainsbury’s and Next, who contend that the current tax exemptions have been exploited by rapidly expanding online retailers like Shein and Temu, which deliver small parcels directly to consumers.
During her announcement in Washington on Wednesday, Reeves remarked, “Retailers can observe that our actions regarding low-value imports demonstrate our commitment to supporting the British high street against the adverse effects of cheap imports that undermine local businesses.”
The issue of dumping, particularly by Chinese retailers, is increasingly concerning in the UK landscape. This comes at a time when the United States plans to eliminate its “de-minimis” exception, which exempts parcels valued under $800 (£600) shipped to individuals from import taxes and normal customs inspections. Originally implemented to facilitate online shopping, this rule has seen a dramatic increase in usage, with over 1 billion shipments—valued at approximately $54.5 billion—reported by 2023, predominantly from China or Hong Kong.
The European Union recently announced plans to phase out its exempt status on customs duties for low-value parcels, following the US lead.
Helen Dickinson, CEO of the British Retail Consortium, which advocates for major retail entities, has welcomed the UK government’s review, stating it shows responsiveness to retailer concerns. She emphasized that a reassessment of this policy was overdue and critical, particularly in light of the increasing volume of potentially noncompliant goods infiltrating the UK market.
Retail entrepreneur Theo Paphitis, owner of Ryman, voiced that retailers have long been advocating for equal competitive conditions. He labeled the review as “a commonsense move” and a positive step for the UK economy.
George Weston, CEO of Associated British Foods, which owns Primark, remarked that eliminating the preferential tax treatment for low-value imports would signify substantial progress in government support for British businesses.
The British Home Enhancement Trade Association (BHETA) has proposed that the government lower the duty threshold to £40. Will Jones, BHETA’s chief operating officer, noted that around 100 million small parcel shipments from overseas sellers contributed to this issue in 2023, driven by the emergence of online platforms such as AliExpress, Amazon, eBay, Shein, and Temu.
Jones argued that the current rules put UK suppliers at a disadvantage and posed significant safety risks, with over 95% of imported goods bypassing safety checks. He cited that more than 98% of counterfeit iPhone chargers sourced through tax-exempt channels failed to meet UK safety standards, underscoring the urgency of government intervention. “It’s essential that the government levels the playing field for UK and overseas producers,” he said, cautioning that while cheap imports may seem appealing to consumers, the associated safety concerns are alarming.
Source
www.theguardian.com