temu’s EU Profits Surge to $120m Despite Minimal Staff, Raising Tax Concerns
London - Chinese e-commerce giant Temu more than doubled its profits in teh european Union to nearly $120 million (€110m) last year, despite operating with a remarkably small workforce of just eight employees, according to newly filed accounts. The figures are fueling calls for increased scrutiny of the company’s tax practices and a leveling of the playing field for conventional retailers.
The accounts, filed in Ireland where Temu’s European operations are based, show a profit of $119.7 million (€110.3m) for 2023,a meaningful increase from the $53.2 million (€49m) reported the previous year. this profit was generated with a headcount of only eight people, sparking debate over the sustainability of the business model and its tax contributions.
Industry analysts are questioning how Temu achieves such profitability with so few staff, suggesting a reliance on a complex structure designed to minimize its European tax burden.
“The UK and other European governments need to move much more quickly to not only protect their tax base, but allow existing retailers to compete on a level playing field with these Chinese e-commerce giants that have overseas tax avoidance hard-wired into their structures,” a retail industry source stated. “Standing strong on the global minimum tax and digital services tax, reviewing customs duty exemptions and bolstering requirements for multinationals to publish a country-by-country breakdown of the taxes they pay would be a great place for politicians to start.”
Temu vehemently defends its operations, asserting that its irish entity represents a ”real operating company employing real people” and that the employee count doesn’t reflect the full scope of its European presence.
“Temu categorically rejects any suggestion that our structure or operations are designed to avoid taxes or minimise our economic footprint in Europe,” a Temu spokesperson said. “Despite being a young and fast-growing company still in the investment phase, we have already paid billions of euros in taxes across European jurisdictions, and that figure will continue to rise as our operations mature.”
The spokesperson clarified that the reported profit figure only represents taxes paid by a single legal entity and does not include customs duties, VAT, or other taxes. Temu also highlighted its two-year investment in building a platform connecting sellers and consumers, resulting in lower prices for consumers and new opportunities for European sellers.
“Our focus is on the long term: building a sustainable, compliant, and trusted platform that helps consumers access quality products at affordable prices while enabling local sellers across Europe to grow their businesses and reach new markets,” the spokesperson added.
