eBay avoids paying £50m tax in UK The world’s largest online marketplace eBay has avoided paying £50m corporate tax in Britain through legal tax-avoidance schemes.
The American online auction site has avoided paying £50m in legal tax avpidance schemes, according to a report by the Sunday Times. Photo: Alamy 10:36AM BST 21 Oct 2012 The American company legally channels payments through Luxembourg and Switzerland, resulting in it paying barely more than £1m in corporation tax, despite generating sales of almost £800m in the UK in a year, according to a Sunday Times investigation. The paper reported that accounts filed in America by eBay Inc, the parent company, indicate that its British subsidiaries generated £789m in sales during 2010. The company’s UK shopping portal has 17m unique visitors a month. Using a group-wide profit margin of 23pc, UK profits would have been £181m in 2010, the latest year for which accounts are available. At the time this would have produced a corporation tax bill of £51m. However, the amount of tax paid in total by eBay’s four main UK-based subsidiaries for that year was £1.2m. The Sunday Times said the amount of tax paid can be explained in part by the fact that the fees paid by sellers using the auction site in Britain are handed over to a related company in Luxembourg called PayPal (Europe) Sarl, meaning that most sales are routed through a tax haven. Accounts also show that eBay (UK), the main British subsidiary, merely provides “services” to a company in Switzerland called eBay International AG.
A spokesman for eBay told The Sunday Times: “EBay Inc in Europe works with tax authorities and complies fully with all applicable tax laws and regimes — including national and internationally recognised rules.” In recent weeks MPs have become enraged as other big-name companies results revealed that have also used complex, legal systems to avoid paying corporation tax in Britain. In recent weeks, Starbucks has faced a barrage of criticism over it negligible tax contribution in the UK. Despite racking up £3bn in sales in over a decade, the Seattle based firm has paid only £8.5m in corporation tax and nothing since 2009. MPs have called for HM Revenue & Customs to investigate how Starbucks avoided paying corporation tax on UK sales of £398m last year. It also recently emerged that Facebook UK generated revenues of just £20.4m last year and paid just £238,000 in tax to the Revenue. Experts said the social networking giant was not breaking any rules but paid less tax because its European headquarters is not in the UK but in Ireland.