Online marketplace giant eBay has come under fire today after being accused of tax avoidance in the UK to the tune of £50million. This news comes despite the company’s UK subsidiaries making sales of £789 million and profitsof £181million.
An investigation by The Sunday Timesuncovered that only £1.2million was paid in corporation tax in 2010 when according to the report, based on the group-wide profit margin of 23% in 2010, £51million in tax should’ve been paid.
The report goes on to explain that one of the reasons behind the tax payments being under estimation is because seller’s fees for using the site in the UK are processed through PayPal (Europe) Sarl in Luxembourg and other related companies in Switzerland. This re-routing of payments outside the UK seems to provide the perfect tax haven for the American company. However a spokesman for eBay insists that it “…works with tax authorities and complies fully with all applicable tax laws and regimesincluding national, EU, and internationally recognised OECD rules.”
Such schemes are being uncovered at an increasing rate in recent times with large companies such as Facebook and global coffee chain Starbucks both being accused of similar activity which has resulted in them paying less tax in the UK ultimately.