Sunday, October 21, 2012

eBay avoids paying £50m tax in UK

Close on the heels of Starbuck's revelation, we find that eBay is also another tax avoider. Another day, another major company 'out-ed'.

There is a very simple solution.  The UK government should levy a minimum tax of (say) 1% of annual revenue earned in the UK for all companies making (say) over £1m pa. If the company's calculated tax is higher than 1%, that is what is owed; but if the tax calculated is lower or if the company is making a loss, 1% is still owed.

 From -  :
"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."

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