eBay accused of tax avoidance
eBay joins the growing list of firms using overseas tax havens to avoid corporation tax.
Instead, the US-based company paid just £1.2 million, The Sunday Times revealed.
The methods employed by eBay included legally channelling PayPal payments through subsidiaries in Luxembourg and designating its UK division as a “provider of services” to Switzerland-based eBay International AG. Both countries are tax havens.
When questioned, an eBay spokesman denied any wrongdoing:
“eBay in Europe works with tax authorities and complies fully with all applicable tax laws and regimes – including national, EU, and internationally recognised OECD rules”.
Likewise, Facebook paid just £238,000 on sales of almost £21 million in 2011 after the company began redirecting income through its European base in Dublin, where corporation tax is significantly lower than in the UK.
IKEA has reportedly slashed its tax bill in half through paying franchise fees to a separate company in Holland, which vastly reduced the furniture giant’s taxable UK income by registering up to £35.7 million in profits to the dutch firm.
“HMRC has got to be tougher on cracking down on this. What we need is total transparency on corporation tax actually paid each year by companies and detailed reasons why it is below the headline rate”.