eBay avoids £50m in corporation tax by making legal payments through Luxembourg and Switzerland

 
AP
21 October 2012

Online auction and shopping giant eBay has reportedly avoided paying nearly £50 million in corporation tax in Britain through legal accounting schemes.

The group paid just over £1 million in UK corporation tax despite making nearly £800 million annual sales in Britain, according to a Sunday Times investigation.

It is thought eBay used legal tax-avoidance schemes, which saw it channel payments through Luxembourg and Switzerland.

The group is the latest firm to see its tax payments come under scrutiny after coffee chain Starbucks reportedly paid just £8.6 million in corporation tax in 14 years of trading in Britain - and nothing in the last three years.

The American coffee firm - valued at £25 billion - is understood to have generated more than £3 billion of sales in the UK since 1998, but has paid less than 1% in corporation tax.

Facebook and Google have also been criticised over poor contributions to HM Revenue & Customs (HMRC).

It was revealed earlier this month that Facebook paid only £238,000 in tax in the UK despite pulling in £175 million in revenues, while Google reportedly paid £6 million in UK tax despite revenues of £2.6 billion.

The Sunday Times today reports that eBay - the world's biggest online marketplace - would have made UK profits of around £181 million in 2010, the latest year for which accounts are available.

This would have produced a corporation tax bill of £51 million.

But the group is believed to have paid £1.2 million in tax that year.

It is thought HMRC head Lin Homer will be questioned in a hearing by MPs on the Commons public accounts committee on November 5 over tax avoidance strategies used by foreign firms.

An eBay spokesman said: "eBay Inc. in Europe works with tax authorities and complies fully with all applicable tax laws and regimes - including national, EU, and internationally recognised OECD rules."

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