Business World

Wednesday 18 October 2017

Ebay paid £1.6m in UK tax despite reporting £1bn in revenue for 2016

Ebay
Ebay

Kalyeena Makortoff

Online auction site eBay has assured that it is "fully compliant" with tax rules, after its UK accounts revealed it paid only £1.6m in corporation tax despite reporting nearly £1bn in revenue.

In an annual report published by its US parent firm earlier this year, eBay said its UK operations had booked net revenue of $1.3bn for the year to December 31, contributing to group total of $8.9bn.

But a newly-filed earnings report on Companies House shows the online retailer only booked £200.4m through its UK business for 2016, while pre-tax profits totalled £7.6m.

It resulted in the company being taxed a mere £1.6m on its UK operations.

It is not clear what caused the discrepancy between the US and UK revenue figures, and eBay representatives did not provide an explanation.

A spokesperson for eBay said: "In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD, including the remittance of VAT to the appropriate authorities."

eBay UK runs as a wholly-owned subsidiary of eBay International - which is incorporated in Switzerland - and according to its accounts, saw part of its revenues generated from the parent company.

Those accounts also detailed that eBay UK's "principal" activities were to "provide services to eBay International AG by recommending market penetration for the UK internet marketplace and related third party advertising sales in the UK, Germany, France, Italy, Belgium and Australia."

eBay is the latest US giant to see its accounts and UK taxes come under the microscope in Britain.

Earlier this month, filings showed Facebook's UK operations paid just £5.1m in corporation tax last year, despite a jump in profit and a near quadrupling of revenues on the back of climbing ad sales.

The social media giant said revenues in the UK jumped from £210.8m to £842.4m for the year to December 31, helping pre-tax profits rise from £52.5m to £58.4m for the period.

But its UK corporation tax only rose to £5.1m from £4.2m a year earlier, and once deductible expenses were applied, the company only paid £2.58m.

Facebook said the sharp rise in revenue was "attributable to the commencement of advertising reseller services" by its UK operations in April 2016, which drew in "large UK customers".

The slight increase in corporation tax came after Facebook was publicly criticised for contributing only £4.3m in tax in 2014 under an arrangement that treated the UK operation's revenues as a payment from Facebook Ireland for services.

Taxi hailing app Uber also recently reported a jump in UK tax contributions, having paid out £551,000 in 2016, compared to £410,000 a year earlier.

It comes after its UK pre-tax profits surged 65pc from £1.8m to more than £3m over the period.

Press Association

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