Ebay paid just £1.6 million in UK corporation tax last year despite making £1 billion in sales, it has been revealed, raising fresh questions about how multinational corporations are able to structure their businesses to minimize tax bills.
Earlier this year, eBay reported to US investors that its UK business made revenues of £1 billion (US$ 1.3 billion) in 2016.
But documents filed at Companies House show the firm’s main UK arm booked revenues of £200 million over the same period, according to the Financial Times. It made a profit of £7.7 million and paid £1.6 million of corporation tax.
With more than 14 million people trading on eBay.co.uk each month, that suggests a profit of 2.5p per person.
The division makes its money from advertising and marketing, while fees charged to users for website listings are instead booked through Luxembourg and Switzerland.
In the company’s US accounts, bosses said that deals struck with the authorities in these countries saved it £233 million last year.
Ebay told the Financial Times it was fully compliant with UK and international tax rules.
Speaking to the newspaper, UK tax barrister Jolyon Maugham hit out at the tax system, claiming it “only nods in passing to the activities taking place.”
“This is the same debate we have with Facebook, Google, Airbnb and Uber. To most people [these companies’ tax payments in Britain] are an outcome that feels counter-intuitive or grossly unfair,” he said.
“This illustrates how divorced our corporate tax system has become from the world in which it is supposed to operate.”
Labour MP Caroline Flint branded the figures “grossly unfair to UK-based businesses who pay their taxes and reject using profit-shifting or shell companies.”
The news comes as the European Commission this month announced it was taking Ireland to court for failing to collect £11 billion in back taxes from Apple.