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E-commerce

Ebay pays GBP1.6m tax on GBP1b revenue

Online auction site eBay has assured that it is “fully compliant” with tax rules, after its UK accounts revealed it paid only GBP1.6 million in corporation tax despite reporting nearly GBP1 billion 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 $US1.3 billion for the year to December 31, contributing to group total of $US8.9 billion.

But a newly-filed earnings report on Companies House shows the online retailer only booked GBP200.4 million through its UK business for 2016, while pre-tax profits totalled GBP7.6 million.

It resulted in the company being taxed a mere GBP1.6 million 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.

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 GBP5.1 million 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 GBP210.8 million to GBP842.4 million for the year to December 31, helping pre-tax profits rise from GBP52.5 million to GBP58.4 million for the period.

But its UK corporation tax only rose to GBP5.1 million from GBP4.2 million a year earlier, and once deductible expenses were applied, the company only paid GBP2.58 million.

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 GBP4.3 million 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 GBP551,000 in 2016, compared with GBP410,000 a year earlier.

It comes after its UK pre-tax profits surged 65 per cent from GBP1.8 million to more than GBP3 million over the period.

PA

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