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eBay dodges £50m in UK taxes through legal tax haven scheme

An investigation by the Sunday Times (opens in new tab) has found that eBay only paid £1.2 million in UK taxes last year despite having generated £789 million in revenue in the UK in 2010.

Based on the company’s global profit margin of 23 per cent, it is estimated to have raked in an income of £181 million during that year. The real figure it would have owed in taxes based on that calculation is £51 million, the newspaper reported.

But eBay managed to pull off the feat by channelling UK payments through entities in Luxembourg and Switzerland, essentially rerouting revenue raked in by its UK subsidiaries through a European tax haven.

Predictably, the auction site denied any wrongdoing.

“EBay Inc in Europe works with tax authorities and complies fully with all applicable tax laws and regimes - including national and internationally recognised rules,” a spokesperson told the Sunday Times.

(opens in new tab)Earlier this month, Facebook was slammed by MPs after it was revealed that the social network took advantage of an Irish tax break and paid just £238,000 on its UK revenues of £20.4 million. Though the scheme is technically not illegal, it was criticised as being deceptive and “immoral”.

Retail giants Ikea and Starbucks have also recently been accused of similar tax practices, with growing concern likely to spur some sort of public outcry.