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EBay accused of sharp practice over tax affairs

08/10/14

The tax affairs of online auction site eBay are under scrutiny following the publication of its accounts.

Online auction site eBay is the latest high-profile name to find its tax affairs under scrutiny.

According to its latest trading figures, the organisation generated profits of approximately £12.4 million in 2013 in the UK, while sales came to £164 million.

However, its accounts in the US indicate that its UK sales came to £1.3 billion. This meant it would have been liable to pay £71 million in corporation tax, whereas it actually paid only £620,000.
It is understood this has been made possible because the company diverted its profits to its Luxembourg-registered subsidiary PayPal and eBay International in Switzerland,

Andy Silvester, campaign manager at the Taxpayers' Alliance, has therefore called for the tax system to be simplified, as this is the "easiest way to ensure that every company pays its fair share".

Speaking to AOL Money, he commented: "Politicians have spent years complaining about tax avoidance, but are less keen to do something about it."

Frances O'Grady, general secretary of the Trades Union Congress, added that many of the organisations that make huge profits in the UK are "effectively deciding how little tax they will pay".

She urged the government to tighten up the law in order to eradicate the numerous loopholes that enable major corporations and wealthy individuals to avoid tax.

In an interview with the Daily Mail, Ms O'Grady insisted that this would ensure they are no longer able to escape paying the millions of pounds that the Exchequer is owed.

This comes shortly after eBay confirmed that it is to separate from PayPal, so the latter can establish itself as its own brand.

According to the company, the move has been taken following a review of its growth strategies and structure.

Chief executive John Donahoe added that the spinning off of PayPal is also a reflection of changes in the industry landscape and the fact each business faces "different competitive opportunities and challenges".

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