eBay tax affairs at last hit the spot light

HMRC eBayIt’s finally happened, eBay have joined the ranks of Amazon, Google and Starbucks as the amount of tax they pay (or don’t pay) is highlighted in the press. We’re not sure how they dodged the publicity on tax planning thus far, but it’s now all over the weekend papers.

Headlines such as “Guess how much tax eBay paid on £1.3 billion profits?” (erm, sales isn’t profits!), “Revealed: Online auction giant eBay pays just £620,000 of UK tax on £1.3billion of sales“, and “eBay paid just £620K tax on sales worth over £1.3 billion” suggest that eBay are avoiding multi-million pound tax bills.

The papers state that eBay reported sales of £164 million in 2013, profits of around £12.4 million and paid tax at treasury approved 5% tax rates of £620,000. They claim the rest of the £1.3 billion sales were funneled through overseas companies in countries such as Luxembourg.

I’m not going to get into the “are eBay paying enough tax argument”, the government sets the rates and it’s up to the government to change the rates if they think companies aren’t paying enough tax.

What does surprise me is the £1.3 billion of sales figure, that’s quite a number to rake in and suggests at 10% eBay fees and 3.5% PayPal fees that eBay annual sales in the UK are approaching £10 billion. Of course there’ll be advertising deals and profits from Shopping.com, Gumtree and a few other bits and bobs, but a vast amount of eBay’s sales will be from eBay and PayPal fees.

Bearing in mind that this year eBay revealed on their 15th birthday that three billion items, worth £65 billion had been sold on eBay UK, the acceleration in sales in recent years must have been massive if they’re approaching double billion pound figures per year. There must be some impressive growth hidden away in the numbers.

The only other surprise is how long it’s taken the papers to turn their focus from Amazon, Google and Starbucks and to take a look at eBay. The question has to be asked however, is it too late (barring the attraction of some lovely headlines full of tax avoiding accusations)?

The government is already looking at tax affairs of large multinationals and how to bring more of the revenues home. MOSS registration begins in just a couple of days time on the 1st of October which is likely to mean eBay will charge UK VAT rates from next year.

eBay’s statement on their tax affairs is short and succinct “eBay complies fully with all applicable tax laws and regimes including national, EU, and OECD rules”. In other words what we’ve been saying for a long time, if MPs don’t like the way current tax legislation works then it’s time to change it, not berate companies for acting within the letter of the law.