eBay pays £1m corporation tax to the UK despite reporting a $1bn revenue for 2016

[Master Disaster]

Yet again these giant corporations get away with paying zero tax while the little guys pay 20% or more, it's disgusting.

 

Yep, eBay USA reported the UK arm of its business had total revenue of $1.3bn (£1bn) for the year of 2016 and today it's come to light that they paid £1.6m corporation tax for the same period.

Quote

The UK arm of eBay paid only £1.6m in corporation tax last year, even though its US parent had total revenues from its UK operations of $1.32bn (£1bn).

 

Ebay's UK accounts record only £200m in revenues, which came entirely from a Swiss parent firm, seemingly for acting as its advertising agency.

 

The company declined to explain how its UK revenues were not booked though its UK business.

A spokesman for eBay said their tax affairs in the UK were legal, because of course they are

Quote

"In all countries and at all times, eBay is fully compliant with national, EU and international tax rules including those of the OECD, including the remittance of VAT to the appropriate authorities," he said.

The figure was based on eBays reported pre tax profit of £7.7m

Quote

The pre-tax profit eBay UK made on its revenues in 2016 was £7.7m, according to the accounts, and it was on this figure that the UK corporation tax was levied.

 

Ebay is a huge international business that makes money mainly from advertisers and the commission on sales made through its auction site.

 

The total revenues of $1.32bn that the parent US business generated from the UK included those from subsidiaries such as the Stubhub ticket exchange and Gumtree classifieds site.

 

Within the group, the UK arm of eBay is wholly owned by eBay International, which is based in Switzerland and is itself owned by eBay in the US.

 

The firm's UK accounts describe the role of eBay UK as providing "services to eBay International by recommending market penetration and advertising strategies for the UK internal marketplace and related third party advertising sales in the UK, Germany, Italy, Belgium and Australia".

This comes after Apple, Amazon and some other big names were all under fire for avoiding tax in the UK

Quote

The seeming ability of the company to shelter most its UK profits from the UK tax authorities raises again the ability of big international companies to route their revenues to the countries with the most favourable tax regimes.

 

This has led in the past few years to intense scrutiny of the tax practices of big firms such as Apple, Amazon, Google and Starbucks.

 

Ebay in the US, whose international revenues hit $9bn last year, acknowledged that its tax affairs were under scrutiny in several countries, which may leave it with more tax to pay.

 

"The material jurisdictions where we are subject to potential examination by tax authorities for tax years after 2002 include, among others, the US (Federal and California), Germany, Korea, Israel, Switzerland, United Kingdom and Canada," its US accounts said.

http://www.bbc.co.uk/news/business-41582844

 

I'd wager that LMG paid more than £1m in tax for 2016 (after conversion) yet a company that reported a $9bn profit and a $1bn onshore profit gets away with paying £1m, the current system stinks.

[PlayStation 2]

Tax loopholes. Learn 'em, exploit the fuck out of 'em.

[vanished]

3 minutes ago, Dan Castellaneta said:

Tax loopholes. Learn 'em, exploit the fuck out of 'em.

That's pretty much what it comes down to.  If this was illegal you can bet they would have been dealt with long ago.  It's not that these companies are evil, they're just doing everything they can to pay as little as possible, and that's just good business.  No one would choose to pay more tax than they have to.  If you want this to change, the tax laws need to change.

[Tiwaz]

there just should a unviersal tax for everbody

[79wjd]

2 minutes ago, Ryan_Vickers said:

No one would choose to pay more tax than they have to.

Not just that, most people pay tax attorneys or buy software to save them as much money as possible. 

[Master Disaster]

Just now, Ryan_Vickers said:

That's pretty much what it comes down to.  If this was illegal you can bet they would have been dealt with long ago.  It's not that these companies are evil, they're just doing everything they can to pay as little as possible, and that's just good business.  No one would choose to pay more tax than they have to.  If you want this to change, the tax laws need to change.

Well apparently the UK government is very light on enforcing tax rules to big business, it's even been rumoured that they've put specific deals in place with some businesses to get better deals on tax for doing other things like moving HQs to the UK etc.

[shermantanker]

if what they are doing is legal I have no problems with them doing it. They have a responsibility to their share holders to pay the least amount of taxes legally possible, and not a single penny more. It is the UK who is at fault for allowing such loopholes to exist in the first place, and if they want Ebay, Apple, Google, ect to pay more it's up to them to fix it.

[WMGroomAK]

Gonna have to agree that this is the way of business...  You don't stay in business long by paying more than you have to.  Unfortunately, to change this requires electing politicians that will be accountable to reverse tax loopholes and anger corporate lobbyists which runs it's own risk. As soon as corporations end up paying more taxes in one area, they are more likely to move their headquarters to a more tax-friendly environment.

[vanished]

Just now, Master Disaster said:

Well apparently the UK government is very light on enforcing tax rules to big business, it's even been rumoured that they've put specific deals in place with some businesses to get better deals on tax for doing other things like moving HQs to the UK etc.

If the UK is going out of their way to make exceptions for these companies, then again, if you want these companies to pay more tax, it's the government you should be complaining to, not the companies.

[79wjd]

Just now, Master Disaster said:

Well apparently the UK government is very light on enforcing tax rules to big business, it's even been rumoured that they've put specific deals in place with some businesses to get better deals on tax for doing other things like moving HQs to the UK etc.

That's not inherently a bad thing.....You want to encourage companies to exist in your country as that will lead to jobs for the people. 

[shermantanker]

3 minutes ago, Master Disaster said:

Well apparently the UK government is very light on enforcing tax rules to big business, it's even been rumoured that they've put specific deals in place with some businesses to get better deals on tax for doing other things like moving HQs to the UK etc.

Pretty much everyone does that. I mean look how much states were bending over backwards for the new Tesla battery factory.

[Master Disaster]

Just now, shermantanker said:

if what they are doing is legal I have no problems with them doing it. They have a responsibility to their share holders to pay the least amount of taxes legally possible, and not a single penny more. It is the UK who is at fault for allowing such loopholes to exist in the first place, and if they want Ebay, Apple, Google, ect to pay more it's up to them to fix it.

100% agree with this. They charged my mum hundreds of pounds because she got her tax wrong once and yet these multi billion dollar businesses get away with paying nothing. It makes me so angry.

[Trixanity]

It may be legal and people may claim they should pursue maximum profit but what happened to corporate social responsibility? You exploit the community you do business in if you pay 0.1% in taxes where the company tax is 20% (or more). They're still making more than enough money if they acted responsibly. It's ridiculous when a multibillion company pays less in taxes than small local businesses.

[vanished]

2 minutes ago, Trixanity said:

It may be legal and people may claim they should pursue maximum profit but what happened to corporate social responsibility? You exploit the community you do business in if you pay 0.1% in taxes where the company tax is 20% (or more). They're still making more than enough money if they acted responsibly. It's ridiculous when a multibillion company pays less in taxes than small local businesses.

Again though, that's the lawmakers' fault.  You wouldn't expect companies to voluntarily pay more.  If you want them to pay more, which I agree they should, then the tax laws need to change.  Don't get mad at the companies for just doing what makes business sense, complain to the government for letting it happen, or even encouraging it which is what actually happened by the sounds of it.

[chilicheeseburger]

As long as these loopholes exist, companies would be stupid not exploit them. After all they're run for profit and less taxes = more profit.

 

And of course, the bigger the company, the larger the legal department they have will be and thus more knowledge on how to make use of these loopholes.

[Trixanity]

35 minutes ago, Ryan_Vickers said:

Again though, that's the lawmakers' fault.  You wouldn't expect companies to voluntarily pay more.  If you want them to pay more, which I agree they should, then the tax laws need to change.  Don't get mad at the companies for just doing what makes business sense, complain to the government for letting it happen, or even encouraging it which is what actually happened by the sounds of it.

You're looking at it the wrong way (or the corporate way if you will). 

It's not that they're voluntarily paying more; they're actively looking for ways to pay less - a lot less. Private citizens would be jailed for doing the same. Small businesses would be wrung for every cent they owed and more.

[vanished]

12 minutes ago, Trixanity said:

You're looking at it the wrong way (or the corporate way if you will). 

It's not that they're voluntarily paying more; they're actively looking for ways to pay less - a lot less. Private citizens would be jailed for doing the same. Small businesses would be wrung for every cent they owed and more.

Private citizens are certainly not jailed for actively looking for ways to pay less... in fact it's quite common.  These tax breaks exist for your benefit, if you're not taking advantage of them that's just foolish, and it's the same for these companies.  Remember, they're not actually doing illegal tax evasion...

[79wjd]

15 minutes ago, Trixanity said:

You're looking at it the wrong way (or the corporate way if you will). 

It's not that they're voluntarily paying more; they're actively looking for ways to pay less - a lot less. Private citizens would be jailed for doing the same. Small businesses would be wrung for every cent they owed and more.

No. its perfectly legal for citizens to look for and use tax loopholes. Thats more half the job of any tax attorneys and tax software.

[Trixanity]

46 minutes ago, Ryan_Vickers said:

Private citizens are certainly not jailed for actively looking for ways to pay less... in fact it's quite common.  These tax breaks exist for your benefit, if you're not taking advantage of them that's just foolish, and it's the same for these companies.  Remember, they're not actually doing illegal tax evasion...

 

45 minutes ago, djdwosk97 said:

No. its perfectly legal for citizens to look for and use tax loopholes. Thats more half the job of any tax attorneys and tax software.

Yes there are loopholes but a lot of these things are grey areas. Often private citizens and small businesses can be bullied by the government to fold and pay up or face legal ramifications. Other times they don't have the resources to fight the battle.

Oh and let's not pretend ordinary citizens pay 0.1% in taxes.

In any case, I'm familiar with cases of people doing legal things who have had property seized, been fined and/or, if my memory serves, been jailed for exploiting loopholes. A lot of these cases just need to be settled in court to determine if the loopholes were used legally or not. It often comes down to what and how. Lots of technicalities.

 

On the other hand, corporations can stretch legal battles out over many years and still come out on top.

 

The best lawyers and accountants work for corporations after all.

Obviously they mostly avoid courts through lobbying and/or through accumulation of goodwill. They have many tools at their disposal.

 

They're working on closing down loopholes though and with good reason: having 20000 companies sharing the same small office building in Luxembourg doesn't exactly sound realistic does it?

[vanished]

1 minute ago, Trixanity said:

[...]

They're working on closing down loopholes though and with good reason: having 20000 companies sharing the same small office building in Luxembourg doesn't exactly sound realistic does it?

yeah something is definitely up with that

[mr moose]

2 hours ago, Trixanity said:

It may be legal and people may claim they should pursue maximum profit but what happened to corporate social responsibility? You exploit the community you do business in if you pay 0.1% in taxes where the company tax is 20% (or more). They're still making more than enough money if they acted responsibly. It's ridiculous when a multibillion company pays less in taxes than small local businesses.

 

corporate social responsibility never existed beyond a handful of altruistic CEO's and good PR.   When it comes to laws, tax and making money corporate practices have been the same since the dawn of time, it is what is responsible for everything we have today as much is it is for everything else. Look at the industrial revolution for classic examples.  But also, and more importantly, standards of living have only ever gotten better even with said corporate greed and job displacement.

 

EDIT: also your percentages are wrong, Ebay payed 1% on a years revenue so it would have been a higher percentage on actual profit and we don't know what conditions there were to obtain that percentage.

 

Besides, people seem to have missed the part where there is a difference between revenue and profit.  What was ebay's profit for that year? the revenue figure is irrelevant as you only pay tax on profit.   

 

As a general rule (because all countries are different), tax is a percentage of profit, many countries will forgo large chunks of tax in favor of local corporate investment (essentially a negotiated tax deduction).   Smaller companies do not pay more tax, they simply have less deductions and less revenue compared to profit. 

 

 

 

[ScratchCat]

Either the pretax profit figure is wrong or eBay needs to rethink their market strategy, 7.7 million of 1.3 billion is kind of terrible. The tax of 1.6 million would have been a sizable chunk of this ,21% in fact.

[vanished]

1 hour ago, ScratchCat said:

Either the pretax profit figure is wrong or eBay needs to rethink their market strategy, 7.7 million of 1.3 billion is kind of terrible. The tax of 1.6 million would have been a sizable chunk of this ,21% in fact.

omg I didn't even see that... if they're making £7.7M pre-tax on £1B in revenue that's beyond insane... that can't possibly be right.

[Mira Yurizaki]

To be fair, if you make under something like $35,000 in the US, you don't pay income tax either because the IRS refunds it. However you did give the IRS an interest free loan.

[mr moose]

1 hour ago, Ryan_Vickers said:

omg I didn't even see that... if they're making £7.7M pre-tax on £1B in revenue that's beyond insane... that can't possibly be right.

It might be that  total sales through their network has to be accounted for.  But accounting at corporate level is quite something and generally speaking given their success I highly doubt it points to a failure in their business model.

 

42 minutes ago, huilun02 said:

Afaik everyone's fine with it. Just look out the window its peaceful outside. 

 

Do you know something about UK tax law and corporate accounts that we don't?  Not everyone who doesn't understand the economics of it needs to be enraged by it.

 

Like in most cases when this sort of thing goes to press, too many people think they understand it enough to be right and right enough to be agitated by it.

 

21 minutes ago, Fooshi said:

Being fine with something =/= not throwing a shitfit about it.

 

I'm very much not fine with multi-billion dollar companies getting away with paying literally no tax, but since not many people know that they get away with this, since it's not illegal per se, hence "loophole", it's not really brought to attention. 

 

There's a lot of things people would be angry over if only they knew about it.

 

I don't even think it would be a loophole, just standard tax accounting practices.  If there is a problem with the system, there are several layers of government that can raise such concerns (after all they are the main beneficiary of tax revenue), not too mention the stock exchange which requires pretty hefty audits and account statements.