eBay paid £1.1m UK tax despite sales of £1.1bn

E-commerce company eBay paid £1.1m ($1.37m) in corporate tax in the UK on sales revenues of more than $1.4bn (£1.1bn), suggests its latest accounts. The company seems to have curb down its tax using a structure by channeling advertisement fees through an overseas company.

eBay's UK unit reported revenues of £185m in 2015 and tax of £1.1m. Its latest accounts show the group's UK subsidiary does not receive anything of the fees coming from the UK sellers. Instead it comes from "the provision of services to eBay International AG", which is eBay's parent company based in Bern.

Like other tech majors, eBay also routes revenue generated in various key markets including the UK, through a country where the tax rates are lower. In response to its tax filing eBay told the Guardian, "In all countries and at all times, eBay is fully compliant with national, EU and international tax rules."

Shadow chancellor John McDonnell said: "Yet again, it seems like another multinational company thinks it can play by different rules to the rest of us.

"The Tories have dragged their feet for years and voted against tough action to make it harder for firms to avoid UK tax. It's time they followed Labour's lead and started taking corporate tax avoidance seriously."

eBay in its annual report said some of its subsidiaries enjoy favourable tax rulings from authorities in Luxembourg and Switzerland.

"We benefit from tax rulings concluded in several different jurisdictions, most significantly Switzerland and Luxembourg. These rulings provide for significantly lower rates of taxation on certain classes of income and require various thresholds of investment and employment in those jurisdictions," eBay noted in its annual report.

Due to such tax arrangements the company could save tax of $319m in 2015 and $986m over last three years. For 2015 the company got an effective tax rates of 19% in three major markets such as US, UK and Germany.

In its annual report the company said the tax authorities have raised concern over some of its tax arrangements with the period between 2003-2012 remains under scrutiny. The tax audits are possible in markets including US, UK, Germany and Korea. The accounts also show revenues for 2015 £185m and down 2% at pretax profit down 9% at £8.1m. The tax charge was £1.07m for last year.

In the accounts filing at Companies House recently revealed Twitter's UK arm paid £1.24m in taxes in 2015, the same year when the company enjoyed a revenue growth of 30.5% to £76m.