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October 22, 2012updated 05 Nov 2021 11:28am

eBay, Ikea taxes under scrutiny in UK

Taxes paid by the British subsidiaries of US e-commerce site eBay and Swedish home improvement retailer Ikea have come under scrutiny following similar outrage over taxes paid by coffee chain major – Starbucks.

Taxes paid by the British subsidiaries of US e-commerce site eBay and Swedish home improvement retailer Ikea have come under scrutiny following similar outrage over taxes paid by coffee chain major – Starbucks.

A Sunday Times investigation revealed that eBay UK paid just £1m in corporation tax in spite of revenues amounting to almost £800m for the 2010 fiscal year.

According to the investigation the e-retailer legally routes its payments through the Luxembourg and Switzerland as royalties & service payments, thereby avoiding close to £50m in taxes per annum.

UK lawmakers and the public have expressed concern and anger over multinational companies avoiding paying their regular share of taxes – often exploiting loopholes in tax laws.

Liberal Democrat peer Lord Oakeshott made an appeal to the consumers to avoid purchasing from such retailers as a way to punish them for their tax avoidance.

“HMRC has got to be tougher on cracking down on this. What we need is total transparency on corporation tax actually paid each year by companies and detailed reasons why it is below the headline rate,” added Oakeshott.

Reacting to the reports a spokesman for eBay told The Sunday Times, “EBay Inc in Europe works with tax authorities and complies fully with all applicable tax laws and regimes — including national and internationally recognised rules.”

Ikea, on the other hand said the report, follows a similar mechanism to reduce its tax liability in half.