Call it tax optimisation or tax avoidance, eBay Inc (NASDAQ:EBAY) is fully using its complex network of subsidiaries to exploit, or benefit if you would want to sound more diplomatic, the overseas accounting. Patrick Hill reported, on eBay Inc (NASDAQ:EBAY)’s latest such benefit of around £70 million as it manoeuvred its way around UK taxes, on Mirror.
The recent tax manipulation story of eBay Inc (NASDAQ:EBAY) has its grounds in the different sales figures reported by the US based parent company eBay Inc (NASDAQ:EBAY) and eBay (UK) Ltd for the fiscal year 2013.
According to Hill, eBay (UK) Ltd disclosed that its sales amounted to £164million, which resulted in a profit of £12.4 million. Moreover, owing to UK Treasury tax breaks the company only had to pay a 5% tax which amounted to an extremely manageable number of £620,000.
Now let s look at how much eBay Inc (NASDAQ:EBAY) actually made from its subsidiary in Britain. Hill pointed out that the parent company had already announced its sales figures before the announcement from the British subsidiary. This figure stood at £1.3billion, nearly nine times more than the figure from eBay (UK) Ltd.
Hill estimated that this would translate into an approximate profit of about £310 million and that would result in a corporate tax of £71 million. Compare this with the £620,000 that eBay (UK) Ltd actually paid the UK government. Hill argues that even if eBay (UK) Ltd were to pay a 23% tax on the sales figure quoted by them, they would have to pay £2.8 million in taxes.
Hill provides a brief overview of the company structure that lets eBay Inc (NASDAQ:EBAY) take advantage of the tax loopholes. The e-commerce company sends the revenues that it earns from UK sellers to Paypal (Europe) Sarl which is registered in Luxembourg. Furthermore, the UK subsidiary is also known to provide ‘services’ to Swiss firm eBay International AG, according to Hill.
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