Sunday, 21 October 2012

eBollocks

Since it has become trendy to display zero knowledge, even at a remedial level, of basic accounting and tax concepts and do a hatchet job of how little a multinational company supposedly pays in tax, now eBay is in the sights of some ignorant hack:
US auction site eBay has paid only £1.2m in tax in the UK, according to an investigation by the Sunday Times.
The newspaper said that its tax bill in 2010 comes despite eBay's UK subsidiaries generating sales of £800m.
Oh fuck, not this one again. A company's revenue has no bearing on corporation tax that it may or may not pay.
According to the Sunday Times, eBay had sales of £789m during 2010 in the UK at its four British subsidiaries. Using its worldwide profit margin of 23%, it would have made a profit in the UK of £181m, leading to corporation tax owed of £51m.
Instead, it paid £1.2m, the report said.
The 23% figure will be an average but it is meaningless in this context as the eBay subsidiaries in the UK don't trade with the public; they provide services to their Swiss parent company eBay International AG:

eBay (UK) Limited - "Recommends market penetration and advertising strategies for the UK internet market place to eBay International AG"

eBay KTA (UK) Limited - Holds 99.9% of the shares of Korean company Gmarket Inc. - it doesn't trade and is also loss-making.

Shopping.com UK Limited - "The principle activities of the company during the year were the provision of sales support and marketing services to Shopping ePinions International Limited." ePinions is an Irish company by the way.

eBay Promotions (UK) Limited - "The principle activity of the company in the year under review was that of online internet advertising and promotions." And once again, these services are provided to eBay International AG. The company is also in the process of liquidation.

So like Facebook, Google, and Amazon the actual company that trades with the UK is a foreign one, in this case Swiss by virtue of Switzerland being a member of the European Free Trade Association. Mystery solved - really, there is nothing illegal, dodgy, or even slightly suspect here.

Update on 8/12/12 - My mistake, it is eBay in Luxembourg that trades with the UK and can do so as part of the European Single Market.

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