Apparently eBay’s dodging taxes too
EBAY is dodging taxes. Or so said the Sunday Times over the weekend. The company, instead of collecting money for stuff here in the UK collects it through it’s Luxembourg PayPal company. So all the taxes get collected over there, not over here.
This is being called, umm, tax dodging, or tax avoidance. It’s certainly not tax evasion as everyone knows it’s legal.
The sad thing about this story is that it’s just wrong. And as with so many tax stories that are just wrong it came in part from Richard Murphy of the Tax Justice Network. The reason that it’s wrong is ably explained by HMRC themselves:
Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works.
Most major economies operate corporation tax in the same way as the UK, so UK-resident companies are treated in a similar way in other countries. In other words, UK companies do not pay corporation tax to another country on the profits from sales in that country, unless they trade through a branch based there. Instead, they pay corporation tax in the UK
This isn’t tax avoidance. This is just the way the system is set up to, is supposed to, work.