EBay 'pays £1.2m in UK tax' on sales of £800m

The auction site says that it complies with UK tax laws

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.

The auction site - which also owns PayPal - responded that it "complies fully with all applicable tax laws".

The report comes after coffee giant Starbucks was also accused of paying just £8.6m in corporation tax in the UK over 14 years.

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.

Accounts for one of its units, eBay (UK) Ltd, show that for 2010 - the last year available - it owed tax of £766,000 on profits of £4.4m.

The auction site told the BBC: "eBay in Europe works with tax authorities and complies fully with all applicable tax laws and regimes - including national, EU, and internationally recognised OECD rules."

Other large international companies have also been accused of avoiding tax in the UK.

A four-month investigation by news agency Reuters earlier this week found that Starbucks generated £398m in UK sales last year but paid no corporation tax.

It said that Starbucks had made over £3bn in UK sales since 1998 but had paid less than 1% in corporation tax.

Facebook UK paid £238,000 in tax last year, according to its accounts. Its sales were £20.4m. Most of the company's income is believed to be legally going through its European base in Dublin, where corporation tax is lower than in the UK.

And a report in the Guardian in April said that online retailer Amazon had generated sales of more than £7.6bn in the UK over the past three years but had not paid any corporation tax on the profits from those sales.