US tech giants Netflix and eBay paid just £1.9m in tax between them in the UK last year, reigniting concerns about how the tech companies are able to reduce their domestic tax bill.
Despite both boasting millions of UK customers, eBay paid just £1.6m in tax on £7.6m in profits in 2016, according to accounts filed to Companies House. Meanwhile, video streaming giant Netflix almost halved its UK tax bill to below €300,000 on around €1m in profits.
The total income from eBay’s UK customers is also believed to be significantly more than its £200m in revenues reported to UK authorities.
eBay UK’s business describes its revenues as coming from marketing and advertising services to a Swiss parent company. But the online auction site previously told US authorities it registered $1.3bn of revenues in the UK, according to the Financial Times.
California-based Netflix reported just €22m in revenues in the UK, with income from British subscribers going to its Dutch arm. According to one estimate from analysts Ampere Analysis, Netflix actually made around $520m in subscription revenue in the UK.
eBay told the Financial Times it was fully compliant with UK and international tax rules. Netflix said its effective tax rate in the UK was 27 per cent, while it also remitted millions of pounds in VAT.
The low return for British tax authorities raises further questions about the corporate structures of international tech giants. “This is the same debate we have with Facebook, Google, Airbnb and Uber,” said tax lawyer Jolyon Maugham. Earlier this month, Facebook reported just £5.1m in tax on a UK profit of £58.4m.
The European Union has also sought to claw back taxes from US tech giants, ordering Amazon to pay back £220m in taxes to Luxembourg and taking Ireland to court after it failed to recoup €13bn in back taxes from Apple.