2022 – Etsy only paid £128,000 in UK corporate tax in 2020 despite £160m in sales | technology sector

Online marketplace Etsy paid just £128,000 in UK corporate tax in 2020 despite generating $195.8m (£160m) in revenue across Ireland.

The Brooklyn-based company will get nearly $7 million in corporate income tax, according to research by the TaxWatch campaign group.

Instead, the vast majority of UK sales – the totals of which were revealed in the US stock exchange Etsy filing – are booked through an Irish company, where they receive a lower tax rate. This tactic is similar to that of a number of US technology companies, including Facebook, Google, Apple and Microsoft. Amazon books a large portion of its UK business through Luxembourg. There is nothing illegal in such structures, but they do raise ethical questions about where dividends and taxes are paid.

Etsy, which was listed on Nasdaq in 2015, is responsible for UK digital services tax, which TaxWatch says would have amounted to around £2.4m for 2020, but that is still far less than it calculates for business revenue tax. Due if all UK sales are recorded here and not booked in Ireland.

Since then, Etsy sales in 2021 are up 68% to $329 million, a level six times higher than in 2018. The group also bought UK second-hand fashion website Depop in June last year and added millions of additional sales. in that country. to his books.

“Despite Etsy’s ethical claims, it is in fact just another US tech company that uses the same tax structures as other US tech firms to shift profits from the UK to the tax haven in Ireland,” said George Turner of TaxWatch.

Turner said Etsy’s current tax bill in the UK could fall further because the tax on digital services could fall under a global tax treaty regulated by the Organization for Economic Co-operation and Development.

Etsy is unlikely to support a proposed OECD-backed minimum global tax rate for global companies with sales over $750 million, and under the plans, companies using tax havens will face an additional tax burden. Under current plans, companies with sales of just over $20 billion – compared to Etsy’s $2-3 billion in sales – will have to pay extra taxes in the countries where they make their money.

Etsy declined to comment on the details of how TaxWatch calculates its tax liability in the UK, but the company is understood to have paid digital services tax in the country in 2020 and 2021.

Subscribe to the daily Business Today mail or follow Guardian Business on Twitter at BusinessDesk

An Etsy spokesperson said the company did just that paid or owed for all known and material tax liabilities in accordance with applicable cross-border tax laws. Cross-border corporate tax law is quite complex, and Etsy is committed to paying its fair share.

“Ireland is the location of our international headquarters, where we employ dozens of people who support our international community in many critical business functions such as software, product and payment engineers, technical project managers and member relations.”

Etsy said it supports the OECD’s attempt to create a “more equitable and simpler model” for cross-border taxation, adding, “We support a global consensus on how to tax the digital economy, even as our tax burden increases.”

Leave a Reply

Your email address will not be published. Required fields are marked *

*