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eBay Responds to Report of Chinese Tax Evaders

eBay responded to a damning report suggesting its UK marketplace was a haven for Chinese tax-evading sellers. The Mirror published an opinion column that said “VAT evading Chinese firms are wiping out British business.”

The newspaper quoted an eBay seller who said Chinese sellers who weren’t VAT-registered were hurting his business because he couldn’t compete on price, since he was VAT registered.

The anonymous seller told the Mirror columnist, “I’ve been banging my head against a wall with eBay and sent my report to the VAT fraud office and nothing seems to get done. Meanwhile we are getting slaughtered.”

VAT stands for Value Added Tax – see how it’s different from a sales tax in this Wikipedia entry.

An eBay UK spokesperson told EcommerceBytes it was the company’s understanding that all of the Chinese sellers mentioned in the Daily Mirror column were issued with UK VAT registration numbers. “These VAT registrations were achieved as part of an outreach exercise eBay started in 2012 to educate overseas sellers on their UK tax obligations. This has resulted in 450 overseas merchants with UK inventory registering for UK VAT.”

She said all sellers should display their VAT registration number with their business information and said eBay would be following up with sellers that are not currently doing so.

Four years ago, the Mirror published a similar report, claiming at the time that eBay “turned a blind eye to apparent tax evasion right under their noses.”

Since then, eBay has placed a growing priority on increasing cross-border trade, and the company makes no secret of its desire to eliminate trade restrictions and faster customs clearance. The same day the Mirror published its column, eBay published a report titled “Commerce 3.0: Enabling Hong Kong Entrepreneurs.”

“eBay and PayPal have been playing a significant role in promoting retail exports from Hong Kong,” according to the report, which showed that eBay sellers based in Hong Kong reach an average of 57 international markets – one of the highest in the world among eBay sellers. Key export destinations for Hong Kong eBay commercial exporters were: United States; United Kingdom; Australia; Germany and Canada.

As for eBay UK’s stance on VAT, the spokesperson said, “We take the VAT and tax compliance of our sellers extremely seriously. All non-UK sellers with inventory located in the UK should be UK VAT registered, and we cooperate with HMRC in all cases to help them enforce the law where there is evidence of underpayment of taxes. Where we identify sellers that are not compliant, we take action to suspend their accounts. At the request of HMRC, we provide information on any sellers, UK or overseas, where there is evidence of underpayment of taxes.”

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.