Yahoo Finance PayPal to pay an extra $4m to UK tax authority
The UK subsidiary of e-payments giant PayPal (PYPL) has agreed to pay an extra €3.1m (£2.7m, $4m) in tax to Britain’s tax authority, Her Majesty’s Revenue and Customs (HMRC).
Tax at PayPal’s UK subsidiary rose to €4.7m, up from €181,749 in 2016. The extra tax payment was covered by a payment from an “affiliated entity,” said the report.
PayPal said in its newly-filed accounts:
“HMRC has been reviewing the company’s direct tax position. As a consequence, the company has agreed and settled its outstanding liabilities and as a result is not subject to any current enquiries.”
However, PayPal has not released a public statement about the tax increase and did not provide comment to Yahoo Finance UK.
Corporation tax is based on profits, not revenues. While the UK subsidiary doesn’t book income from UK transactions, it reports sales from services it provides to other group firms. The online payments service saw revenue surge by 8% to €36.8m in 2017 and profit after tax reached €3.1m, up from €1.1m.
Globally, PayPal reported revenues of $13bn and pre-tax income of $2.2bn in 2017 but doesn’t give a breakdown for the UK or Europe.
In response to the Paypal tax review, an HMRC spokesman said: “We do not comment on identifiable taxpayers. We make sure that large businesses, just like everyone else, pay all the taxes due under UK law and we don’t settle for less.”
The news comes after social media giant Facebook (FB) booked a surge in UK revenue and a rise in profits, prompting a rise in the tax it pays to Britain. For the year ending December 2017, UK profits increased to £62m, from £58.5m. Meanwhile, UK sales jumped to £1.26bn, from £842m.
This story was updated to reflect PayPal reports in euros.
