Rental website Airbnb paid only £188,000 ($246,521) in UK tax last year, despite collecting £657m in rental income through property owners.
The company has two British and an Irish subsidiary, with the latter booking the commissions Airbnb receives by its UK listings. Airbnb Payments UK, one of the two British businesses, handles payments between landlords and guests for countries other than the US, India and China.
The company, which had 168,000 listings and catered for over 5.5 million people in Britain last year, recorded a pre-tax profit of £960,000 in 2016, when it paid £188,000 in tax, compared with £196,000 in the previous 12 months.
Airbnb UK, the company's other British subsidiary, made a pre-tax profit of £463,000 last year but it did not pay tax. The reason for this is that the business, which is responsible for marketing the website and the app to British users, gave shares, which are tax-deductible, back to its employees.
In a statement released on Sunday (8 October), Airbnb defended itself, arguing it followed the rules and paid the taxman what it owed.
"Our UK office provides marketing services and pays all applicable taxes, including VAT. The Airbnb model is unique and boosted the UK economy by £3.46bn last year alone. We follow the rules and pay all the tax we owe. The overwhelming amount of money generated by the Airbnb platform stays with local hosts and their communities, and is subject to local tax," the company said.
Airbnb has faced similar criticism in France, where French finance minister Bruno Le Maire questioned why the San Francisco-based company could be allowed to pay tens of thousands of euros in tax, despite reporting a turnover worth millions of euros.
The company, which remains privately held nine years since its inception, is worth approximately $24bn but has come under scrutiny in cities such as Berlin, Paris and Barcelona, where local politicians have taken steps to prevent landlords from renting properties to tourists rather than locals.
News of the Airbnb tax bill comes just a week after the European Commission slapped down what it described as a cosy tax arrangement between Luxembourg and Amazon, and ordered the online retailer to pay back €250m in taxes.
Meanwhile, the EC also confirmed that it planned to take Ireland to court over its failure to collect €13bn of back taxes from Apple. The Irish government claimed the deal was fair and it would not be collecting the taxes, while Apple described the demand as ludicrous.