Photo credits: Leon7 via Wikimedia Commons

Online marketplaces including Amazon and eBay are not acting on online tax fraud where third-party vendors using their platform don’t charge value-added tax, according to a report released October 18 by UK’s House of Commons Public Accounts Committee, reported Bloomberg.

Members of Parliament said that these online marketplaces “profit from people who are defrauding the British taxpayer.”

Amazon and eBay profit from these sellers -- who don’t charge UK’s prescribed 20 percent VAT on their goods -- in the form of commissions.

The parliamentary report said that Her Majesty’s Revenue and Customs, a government department tasked to collect taxes, likewise has failed on its part to go after these sellers, who were referred to in the said report as “fraudsters.”

Every year, the Treasury loses approximately 1.5 billion pounds ($2 billion), as estimated by HMRC, to online tax fraud.

Meg Hillier, the committee chairperson, stressed that online marketplaces made a commitment to remove “bad actors” in the online business community.

However, according to her, “that sentiment rings hollow when those same marketplaces continue to profit from the actions of rogue traders.”

She described the way HMRC and online marketplaces respond to online tax fraud as “dismal” despite how “hugely damaging” it is.

MPs recommended in their report that HMRC should meet online marketplaces by March 2018 to discuss online tax fraud and arrive at an agreement.

In addition, online marketplaces should require vendors who are not from countries in the European Union to present them with a valid VAT number.

As for HMRC, it should prosecute whoever will be found guilty of committing online VAT fraud, with the MPs even asking this tax agency to "name and shame" the fraudsters.