Amazon and eBay have been accused of profiting from a billion-pound tax fraud and 'turning a blind eye' to the problem.
Senior representatives of the companies were grilled by MPs at a meeting of the Public Accounts Committee (PAC).
HM Revenue and Customs (HMRC) estimates that taxpayers have lost £1.5 billion from overseas sellers illegally selling goods into the UK without paying VAT.
As a result, many small British businesses are struggling to survive as prices are undercut, MPs said.
Labour MP Caroline Flint repeatedly challenged Joe Billante, an eBay vice-president, and Steve Dishman, a vice-president at Amazon, to admit they were profiting from the activity.
Joe Billante, an eBay vice-president (left), and Steve Dishman, a vice-president at Amazon (right), were grilled by MPs at the hearing yesterday
MPs accused eBay and Amazon of failing to do enough to prevent abuse of the VAT system
She said: 'You are profiting from the evasion of tax by these overseas sellers. Is it not a fact that if you have overseas sellers using your marketplace, and you are taking money from them for every product sold on your online marketplace, whether intentionally or not, the system is creating you as profiteers from the evasion of tax?'
Speaking at the session last night, she added: 'We are talking about billions of pounds of VAT which is being lost to the HMRC and to the UK.
'It is putting out of business legitimate businesses that are playing by the rules.'
Mr Dishman replied: 'We want all the bad actors off our platform... We are focused on having a level