Uber claims it is not avoiding Aussie tax as it is not profitable
An Australian Senate inquiry into the tax avoidance of multinational companies continued in Sydney yesterday, when Uber appeared before the Senate Economics Committee to discuss the funnelling of revenue offshore to the Netherlands. In his opening statement, Brad Kitschke, Uber director of public policy in Australia and New Zealand, said the company, which he still considers a start-up, is not avoiding tax and believes this has been misrepresented in the media. "We are unlike other, more mature US tech companies," he said. "First, and simply, we are not yet a profitable company, and as you are aware, companies are taxed on profit, not revenue."

The Netherlands is the natural place for Uber to bill its Australian customers, Airbnb only lives in Ireland because it's got the best skills pool, and Bermuda is beloved of Chevron merely because it has a good maritime safety record.

Those were some of the more amusing outcomes of yesterday's Australian Senate hearing into corporate tax avoidance, as app-hawkers Uber and Airbnb channeled Milo Minderbinder from Catch-22 with the argument that since everything they do is good for everybody, why fuss about the rules?

Uber told the inquiry its Australian business doesn't pay tax because it doesn't generate any revenue – drivers are allowed to keep 75 per cent of a ride's fee, the company said, and the other 25 per cent goes to the Netherlands.

Uber Australia merely employs support staff in Australia, paid for because head office happens to feel kindly towards the antipodes.

“Uber Australia doesn't generate revenue, the Dutch company generates revenue, the platform generates the revenue”.

The ride-share company also re-stated its complaint against Australia's Goods and Service Tax (GST - the local equivalent of sales tax or VAT), saying it shouldn't be assessed against a tax drafted in 1999 because it's a startup.

“We don’t think that it is appropriate that the tax office has essentially applied a 1999 law to what is a brand new business model that didn’t envisage this type of activity”, public policy director Brad Kitschke told the inquiry.

Its operations should not be taxed like a taxi service, Kitschke said, because Uber isn't a taxi company, it's a technology company.

Airbnb's appearance at the inquiry was much less convoluted: it simply declined to tell the Senate how much tax it paid in Australia, but promised that whatever profit it made here, it paid 37 per cent to the tax-collectors.

Anyhow, the company said, Australia shouldn't worry about whether it pays tax, because its business is growing the economy. As Milo Minderbinder would say, “everybody gets a share”.

Chevron, which told the inquiry that it registers 200 businesses in Bermuda because of that country's maritime safety record, is smarting the most from the hearings, as it was described as “Australia's biggest tax dodger” by opposition senator Sam Dastyari. ®