Taxing Uber

Sharing economy has disrupted labor, competition law and
tax law. With the proliferation of various online sharing platforms, enabled by technological advances, classical work organizations that usually appeared in the form of medium or large companies, as an expression of economic vertical integration, now started to dissipate into a cloud of self-employed entrepreneurs gathered around one or several suppliers of labor—the platforms. These suppliers of labor claim to be simple intermediaries, putting into contact individuals seeking and offering services, often by using their own idle assets. Value is thus created through the interaction of many dispersed individuals, rather than by a single centralized entity. As will be explained in this chapter, there are currently not only labor law incentives, but also tax incentives, to structure businesses in the way Uber and other “gig” entrepreneurs have done. Countries, on the other hand, are facing a drop in tax collection of indirect taxes (VAT/GST), as well as direct taxes (withholding taxes or payroll taxes) caused by the increasing quantity of individuals taking part in this new form of economy.
Alongside these specific problems related to the new form of work organization used by Uber and other online sharing platforms there is the issue of tax avoidance schemes used by the platform itself.
Unlike the traditional intermediary businesses, Uber and other similar sharing platforms (such as AirBnB) which rely heavily on the use of an intellectual property
(IP), in this case the Uber application, can easily relocate their profits to low-tax
jurisdictions, leaving high-tax jurisdictions where their income is effectively being
earned, without their fair share of tax. These circumstances also create an increasingly unfairmarket competition between the “gig” entrepreneurs and the participants of the traditional “brick-and-mortar” economy which remain under the