The ATO’s challenge tracking down tax from Uber

By Josh Taylor

Monday April 25, 2016

The Australian Tax Office’s battle against ride-sharing company Uber just to get a list of drivers working in Australia shows the challenges the agency faces in attempting to ensure multinational companies are paying their fair share of tax.

Last year, the ATO announced it would be using data-matching technology in order to track down the tens of thousands of Australians working as Uber drivers to ensure they were paying income tax and GST, after requiring drivers to collect GST from August last year. Uber is challenging that decision in the Federal Court, with a hearing date set for July.

Speaking before the Senate committee on corporate tax avoidance last week, ATO commissioner Chris Jordan said Uber currently billed from the Netherlands, making it difficult to track how much tax was being paid by the company and its drivers.

“They hold information over there that we find very difficult to get. Part of the issue here is, as a compliance measure, taxi drivers want to make sure Uber drivers are paying tax on their fees because they feel like that is unjust, and that would be wrong. So for us to get a list of the drivers would be a very useful thing to do. But sometimes some companies argue that that is held overseas, and their parent will not give it to them or it is all too difficult, so we have to go through other means. We have to go through the bank of that company here in Australia and work that way.”

Jordan said it was a lot more effort but the ATO had been working with the banks and going through payments made to drivers to identify who was working for the company.

“Some are just suppliers, but some are drivers. So we get there, but I think it is interesting when they come here and say, ‘we will comply with all legal obligations, we will comply with all tax laws’, but then find it convenient not to be able to provide a list of drivers.”

Mark Konza, the ATO’s deputy commissioner for international taxation, said the ATO was moving to make multinational companies hold more documentation within the countries in which that they operated:

“In the country-by-country report, for example, they are now required to get the master file that describes the global operations. In the past, if we asked for that sort of information, they would have looked at us blankly and said, ‘we don’t know anything about what happens offshore’. So that is a direction we are heading in.”

Uber argued in a previous hearing that it needed to manage its operations out of the Netherlands in order to be a global platform operating out of 64 countries. It insisted any change to tax treatment needs to be a global rather than a local response.

Jordan told the committee that, since July 2013, the ATO’s workforce has reduced by 18% — 4000 staff cut from the 22,000 total. Since the Panama Papers scandal, Jordan said there had been discussions around recruitment to deal with the issue of transfer pricing and other tax avoidance issues, but he said any initiatives would be for the government to announce in the budget:

“We are quietly recruiting … people who have decided they want to do some good for the country and come and work for us. We are building up our teams and we are marshalling resources. Obviously, when we look forward we say, ‘where are the big issues?’. We marshal people to work on the big things of the moment, and this is obviously one of those. So we are recruiting high-level people, experts, and we are training.”

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