It is widely understood that Uber’s business model represents a direct attack on working conditions and workers’ rights. What is less well understood is how the Uber’s business model undermines global funding for public services.
Dutch shell companies are at the heart of Uber’s global operations. In 2019, Uber’s top Dutch shell company, controlling more than 50 other Dutch subsidiaries, pulled in over $5.8 billion (US dollars unless otherwise noted) in operating revenue from countries around the world, excluding the US and China. The direct transfer of revenue from around the world to the Netherlands leaves little, if any, taxable profits behind. With a series of global restructures in 2019, Uber created an $8 billion Dutch tax shelter that, if unchecked, may eliminate tax liability on profits shifted to the Netherlands for decades to come.
The $8 billion Dutch tax shelter was created in 2019 when Uber transferred its intellectual property rights from Bermuda to the Netherlands. The “sale” was financed with a $16 billion loan from an Uber subsidiary in Singapore. The Singapore subsidiary is the immediate parent company of the Dutch shell company that controls Uber’s global empire. Accrued interest on this loan will further reduce taxable income in the Netherlands by $1 billion a year for the next 20 years.
Revenue generated from Uber’s global ride-sharing and meal delivery services, excluding the US and China, accumulates in Dutch subsidiaries with limited financial reporting. These Dutch subsidiaries own the technology – or intellectual property rights – behind the Uber apps. In Uber’s business model, profits generated through the apps are earned in the Netherlands. This is either a direct transfer of revenue or under contractual arrangements with Uber entities in individual countries to collect and disburse payments.
Uber’s Dutch subsidiaries manage large global payments from consumers and remittance flows to Uber workers. These global financial flows allow Uber to exert significant controls over Uber workers and may earn significant additional revenues from interest, fees and other banking transactions. Uber’s business model is being challenged in many jurisdictions. However, it has largely been able to avoid being classified as a transport company, avoid acknowledging workers as employees and avoid regulation for banking operations.
Along with Uber’s undermining of worker rights, Uber’s global tax avoidance mainly through Dutch shell companies must be urgently addressed. Domestic and global rules must be changed, so that tax revenue from Uber – and other multinationals – begins to fund recovery from the global pandemic rather than continuing to undermine existing taxpaying businesses and driving workers further into poverty.
The CICTAR report on Uber’s global tax avoidance was submitted to an Australian Senate Inquiry on Job Security and can be obtained through this link.