Uber shifted NZD $200m offshore, report claims tax loss

A new report has alleged that Uber shifted hundreds of millions of dollars in profits offshore, resulting in a loss of millions in tax revenue for New Zealand.

Report findings

The report, produced by the Centre for International Corporate Tax Accountability and Research (CICTAR) and commissioned by Workers First Union, assesses Uber's business practices and its approach to revenue and taxation both within New Zealand and globally. The report claims that Uber's practice of misclassifying employment relationships is a fundamental aspect of its business model and not restricted to how it treats New Zealand law.

"In 2023, Uber's NZ subsidiaries paid just $1.2 million in tax while transferring some $200.2 million in 'intercompany service fees' offshore, likely to an intellectual property holding company in Delaware," Edward Miller, a researcher at CICTAR, said.

"Recording these profits in Aotearoa would have delivered another $56 million in tax revenue and helped to fund the roads, infrastructure and public services that companies like Uber depend on to operate," Miller added.

Revenue classification

The report, titled "The Business of Misclassification", discusses Uber's method of categorising service fees—the fee drivers pay to use the platform—as its primary revenue source, rather than the fares paid by passengers.

"Uber believes it is a technology company rather than a transport company, and that drivers are its consumers, who pay a service fee to use the platform and be connected with end-users, with whom they contract directly. Not only does this misclassify the business transaction and the workforce, but it also has the effect of misclassifying firm revenue and taxable profit," Miller explained.

"Shifting profits to a jurisdiction like Delaware could enable Uber to deploy the billions in tax assets it has accumulated through its rapid expansion, delivering extraordinary benefits to shareholders," Miller continued.

Court decisions and implications

New Zealand's Court of Appeal in 2024 upheld a ruling from the Employment Court that determined Uber had misclassified a group of its drivers as independent contractors. This classification denied drivers access to minimum wage, sick leave, collective bargaining rights, and other employment entitlements. The report asserts that this form of misclassification is central to Uber's overall business model.

"The 2023 financial statements for Uber's NZ subsidiaries state combined firm revenue of $365 million, but this presumes that Uber is a technology company that simply delivers services to drivers. We estimate that the revenue generated by delivering transport services came to $867 million that year, which would have made it the 61st largest company in the country," said Miller.

He cautioned, "Taxing digital service providers is a huge challenge for regulators, but failure to do so will see a growing proportion of economic activity in New Zealand recorded as digital services provided by overseas companies."

Union response

Dennis Maga, Workers First General Secretary, said the findings in the report would be concerning for Uber union members and called for legal reforms to prevent multinational companies from exploiting loopholes to the detriment of New Zealanders and public infrastructure.

"The entire Uber model is built on deception. I don't think anyone really believes that Uber is just a tech company that connects passengers and drivers through an app. It's a transport company that makes millions in profit and simply does not pay its fair share of tax."

Maga criticised Minister Brooke van Velden's relationship with Uber, stating, "Minister Brooke van Velden must stop 'cosying up' to Uber and cease her push to enshrine Uber's 'dodgy' business practices in law."

He continued, "Instead of laying out the red carpet for Uber to write their own laws, the Minister should be protecting New Zealanders from exploitation and ensuring they contribute something back to our country, rather than just taking our money overseas."

Uber's final Supreme Court appeal regarding the employment classification of four drivers, previously determined by the lower courts, is due to be heard in July. Maga said, "The world is watching. Will we meet the challenge in front of us and ensure fairness in our tax system, or will we be another victim of a corporate steamroller that is crushing economic sovereignty around the world?"