Uber is able to use a gap in EU and UK tax rules enabling it to avoid incurring sales tax, on the booking fees it charges drivers in Britain, which a senior UK politician deems to be an unfair practice toward competitors, as well as defying the intent of the law.
In Britain, the San Francisco-based Uber already charges lower fares than its rival ride hailing apps; where its competitors’ fares include 20 percent tax (VAT) on booking fees, Uber’s fares do not.
Uber is taking advantage of a loophole, which focuses on how the tax is collected for business-to-business sales across EU borders. The company treats its 40,000 UK drivers as separate businesses, each too small to register for VAT.
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