The Uber Tax Puzzle

Uber has attracted controversy for numerous reasons, including its lack of regulation in Canada and the fact its drivers do not have sufficient auto insurance. One of the lesser discussed problems with Uber is its tax situation, where drivers for the UberX service do not need to have a tax number for GST.
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This has been highlighted in Quebec, where unregulated Uber drivers or the company are not subject to sales tax collection. Drivers are not bound by taxi laws as they are independent freelance contractors who connect with customers through the Uber mobile application.

Quebec Transport Minister Jacques Daoust said the company and drivers have a legal obligation to declare earnings, but if the company does not it should leave the province. The politician said “If they want to respect the laws, if they want to pay taxes then they are most welcome.”

The problem is more nuanced as most UberX drivers work for the company less than 20 hours per week, which means they do not qualify to be obligated to annually register their taxes. This point was reiterated by the company this month, with Uber stating that drivers earning less than $30,000 per year (75 per cent of the UberX workforce) and are exempt from tax.

Uber has long been criticized for shielding its exact earnings and using tax havens to store its money, which in terms of the company’s international divisions means money goes to the Netherlands. This is not uncommon amongst technology companies and Uber insists it pays “all necessary” taxes within Canada.

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