Uber’s local arm made a gross profit of $785 million connecting Australians to rides and restaurant meals in 2018, but most of it was wiped out by a service payment to its US parent, and it paid just $8.5 million in company tax.
Uber Australia Holdings, which combines four entities supplying the local ridesharing and UberEats meal delivery services, and the marketing supporting them, made an after-tax loss of $13.2 million, despite revenue from contracts with its driver and restaurant partners of $935 million.
A $691 million “service fees” charge, otherwise unexplained in the accounts, did most to reduce the company’s taxable income.
The loss revealed in accounts lodged with the corporate regulator on Wednesday are in step with losses its parent, Uber Technologies Inc, outlined in filings for a $12.8 billion initial public offering last week, which nevertheless was quickly oversubscribed.
Despite dominating the ride-hailing market in many countries, Uber Technologies lost $1.5 billion in the March quarter, and $2.5 billion in 2018, as it invested heavily to expand in logistics and other transportation businesses, including scooters, autonomous driving and mass transit.
Tax-reducing tactics under fire
However with no such research and development occurring in Australia, the company’s local tax bill is likely to face scrutiny alongside those of Facebook and Google’s local subsidiaries.
On Tuesday they both lodged 2018 financial reports where most receipts generated from Australians were funnelled offshore, with the tech giants explaining the tax-reducing behaviour as fair payment for services rendered by other subsidiaries.
However critics have pointed out that most of the money Australians paid for Google advertising in 2018 went straight to its subsidiary in Singapore, which levies 17 per cent corporate tax against Australia’s 30 per cent.
The accounts of Facebook and Uber did not reveal where the large service fees were paid. However Uber Australia Holdings’ immediate parent is based in the Netherlands, a country fighting to improve its past reputation as a tax haven.
Australian business booms
While Uber Technologies revealed a slight slowdown in revenue growth in its IPO filing – 19 per cent in the last quarter versus 22 per cent for the prior comparable quarter – its Australian arm boomed in 2018.
The $935 million in revenue from driver and restaurant commissions was up from $595 million in 2017.
However, a proportionally lower “service fee” saw 2017’s operating profit of $5.6 million eclipse 2018’s $2.5 million.
The 2018 after-tax loss of $13.2 million was also a worse result than 2017’s $2.1 million loss, incurred after a $4 million tax bill.
Uber Australia Holdings was approached for comment on its financial statement.
Uber Technologies made headlines in March when it announced its drivers would get cash bonuses under its path to IPO.
The Australian accounts don’t make any provisions for such payments, however they do reveal that it is Uber’s marketing expense line that takes the hit on discounted ride promotions, as well as for most refunds given to dissatisfied riders.
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