When Uber revealed this week it paid just over $403,000 in tax in Australia over a three-year period many small businesses were left scratching their heads.
The Silicon Valley technology giant with a market valuation of over US$60 billion responded to questions taken on notice at the Senate inquiry into corporate tax avoidance to disclose the amount of corporate tax it paid in Australia has only slightly increased from $19,387 in 2013, to $134,387 in 2014, and then $249,280 in 2015.
Individuals Are Not Rewarded
Alyce Tran started fashion business The Daily Edited three years ago and says her business pays more tax than Uber with corporate tax of “over $100,000 a year” plus GST and import taxes on turnover of around $5 million.
“I used to be a lawyer, I do things by the book but I have efficient tax structures in place,” she says. “We have paid more tax than Uber in our short life.”
Tran says it’s not just Uber but many big corporates which pay a low amount of tax.
“It goes to show that if you can structure things in crazy ways it can pay off for you as an entity,” she says. “I’m running the show while they probably have a team dedicated to this I suppose.”
Tran says what Uber pays is not necessarily unfair but appears to be the nature of capitalism and commerce.
“If I put myself in their shoes I’d probably do the same thing, to be honest,” she says.
Tran says when she first started her business while continuing to work full time any profit got swallowed up entirely in tax.
“Individuals who are hard working and putting it on the line are not rewarded for it,” she says.
Propping Up The Economy
Kiel Van Daal, managing director of design company Digilante, says last financial year his business had a corporate tax liability of $150,000 on $1.6 million revenue “and that’s not talking GST or income tax”.
Van Daal employs 20 staff and says as a growing business everything earned goes back into Digilante.
“The Apples of the world or other large corporates set up offices in tax havens like Ireland and funnel revenue through to pay a fraction of the tax,” he says. “Small business, which is the backbone of the Australian economy, is propping it up in tax.”
Digilante has now grown to the size it is soon going to be slugged by payroll tax as well.
“It doesn’t incentivise a small business to grow when you are constantly given these roadblocks that mean more money from our back pockets,” Van Daal says.
Unfair To Small Business
Peter Strong, chief executive of the Council of Small Business of Australia, says he estimates up to 30 per cent of SMEs are likely to pay more tax than Uber.
“To be fair, This is an international problem but it has to be confronted,” he says. “The taxation system is unfair to small businesses because the people from overseas get a leg up. The policy makers in Treasury are going to have to consider this differently than they are at the moment.”
Michelle Rowland, shadow small business minister, says Labor’s plan to address multinational tax loopholes is a vital reform to ensure large corporations are paying their fair share of tax.
“The fact that some hardworking small businesses in Australia are paying more tax than huge multinational companies is a disgrace,” she says. “While these large corporations pay little tax in Australia, hundreds of thousands of small businesses in Australia are left carrying the tax burden.”
Small Business Minister and Assistant Treasurer Kelly O’Dwyer declined to comment on the basis that the matter is before the courts.