Uber facing UK tax row

Car service Uber is using a gap in EU and UK tax rules to avoid incurring sales tax on the booking fees it charges drivers in Britain, a practice a senior politician said was unfair to competitors and defied the intent of the law.

San Francisco-based Uber charges lower fares than rival ride hailing apps. In Britain, its competitors’ fares include 20% Vat on booking fees, but Uber’s fares do not.

Uber is able to avoid Vat by exploiting a loophole in how the tax is collected for business-to-business sales across EU borders, which arises because it treats its 40,000 UK drivers as separate businesses, each too small to register for Vat.