By Francois Chadwick, Vice President, Finance Tax & Accounting
The digital economy has driven incredible advances in technology and transportation, creating new opportunities for people and communities around the world. Understandably, governments are trying to adjust public policy to address the dynamic 21st-century economy, including proposed international tax regimes targeted specifically at “digital” companies. Many of these new policy efforts are well intended, however, the global trend toward uncoordinated, unilateral tax measures has created business uncertainty and has increased risks of double or even multiple taxation.
Given these developments, we believe now is a critical time for stakeholders to strengthen efforts to reach a global consensus regarding the taxation of the digitized economy. That’s why today, we are taking the discussion one step further and Uber is releasing a comprehensive proposal for international tax rules that addresses the challenges of the digital economy in a principle-based and administrable way.
Uber’s proposal is underpinned by robust economic analysis and adherent to existing rules wherever possible. Among the potential “Pillar I” solutions outlined in the Programme of Work, Uber’s solution most closely aligns to the Modified Residual Profit Split (MRPS) method. The company believes this approach, with the specific design features included, has the highest chance of achieving sufficient global support.
Building off the MRPS approach, our proposal seeks to satisfy concerns about the ability of digital businesses to sell remotely without physical presence in a jurisdiction, the capability of companies to concentrate residual profits in low-tax jurisdictions that are properly attributable to market intangibles, and the ability of entities to engage with users in a country while receiving payment from customers outside that country without discarding key elements of the existing system of profit allocation.
This proposal reflects the company’s ongoing participation at the Organization for Economic Cooperation and Development (OECD) and underscores our desire to lean in and work constructively with governments and the business community alike to adapt the current system for the realities of business in the 21st century. While the proposal we’re releasing today is intended to be a comprehensive solution, we understand this is the first step in a larger conversation with the international community. We look forward to engaging with governments and companies to advance the global dialogue towards a consensus solution that will be robust and sustainable for the coming decades.
You can read Uber’s proposal at Tax Notes, a weekly magazine focused on international taxation.