# Various Taxmen come knocking on Uber's door



## Hugh G (Sep 22, 2016)

*The taxman comes knocking on Uber's door*

*By Vibhuti Sharma, Tanvi Mehta, Karina Dsouza and Arjun Panchadar*
June 5, 2019 - 10.15am
https://www.smh.com.au/business/com...-knocking-on-uber-s-door-20190605-p51uk6.html


Uber chief Dara Khosrowshahi.Credit:Michael Nagle

In its full quarterly report on Tuesday, *Uber said various state and foreign tax authorities were also looking into its taxes* and that it was currently unable to put a definite timeline or estimate on the overall adjustments that might result.

*The $US141 million amount related only to its transfer pricing positions, which refers to the common multinational practice of charging for services between wholly-owned businesses in different countries or jurisdictions to reduce the tax it pays.*

Earlier this year, the company had said in a regulatory filing that it expected unrecognised tax benefits related to the audit to be reduced within the next year by at least $US127 million.

Industry experts characterise transfer pricing as a relatively risky strategy, which typically is among multinationals' top tax concerns and has been used by authorities in the past to go after Apple and Amazon.

"Although the timing of the resolution and/or closure of the audits is highly uncertain, it is reasonably possible that the balance of gross unrecognised tax benefits could significantly change in the next 12 months," the company said.

The announcement came on a day when at least 11 of the brokerages, whose underwriting arms backed Uber's Wall Street debut last month, weighed in with "buy" recommendations on the company's shares as a statutory embargo lifted. Citi, however, initiated coverage with a "neutral" rating.

Uber shares gained 2.8 per cent in afternoon trading as the technology sector bounced back from a sell-off on Monday.

The company's stock has struggled since its market debut on May 10 and is trading below its IPO price of $US45.




In its first report since going public, Uber announced a $US1 billion quarterly loss and a jump in revenue to $US3.1 billion. The results reassured some investors but still leaves others wondering how long it will take to turn a profit.

Still, the shares have outperformed rival Lyft, which have fallen by a third in value since its own debut in March, and analysts from Deutsche Bank said Uber's stock remained the best internet IPO for investors since Facebook's launch in 2012.

"Uber should trade at a premium to LYFT given Uber's larger global scale and reach, cross product growth opportunity and larger ability for long-term leverage," said analysts at Morgan Stanley.

"It is still in the early innings in its core and emerging opportunities."

In its first quarterly report as a public company last week, Uber reported a $US1 billion loss as it spent heavily to build up its food delivery and freight businesses.

But many of the analysts covering the stock on Tuesday said they believed Uber had the scale and time to develop into another powerful US global tech player.

RBC analysts believe the market under-appreciates Uber's profit potential while analysts at Mizuho Securities expect the intense competition to rationalize over the next few years due to continued consolidation and listings of private peers.

"...Uber has ample room to gain operating leverage from economies of scale," analysts at Mizuho said.

*Bloomberg*


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