The Income Tax Department has requested information from the Netherlands regarding Uber BV, the Dutch arm of Uber Technologies based in the United States, concerning the company’s financial dealings, as per sources familiar with the matter.
The department is specifically seeking details from Uber BV about its financial accounts for the fiscal years 2019-20 and 2020-21, along with information on transactions involving Uber India Systems Pvt Ltd (UISPL), which oversees the Uber cab-hailing app in India.
The ongoing investigation into UISPL has identified specific transactions between the two entities that warrant a thorough examination, according to one of the sources. Despite Uber BV’s assertion that Uber India is not a dependent entity, certain transactions contradict this claim and are now under scrutiny.
A dependent agency, in this context, acts on behalf of a foreign enterprise, and the income generated through the agency is subject to taxation in the country where the agency is located.
In 2013, the Uber group established UISPL in India to promote and market the Uber app in the country, providing associated support services.
“If it is proven that the foreign entity is earning income through businesses here, it’s liable to pay taxes,” explained the source.
According to filings with Dutch authorities, Uber BV reported losses of $4.80 billion in FY20 and $4.62 billion in FY19.
Earlier in the year, the Income Tax Department challenged an Income Tax Appellate Tribunal (ITAT) decision in the Bombay High Court, arguing that UISPL was obligated to deduct tax at source (TDS) for payments to drivers.
While the tax department had considered Uber India as the public face of Uber BV and treated it as an ‘assessee-in-default’ for non-compliance with TDS rules, the ITAT ruling contended that Uber India was not responsible for the payments, had not entered into contracts with driver-partners, and no work was performed by the driver-partners for Uber India.