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The Sharing Economy Doesn’t Share the Wealth

April 6, 2016

bloomberg – excerpt

As Airbnb and Uber inch toward profits, tax authorities worry.

Every time Ian Haines rents out his spare room in the Australian port city of Albany, Airbnb takes a 13 percent cut. Haines, who’s semi-retired, uses the extra money to supplement his income running a local farmers market. He says he’s careful to pay taxes on the Airbnb money, because the San Francisco company may report the transactions to the Australian government.

For Airbnb, things are different. Because it manages its finances via units in Ireland and tax havens like Jersey in the Channel Islands, only a small part of its share of the revenue is ever likely to be taxed by Australia or the U.S. A review of Airbnb’s overseas regulatory filings shows it has a far more extensive web of subsidiaries than it has publicly acknowledged—more than 40 in all.

This is the challenge that Airbnb, like Uber and other companies in the so-called sharing economy, poses for the world’s treasuries. In the five years since these businesses began their spiraling growth, some cities and states around the globe have fought hard to make them play by the same rules as traditional hotels or taxis and collect various local taxes—often as not, they’ve lost. As the new breed of companies moves toward profitability, transforming larger chunks of the economy, policy experts say the battle is likely to shift to the national level, where billions of dollars a year in corporate taxes could be at risk. (A source close to Airbnb says the company will turn its first profit this year.) Governments have been slow to respond… (more)

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