They don't pay VAT (currently 20% in the UK - similar to sales tax in the US) by treating each one of their drivers as a separate business. In the UK your company has to make more than £85000 to be forced to charge VAT which is well below what each driver makes. Uber itself offers digital services though a Dutch subsidiary and I don't believe that company is liable to pay corporation tax in the UK. I personally think that this is a more unfair issue than not paying VAT.
Curiously the "GST" in Australia (which is a similar type of tax) has a similar thing, $75,000 AUD+ per year before you need to register.
Unless you're a taxi driver, when you need to register regardless. They carved that out.
The ato claims this is because[1]:
1) to avoid the confusion that would be created if some taxis had to charge GST and others did not
2) avoiding the added problem that would arise if a passenger was using a taxi for a business trip (creditable acquisition). In this instance, the passenger would want to be able to claim an input tax credit for the GST included in the fare
3) meter rates are set by each state authority and after 1 July 2000 all meters were adjusted to reflect the GST. If some drivers were registered and others were not, all would be collecting the higher rate. This would disadvantage drivers who had to be registered if the ordinary registration turnover threshold applied.
That link has absolutely nothing to do with them being US based or not.
This is the problem with having conversations about tax law: the vast majority of people have no idea what they're talking about. Worse: the vast majority of people think they know what they're talking about.
