The taxi-hailing service Uber has been ordered by the Kenya Revenue Authority (KRA) to pay value added tax. This is after it was disclosed that despite the much profits generated by Uber, there is no VAT being paid by the online taxi hailing company.
According to KRA, the VAT Act 2013 provides for charging of tax at the standard rate of 16 percent where transportation of passengers by any means of conveyance is hired or chartered. This was stated in a letter to Corporate Cabs Association dated January 14, 2016, Maurice Oray, a senior assistant commissioner at KRA.
The letter further stated that the VAT Act 2013 provides for charging of tax at the standard rate of 16 per cent where transportation of passengers by any means of conveyance is hired or chartered. Uber will not only be the only one to abide by the VAT act, but all other operators in the e-taxi market where Uber is one of them.
Uber, Little Cab, Mondo and other suppliers of taxi services are liable to be registered if their turnover is Sh5 million in any period of 12 months. KRA’s demand that Uber must pay VAT comes as a fresh regulatory headwind for the American firm, which is battling tax and employee rights challenges across the globe.
In July, Uber lowered its prices by 35 percent in Nairobi calling it ‘the next disruption’ after launching its services in Kenya. Uber started operating in Nairobi, the Kenyan capital, in February last year, and has partnered with more than 1,000 drivers across the country. Just recently, Thika become the third town after Nairobi and Mombasa to join a growing list of smart transportation hubs in the country.