Uber Receives Tax Reprieve as Burden is Transferred to Car Owners

Uber Kenya has received a major tax reprieve following the move by Kenya Revenue Authority to exempt it from paying Value Added Tax and instead shift it to taxi owners.

In the last few weeks, the taxman had shown intentions to tax Uber and other e-taxi service providers in the country like the Little Ride from Safaricom. In a change of events, Kenya Revenue Authority now says that the e-taxi providers are IT firms that do not take part directly in the taxi business but only provide the software to help boost the taxi industry.

Uber – the biggest player in Kenya’s taxi market with more than 1,000 drivers and about 10,000 journeys a day – is seen as the biggest winner given the tech giant had passed the trouble of paying VAT to its registered drivers.

Uber now has more than 1000 taxi drivers and makes approximately 10,000 journeys in a day and it is now the only biggest online taxi service provider in Kenya. The drivers attached to Uber, however, are not employees of the firm but individuals who own cars but using it to get customers. This means that the move by KRA makes the car owners to be paying taxes and not Uber though critics have seen the move as controversial given that other service providers like Pewin and Kenatco are still paying taxes.

Early this year, Uber reduced its prices in journeys made within Nairobi in a move that was seen as targeting more customers as well as rivaling the other upcoming online apps like Little Ride. The move to reduce the fare within Nairobi led to the drivers allied to the company to stage a protest saying their daily income had been drastically reduced.

The taxi owners allied to Uber are yet to react to the news from the taxman concerning the move.

Read: KRA Demands That Uber Start Paying Tax