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Monday, 25 June 2018

Taxman going after Uber, Careem for retroactive VAT payments

EXCLUSIVE- This comes as the taxman looks to collect as much as EGP 6 bn from Uber and Careem in retroactive VAT payments for the last two years. Government sources tell us that tax officials should have a final figure within two weeks once they’re done reviewing paperwork filed by each company in the two years since the VAT came into effect. The Tax Authority had issued a directive last week that requires ride-hailing apps to begin charging VAT on the portion of revenue they take from each ride. While it left the tax treatment on the drivers’ share of the profit unchanged, the directive mandates ridesharing companies to pay a retroactive VAT of 13% on their own share of revenues from September 2016-June 2017 and 14% VAT on everything from July 2017 onwards.

Uber may be subject to different tax treatment, the sources said, explaining that unlike Careem, which is licensed as an Egyptian company, Uber operates in Egypt as a foreign entity subject to another country’s tax regime. Uber officials reportedly promised to deliver the documents once they coordinate with their parent company, while Careem officials should sit down with tax officials this week to hand over the paperwork, we’re told.

In other industry news: Car service companies are reportedly suing Uber for allegedly cutting their drivers. A number of car service companies are said to have filed lawsuits demanding financial compensation from the ride-hailing company after it terminated agreements that had incorporated their drivers in its fleet. Nabil Abdel Nour, the owner of Fourat and Nile Company for Limousine Services and Grand Limousine, alleges Uber let go of around 4,000 of his drivers. He claims that his work for Uber over the past 18 months was worth EGP 18 mn. 1st Car is also suing Uber for letting go of around 700 drivers. Uber, which had contracted car service companies when it launched in Egypt, appears to be shedding them as its fleet grows. The move comes as a provision of the recently passed Ride-hailing Apps Act forces the two to find a way to incorporate white cabs into their fleets.

White cab owners, meanwhile, plan to launch by early August a rival ride-hailing app dubbed Professional Taxi, White Taxi Association Head Mamdouh Abdel Hamid tells Al Mal. The would-be competitor’s strategy appears to be undercutting Uber and Careem by taking a commission on fares that would be as little as a fifth of what Uber takes today.

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