VAT tax decision outrages taxi drivers against the UBER’s of this world


(Posted 24th October 2016)

A recent decision by the Kenya Revenue Authority to spare the UBER’s of this world in Kenya from paying Value Added Tax on rides, has prompted outrage and anger among the company’s drivers, described by them as independent contractors responsible for their own tax affairs.
It has also angered regular cab companies operating in Kenya as they have to pay VAT on their services rendered while the UBER’s of this world have been able to hide behind their contention that they provide only an exchange platform between drivers and clients, something hard to believe given that they pay incentives to their so called contractors, issue UBER receipts and provide other services and oversight.
Other benefitting from this unexpected ruling, which may well be challenged in court, are Little Cabs, Mondo Ride, Taxify and others, no doubt leaving their bean counters rub their hands in joy while their drivers are left to hold the bag.
The best way to ensure full VAT compliance is to hold the company accountable. That is one entity to deal with and to audit, not hundreds or thousands of drivers who will now be harassed by the taxman. Enforcement against few is better and easier than against many, KRA seems to have forgotten about that principle. In any case I see dissent growing among drivers because the price wars among the principals have already eroded their earnings and now they have to pay VAT from that cash too‘ was the insight offered by a reader from Nairobi.
UBER has been rolling out services in Kenya and the Eastern African region but has faced stiff competition in Kenya while at the same time reporting a record loss on a global basis for the last financial year.