Sales tax on ride hailing services to be 5 percent, clarifies SRB

KARACHI: Sindh Revenue Board (SRB) in a clarification has said that there would be a reduced Sindh sales tax rate of 5.0 percent over ride hailing services.

The News, on Sunday, quoting Sindh Financial Bill 2019 had reported 13 percent sales tax each on ride hailing service and the driver.

The SRB said, “In the Sindh Budget-2019, the services provided or rendered by CabAggregators (also known as “ride hailing services”) including the service of the cab drivers (also known as “cab services” or “rent-a-car services” or “taxi services”) using the online platform of the cab aggregators (Uber, Careem and the like) have been declared a taxable service

with a reduced rate of Sindh sales tax rate of 5 percent on the total component (ie the component of the cab aggregators and the component of its cab drivers, both).”

The rent-a-car services and vehicle renting services (including the radio cab service like metro cab, white cab etc) were already paying 10 percent Sindh sales tax on their services.

“Although the services of the cab aggregators and the cab drivers related thereto competes with such rent-a-car services or radio cab services, the former remained outside the tax net on one pretext or the other causing discriminatory tax disadvantage to their competitors,” it said.

It said the tax measure of levy of Sindh sales tax at the reduced rate of five percent on their taxi services based on online market platform still provided a tax advantage to the service providers. “There is no force in the argument that tax advantage be provided to the taxi services based on online market platform on the ground that it provides employment to general public,” the SRB added.

The goods and services of every manufacturer or producer or service provider envisage generation of employment but those too pay the taxes. Ride hailing services and the cab services based on their online market platform pay sales tax/service tax/VAT on the total price at the respective standard rates (which were higher than Sindh’s standard sales tax rate of 13 percent) in India, UK, EU countries, Australia and several other countries.