The Sindh government has reduced the tax it is going to levy on online ride hailing services to 5%.
In its recently presented budget, the government had proposed a 13% tax on the service and 13% tax on drivers’ salaries. However, in a notification on Monday, the government announced that it had reduced this to 5%. This will be effective from July 1.
It denied that there would be a 26% increase in fares, as reported by The News. The service will be taxed 5% and the driver 5% separately but the consumers will only pay 5%, not 10%.
The tax was reduced after negotiations with ride hailing services like Uber and Careem. The government noted that other rent-a-car services were already paying 10% in tax, so this 5% tax will still give Uber and Careem a competitive edge.
Careem says it is trying to negotiate with the government to remove the 5% tax on its drivers’ earnings.