Cab aggregators to pay 5pc Sales Tax with effect from July 1     

KARACHI: The Sindh government has imposed five percent sales tax, with effect from July 1, on the services rendered by Cab Aggregators, Sindh Revenue Board officials said here on Sunday.

Clarifying certain misgivings about tax imposed under Sindh Budget 2019 - 2020 on the services provided by Cab Aggregators or ride hailing services, under varied categories, as taxi services; cab services or rent-a-car services using online platform (Uber, Careem and the like) they said these have been declared as taxable services.

"This is but with a reduced rate of Sindh sales tax rate of five percent on the total component (i.e. the component of the cab aggregators and the component of its cab drivers, both) and not at the rate of 13 percent having any effect of 26 percent," said the SRB officials.

It was mentioned that the rent-a-car service and vehicle renting service (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 other causing discriminatory tax disadvantage to their competitors, they said.

The officials reminded that 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 provides a tax advantage to the service providers.

There was said to be 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 goods and services of every manufacturer or producer or service provider envisage generation of employment but those too pay the taxes.

According to SRB officials, the 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 are higher than the Sindh's standard sales tax rate of 13%) in India, U.K, EU countries, Australia and several other countries.