With Iran’s largest ride-hailing company, Snapp, signing a deal with Tehran Municipality, the long-drawn fracas between urban managers and online mobility service providers has come to a close.
After the Iranian government issued a guideline over regulating online mobility services, Snapp’s archrival, Tap30 signed a deal with TM in mid-October.
At the time, Snapp managers criticized the guideline for being lopsided and giving e-hailing companies the short end of the stick. Since then, talks had continued between the company and the government.
During the signing ceremony of the deal on Sunday, Snapp CEO Jhubin Alaghband said, “Sticking points in the negotiations were discussed in 18 meetings between Snapp, Vice Presidential Office for Science and Technology, Tehran Municipality’s Transportation and Traffic Organization and other stakeholders,” Peivast news website reported.
Following long-drawn talks between these startups, Iran’s ministries of ICT, industries and interior, plus urban entities, spearheaded by Tehran Municipality, introduced a guideline in late September. While taxing the startups, the guideline has left them some room to wiggle.
As per the text, the ride-hailing companies need to forge a deal with each city's municipality by paying a 2% tax on each ride’s fare. In return, they will be exempted from paying value-added tax and municipalities won’t tamper with the company’s pricing system.
Tap30 was the first major firm to sign a deal with Tehran Municipality. Milad Monshipour, the company’s CEO, called the deal a “win-win agreement and a breakthrough” that can be referred to as an example of “fruitful negotiations between the private sector and state agencies”.
The ride-hailing companies need to forge a deal with each city's municipality by paying a 2% tax on each ride’s fare. In return, they will be exempted from paying value-added tax
On the other hand, prominent figures in Iran’s startup ecosystem have cautioned that the deal has opened a Pandora's box that no one would be able to close. They speculate that soon other state agencies will attempt to claim a share of local startups’ revenues.
After the guideline was issued, Snapp demanded guarantees that it would be exempted from paying the 9% VAT.
Seemingly during recent talks, Snapp and the government have reached an agreement exempting the firm from paying VAT.
Alaghband said, “Since Snapp is a transportation company, it will be exempted from paying VAT.”
User Privacy
In addition to the 2% tax and VAT exemption, one of the sticking points in the negotiations was the extent of oversight state and urban authorities would have over the activities of online taxi firms.
Privacy advocates have always been alarmed that the authorities would demand unbridled access to the travel logs of users.
Monshipour says, “User privacy is a redline for us. Fortunately, the guideline safeguards users’ privacy.”
Just like Monshipour, Snapp’s CEO said that preserving the privacy of users and drivers tops the company’s priorities.
However, the guideline includes a clause demanding the companies hand over compact discs containing all “travel logs” to the Interior Ministry.
Negin Ansari, Tap30’s director for legal affairs, said, “The text explicitly defines ‘travel logs’ as each trip's duration, distance and fare, plus the vehicle’s number plate.”
Ansari further said that in view of the mobility firms’ social impact, they are highly regulated across the world. She believes that taxes and regulations imposed on the operations of online taxi firms are not likely to be extended to other startups.
A clause in the guideline requires municipalities to spend the money collected from online taxi firms on expanding urban transportation services and curbing air pollution.
