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Taxman Watching Ride-Hailing Companies

Ride-hailing companies are coming under close scrutiny over driver welfare.Ride-hailing companies are coming under close scrutiny over driver welfare.

The outgoing Telecoms Minister Mahmoud Vaezi, has called for addressing the “unclear status” of taxing online businesses like the ride-hailing apps, Snapp and Tap30.

A key issue raised recently by several officials is that with more than 100,000 gig-economy jobs created by such companies, drivers and delivery bikers need to register as self-employed.

“Such businesses need better support and statutory regulations,” Vaezi was quoted as saying by Fars News Agency.

Ride-hailing companies have so far avoided showing how they employ drivers and motorbikes.

One source who spoke on the condition he not be named said that the popular applications are “making a loss” to offset any potential big tax bill sent by the taxman.

In addition, the contract between the driver and application is such that the drivers are not directly on the payroll but in essence self-employed.

The onus of tax payments should, then, in theory be on the drivers, rather than the ride-hailing app itself, which has to pay its own corporation tax.

The minister noted that establishing a new regulatory and tax framework is not simple since such gig economy businesses differ from traditional employer-employee structure.

“Therefore, a comprehensive study needs to be done before action is taken.”

 Insurance for Drivers

Vaezi also said that due to the ad-hoc nature of the said businesses, drivers mostly do not have standard employee insurance that coveres medical care and pension.

“The government is looking at different ways of easing things for ride-hailing drivers and one of the most important issues here is insurance,” he said.

 

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