Sindh tax on online taxi service creates anomaly

Sindh tax on online taxi service creates anomaly

KARACHI: The levy on online taxi services introduced by Sindh government has created an anomaly as those taxi services not connected to ‘cab aggregator’ will remain outside the ambit of this tax, tax experts said.

The Sindh Finance Bill 2019 has proposed to tax services of the “Cab Aggregator” including the services provided or rendered by the owners or drivers of the motor vehicle using the cab aggregator services.

The rate of tax is 13 per cent on total consideration for providing or rendering such services from July 1, 2019 onwards.

The bill also defines “cab aggregator” to mean a person who is an aggregator or operator or intermediary or online marketplace who canvasses or solicits or facilitates passengers for travel by motor vehicles like tax, cab, car, van, motor cycle and rickshaw, and who connects the passenger or the intending passenger to a driver of any of the aforesaid motor vehicles through telephone cellular phone, internet, web-based services or GPS or GPRS-based services, electronic or digital means, whether or not he charges or collect any fee, fare, commission, brokerage or other charges or consideration for providing or rendering such services.

“The aforesaid insertion in taxable services has created an anomaly whereby motor vehicles, like taxi, cab, car, van, motor cycle and rickshaw not connected to a cab aggregator will remain outside the ambit of such tax,” said PwC A F Ferguson Chartered Accountants in a commentary on Sindh Budget 2019/2020.

They said that it appears that the aforesaid services will become uncompetitive compared to services of cabs, taxi, rickshaw etc. which are not connected to a cab aggregator.

“Due to complex nature of operations, special procedure rules for chargeability and collection of tax on such services is required to be introduced separately,” they added.

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