The government of Sindh has imposed a 5% tax on the online taxi services in the Sindh budget 2019-20. According to Sindh Revenue board (SBR) the new tax will be effective from 1st July 2019.
Under the financial budget 2019-20, the rent a car and online taxi services were brought under the tax net. The services provided by cab aggregators, also called ride hailing services including cab service, rent-a-car service or taxi service, using the online platform of the cab aggregators (Uber, Careem, etc.) have been declared a taxable service with a reduced Sindh sales tax (SST) rate of 5% on the total component – that of both the cab aggregators as well as the component of its cab drivers.
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According to the statement issued by SBR to clarify confusion regarding ongoing rumors of a 13% tax imposed, the rent-a-car services and vehicle renting services, which include the radio cab service such as the Metro cab, White cab and others, were already paying 10% SST on their services. Although the services of the cab aggregators competes with such rent-a-car services or radio cab services, the former remained outside the tax net on one pretext or the other causing discriminatory tax disadvantage to their competitors. The reduced tax rate of 5% levied on their taxi services based on an online market platform still provides a tax advantage to the service providers.