Sindh government imposes 5 percent Sales Tax on cab aggregators

Karachi, June 23, 2019 (PPI-OT): The Sindh government has imposed a reduced rate of Sindh Sales Tax of five percent on the services rendered by Cab Aggregators. It is not 13 percent as is being propagated. A statement issued by Sindh Revenue Board here on Sunday has give. Some clarifications so that nobody remain confused.

In the Sindh Budget-2019, the services provided or rendered by Cab Aggregators (also known as “ride hailing services”) including the service of the cab drivers (also known as “cab services” or “rent-a-car services” or “taxi services”) using the online platform of the cab aggregators (Uber, Careem and the like) have been declared a taxable service 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). There is no truth in the propaganda that the rate will be 13 percent having any effect of 26 percent.

It is pertinent 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. The 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 is 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 too those pay the taxes. It is pertinent that 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.

At the end, it is once again clarified for the information of all concerned that rate of Sindh sales tax is 5 percent and neither 13 percent nor 26 percent on ride hailing services (involving the service of the cab drivers) with effect 01st July, 2019.

For more information, contact:
Press Secretary,
Chief Minister House, Sindh
Tel: +92-21-99202019(Ext: 336)
Website: www.cmsindh.gov.pk