Tax: e-Hailing drivers accuse inDrive of double taxation, reject FG’s 7.5% VAT

e-Hailing drivers operating on the inDrive platform have accused the company of charging them twice for Value Added Tax (VAT). According to the drivers who shared their trip narration with Technext, on January 1, they discovered that the company included a 7.5 per cent VAT as part of the deductibles on a trip.

Then another 7.5 per cent VAT on their commission was deducted, a situation which amounted to double taxation. According to the drivers,

“Immediately we entered into the new year, on the first trip I took, I was wondering why I was paying so much as commission to inDrive. When I checked the narration, I discovered that they had included VAT of 7.5 per cent twice,” one driver said.

According to the new trip narration, a VAT of 7.5 per cent is now applied to every trip against the driver for providing transportation services. Then there is another 7.5 per cent that inDrive shows as VAT on service payment, and service payment is supposed to be their own commission, which they are taking from the drivers.

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According to the drivers, the service payment VAT is supposed to be for the service that inDrive is providing, since they are claiming that they are not a transport company. Thus, the service payment VAT is supposed to be paid by inDrive for the service for which they received their commission. However, the company has passed the charges to the drivers, a situation the drivers describe as unacceptable.

“Government is supposed to charge inDrive 7.5 per cent on the service they are providing for the drivers. So they are supposed to pay that money from the commission they received from the drivers. For instance, if inDrive is taking 9.99 per cent commission from the driver, if the government wants to levy VAT against inDrive, they are supposed to levy that VAT on the 9.99 per cent commission they receive from providing service from the driver, not now taking another 7.5 per cent on the cost of the fare,” the drivers explained.

Drivers

The drivers also accused the e-hailing company of raising its commission from 9,99 per cent to 12.5 per cent. This means its overall deductible per trip has now risen to 20 per cent, comprising a commission of 12.5 per cent and VAT of 7.5 per cent levied against the driver for the service provided.

AUATON rejects FG’s 7.5% VAT

In the same vein, the Amalgamated Union of app-based Transporters of Nigeria (AUATON) have rejected the 7.5 per cent VAT imposed on members, describing it as discriminatory and unjustifiable. In a statement sent to Technext, the union said the government appeared to have singled out e-hailing operators for VAT payment, as other transport workers are not required to pay the tax.

“We want to call on the federal government that levying a VAT against our members for providing online transportation service is unjustifiable and unfair because other transporters operating on the street, garage, and car parks are not levied with VAT for rendering the same service, which is exempted by the new tax administration,” the union’s statement reads.

AUATON

The union further said that the 7.5% VAT tax levied against e-hailing transportation services is adding an unnecessary burden to their earning, which invariably affects their purchasing power and standard of living.

“It is for this reason that the union and members reject any transportation service VAT that singles out e-hailing drivers. It’s important that the tax administrator engage the union and the app companies to have a clearer understanding of our sector, rather than engaging a section of the app companies to implement this burdensome scheme,” the union’s statement reads.

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