Careem and Uber both have failed to escape consequences of tax evasion despite using any possible tactic they could have utilized.
The irony is that PITB (Punjab Information Technology Board) played a key role in bringing the taxi services powered by mobile apps in Punjab. The board has tremendous exposure in the sense that it has to interact with all the departments of Punjab regarding any digital development and initiating the technology related programs. Didn’t PITB know the tax laws and company registration laws for foreign businesses in Pakistan, although it is working with telecom sector which from in foreign countries?
PITB signs an MoU with Uber to create opportunities for local entrepreneurs… pic.twitter.com/bAaUtXxtPG
— Umar Saif (@umarsaif) April 20, 2016
All the hue and cry started on social media when the news of the ban on Uber and Careem followed by the sheer unwillingness of both the companies, to pay taxes went public. But the issue is not very new both cab services were in a constant tax war with Punjab Revenue Authority since their launch.
Mobile app oriented cab services tried to opt the options to trick the government and keep their earnings safe from them. The US-based company Uber tried not to challenge the Act that brings such service into the tax net; rather it made another excuse based on the foreign nationality of its directors.
In response to intimation notice form PRA (Punjab Revenue Authority) that asked the Uber to comply with relevant tax regulations or pay the penalty for not meeting with them, Uber only presented the excuse that company’s registration is pending as NTN number of outside directors is required which would take some time. We wonder, in this digital age, a technology-oriented company which provides services to multiple countries is not able to furnish the documents of its directors.
As far as the case of Careem is considered, the company has till now not admitted the Act to be relevant; it continues to insist upon its status of a service provider that is not liable to pay tax as it doesn’t own the vehicles as property. So, the company took a stay order from Lahore High Court to continue its taxless companies.
Going to any extent for dodging taxes is very common for the corporates, but at the same times, corporate-friendly governments are also not out of fashion in this capitalist society. Perhaps, the government has not seen any friendly attitude from the Uber and Careem that’s why it is behaving with them in such a cold manner.
Although, there is an assurance from the institutes like PITB that services would continue to work, still, both have to confront the grim reality of tax, that is also going to burden consumers too. When Uber and Careem would pay tax, the burden would ultimately shift to consumers, that would reduce the popularity of both these cab services run by apps.
History of Uber’s Clash and Controversies
Uber expanded from San Francisco to more than 60 countries around the globe, only within five years, due to an exceptional growth model that is careful enough to save the money by evading corporate tax through apparently legal tactics, like creating friendly companies in the countries that are very lenient on corporate tax. In the Past, the Uber has remained infamous for using manipulative tactics to grab the market share. Even, the reputation of its drivers was not good as they were involved in cases like abductions or victimizing the passengers.
Although in Pakistan, no such case has been reported related to security of passengers but still the way both the companies are operating are illegal, as the services would continue to expand, passngers would likely to face certain complaints, if services didn’t abide by the rules and regulations.