The Punjab government is working on to improve the regulation of ride-hailing apps like Uber and Careem. For this purpose, the government is looking over several initiatives to bring these apps into tax boundaries.
According to the proposal, cars operating under Uber and Careem would be registered as commercial vehicles. This rule would be applicable during the time period when the owners of the car are online on the app.
Punjab Information Technology Board Chairman, Dr. Umar Saif initiated this long delayed task as per the companies’ unique business model and proposed problems.
According to sources, Umar Saif stated:
“The biggest concern of these companies is declaration of their fleet of vehicles as commercial vehicles since they do not own any of them”
Uber and Careem’s business model
Uber and Careem’s core functionality is to connect people with private car owners who are eager to provide cab services. They both work on the basis of innovation and information technology model to help people search for private rides. Apparently, it doesn’t make them the owner of any of the cars that work as their taskforce. Beside high taxes, there are various reasons to why private car owners deny registering their vehicles as commercial.
Umar Saif added that a proposal has been presented to re-register such cars as private vehicle before they are sold. He said:
“Declaring private vehicles as commercial is the major irritant for the companies since resale value of commercial vehicles drops considerably. An entire clause in provincial motor vehicle ordinance has to be added for such cases and transport authorities are working on this idea”
Saif also presented a unique tax collection model. It proposes that vehicles turned on to the app would be applicable to commercial tax. Punjab Revenue Authority will automate revenue collection with sales tax which would be forwarded to Federal Board of Revenue (FBR).
Legal ban in regard
This year in January, Punjab Transport Authority issued a notice regarding such online transport apps. It stated that all ride-hailing apps that offer transport service without commercial licensing would be considered illegal. Moreover, they were violating the local laws and safety regulations by operating cars without providing fitness certificates and routine permits.
The company’s officials collaborated with the provincial government to develop a legal framework which was to be implemented within 15 days. The ban was removed on the basis of this framework.
Dr. Umar Saif said that the companies are looking forward to apply the proposed plan. He also added that they haven’t yet developed a legal framework for the purpose.