KARACHI: The Sindh government has hinted at reducing the rate of tax on online app-based cab services like Careem and Uber as well as drivers in the province considering that such companies generate employment opportunities in the country. “There are chances of a (downward) revision in the rate of sales tax on services being provided by the cab operators and drivers in the final budget documents, which are yet to be approved by the provincial assembly,” Sindh Minister for Local Government Saeed Ghani said while talking to media outside the Sindh Assembly on Wednesday.
He was responding to a question on whether the tax would not discourage employment opportunities in the province.
One of the two cab firms told The Express Tribune that they had provided employment opportunities to around 100,000 drivers in the past three years in the province.
Ghani added that the provincial government had proposed 5% sales tax on the services being provided by the ride-hailing apps and drivers to bring them into the tax net. “The rate of tax (5%) remains meagre considering they are making money,” he said.
The tax was much lower than the 16% levy being charged on such services by the Punjab government since long, he said.
Ghani said the Sindh government had not proposed 13% sales tax on the cab operators and drivers.
The proposed Sindh Finance Bill 2019, however, shows the rate of tax at 13% on the cab operating firms and drivers each.
In a statement, Careem said, “We appreciate the efforts of the government of Sindh to reduce tax from 13% to 5%; this will go a long way towards developing the digital ecosystem and creation of jobs in the province.
“However, we would like to request the government of Sindh to consider zero tax instead of 5% on captains (drivers) since it will have a substantial impact on their income.”
The Khyber-Pakhtunkhwa government has imposed only 2% tax on total revenues of the cab running firms and exempted drivers from the sales tax on services.
An official at a cab operating firm said drivers should remain exempted from tax as they were daily-wage earners.