Ridesharing VAT 5pc of company’s cut of fare
People availing ridesharing services will have to pay value added tax (VAT) based not on the whole fare but the portion which the app-based companies take for themselves, clarified the National Board of Revenue (NBR) on Sunday.
The tax collector said companies offering the service through mobile-apps would have to deposit VAT amounting to 5 percent of their cut of the fare.
The law exempts drivers from paying VAT on their income, according to the NBR. At present, ridesharing service providers claim 18-20 percent of the fare for themselves.
However, Ruhul Amin, chief financial officer of Obhai Solutions Ltd, said they had been paying the VAT from their own pockets. “…we have been paying the tax since June 2018. There will be no impact on consumers,” he said.
The NBR levied the indirect tax last year amid surging popularity of ridesharing services on traffic-ridden roads lacking adequate transport facilities and having CNG-run auto-rickshaws whose drivers demand fares on a whim.
With Pathao and US-based Uber first to arrive in 2016, there are currently some 20 ridesharing service providers such as Shohoz and Obhai in Dhaka, Chattogram and Sylhet providing about 40,000 rides daily.