In 2015, The Lagos State House of Assembly passed a raft of regulations under the Road Traffic Regulations on Taxi Operations. The laws were meant to bring sanity to the taxi industry, while at the same time focusing on the commercial aspects of road transport. Under the laws, all taxi operators must register their details with the Transport Ministry before being issued a license. Drivers were also not allowed to have vehicles older than 12 years and were supposed to have third party insurance.
This law is now being used against San Francisco-based company Uber, that has operations in Lagos, Nigeria. The Lagos government has claimed that Uber is not properly licensed and that its drivers have not been paying both taxes and fees for operating the services in the populous city. The government has as such threatened to clamp all Uber vehicles until they comply with these rules.
Uber has however responded to these assertions by stating that it is a technology company and as such these rules cannot be used against the firm as it is a technology company. According to Premium Times, Uber says it operates cab ho9re services and as such cannot be regulated as a taxi company under these rules. Quoting Uber’s GM for West Africa, the publication says “A taxi driver negotiates fares off the road but a car hire service must be pre-booked, which is what Uber does”.
Uber has faced similar problems in several cities including Nairobi, where the KRA sought to know how to tax earnings made by Uber drivers. KRA eventually stated that taxi hailing services do not offer taxi services but provide a platform or an app that assists taxi operators in their activities. As such, VAT can only be charged by the supplier of taxi services effectively transferring the burden of payment to the owners of the vehicles.