uber cash payment

Here’s more on the topic of taxation of Uber and Grab drivers. The government is seeking to tax individuals engaged in digital or online businesses, including Uber and Grab drivers, to address its lost opportunity for revenue from a fast-growing segment of the economy, The Star reports.

“The Inland Revenue Board (LHDN) is doing a thorough evaluation and study to go into taxing individuals engaged in digital or online businesses as the income they earn is taxable,” said Treasury secretary-general Tan Sri Mohd Irwan Serigar Abdullah.

“It will be a revenue loss for the government if we did not do anything about it because going forward, more and more businesses will go into sharing of the digital economy,” he told the media at the Public Sector Forum on Financial Reform for Economic Development in Asia yesterday.

uberX

Irwan pointed to local Uber drivers as an example, noting a recent survey by the Land Public Transport Commission (SPAD) which indicated that part-time Uber drivers could earn an average of RM7,000 per month.

However, without a framework in place, the government is unable to collect taxes from this group even though they earn enough to pay tax. Irwan said that there’s no specific timeframe to implement the tax framework for online businesses as the matter is still being reviewed. The Treasury sec-gen hopes to get things finalised by next year.

He revealed that LHDN has formed a division to address issues relating to Internet-based businesses, and is now working with the Companies Commission of Malaysia to come up with the right approach.

“Internet businesses are growing fast and they are becoming important to everyone in society. But tax collecting agencies are finding it difficult to collect taxes from these new sources, so we need to devise new ways to address this, otherwise it will be revenue lost for the government,” he reiterated.

RM Credit Card

Earlier, The Sun reported that the government may look to tax Uber/Grab drivers should the should it fail to impose tax on Uber’s ride revenues. The app-based driver service company employs shrewd tax management strategies that has so far escaped the net cast by tax authorities including those in Australia, Canada, Hungary, the UK and US. Ride fares go straight to Uber BV in Netherlands and not the company’s Malaysian office.

The free daily followed up with Uber Malaysia GM Leon Foong, who said that its drivers are responsible for their own tax affairs. He also said that between 70% to 80% of the fare collected from a passenger is channelled to the driver on a weekly basis.

We see no reason why income from Uber/Grab should be exempted from income tax. Salaried employees have nowhere to run from the taxman, and no group – be it Uber drivers or MLM evangelists – should get a free ride. What say you?