Hours after a memo stated that ride-hailing services Uber and Careem are illegal, Chairman of the Punjab IT board Umar Saif said that the matter was being reviewed.
“This is being reviewed within the government,” Saif said upon being asked if the companies will be banned in Punjab. “We are coming up with a formal policy. This letter was an internal memo and has prematurely been made public.”
Although he said both Uber and Careem currently do not pay tax in Pakistan, Saif said that the Punjab government is tackling the issue with an “innovative business model”.
“There are two ways that a government can approach such companies when they launch: 1) treat them as a taxi service or 2) treat them as a service that government can regulate.”
“We don’t want to treat them as a taxi service,” Saif added. “But they need to be regulated and taxed. They must register as a formal business under a new taxation regime.”
When asked to share details on the new plan, Saif said that it would be modelled around taxation regimes for such companies in Malaysia, Egypt, and Indonesia where they are treated as “network service providers”.
The letter of the Provincial Transport Authority appears to have taken Saif, a cabinet member of the Punjab government, by surprise.
“We brought them to Pakistan with a lot of effort and have been talking with each other from the start. We have asked them for a proposal and they have had extensive meetings with the transport department and provincial authorities.”
He said he feels the companies are “great for places like Pakistan because we don’t have much of a transport structure”.
“They create employment, they are a great monetisation channel, and they take cars off roads due to ride sharing, which is good for our congested roads.”
He said he takes pride in the launch of the Uber Rickshaw service, as rickshaw drivers now have an opportunity to be a part of the formal economy.
“The government is taking a balanced approach. We want to come up with a new taxation policy, that helps people gets jobs but also regulates the industry,” Saif said.