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Uber reaches milestone in Nairobi

Prof. Dr. Wolfgang H. Thome, eTN Africa Correspondent  May 12, 2016

The initial violence dished out by regular cab drivers against UBER rival drivers seems to have been brought under control by the Kenyan security forces, making sure that a good thing for visitors to Kenya is not stopped. The business community has embraced the new service, as have commuters and travelers from abroad, especially those who use UBER services back home or wherever they travel and find the service on the ground.

News in overnight from Kenya suggests that UBER has now signed up over 1,000 drivers and are still growing fast, making sure that even during large conferences, and Kenya will host several of those this year and beyond, during rush hour and on the crucial routes from both to and from Jomo Kenyatta International Airport and Wilson Airport, there will be enough UBER vehicles available to meet demand.
The service has also rolled out in Mombasa, although at this stage not beyond this coastal city, leaving crucial tourist areas at the famous Diani beaches and also on the stretch from Kilifi to Watamu and Malindi, at this stage at least, to rival operators.

UBER also released some data on the occasion, that around 100,000 people make use of UBER services every month in Nairobi and that these drivers clocked over 8 million kilometers since services started in January 2015.

The more user-friendly pricing model had initially triggered violent reactions by regular cab drivers, incited by the use of strong language from their cab drivers association leaders, but this was eventually nipped in the bud when several UBER cars were torched and drivers barely escaped with their lives. UBER's success brought the advance of EASY Taxis to a crashing halt as that company, which set up earlier and had signed as many as 2,000 drivers, indicated they will pull out of Kenya, leaving the field of apps-controlled cab operations almost entirely to UBER.

With UBER due a quarter of the fare from their drivers, however, questions have been asked as to how those remittances work and if, as required under Kenyan tax laws, relevant taxes are being paid before any remittance is done. Kenyan tax laws require withholding taxes to be paid by foreign companies and individuals like consultants, and regular cab associations are reportedly looking into these issues with the aim to ensure that their rivals are made to pay taxes.

This incidentally is a similar move regular hotel operators, through their associations, are reportedly looking into vis-a-vis AirBnB's services, as allegations have been flying around in Kenya that perhaps not everyone signed up to the scheme is fully tax compliant, no doubt also a focus by the Kenyan tax authorities after being faced with a growing deficit between spending plans by the government and their ability to collect taxes.

Said a small accommodation provider spoken with during a recent visit to Kenya: “If you are in the hospitality business in Kenya, paying taxes is today inevitable. The digitalization of the tax body and their ability to cross reference has progressively sealed any past loopholes. For some of the smaller operators, it is now the question of a level playing field. They want to be sure that if they pay taxes, AirBnB operators are also captured in the tax net. I personally cannot prove that AirBnB operators do NOT pay taxes on their income from renting out rooms in their homes, but I know we both have our suspicions. Therefore, this must be captured and our associations and KRA, short for the Kenya Revenue Authority, are looking into such elements to make sure competition is fair and not tilted in favor of anyone.”

Interesting times ahead no doubt, for UBER, to watch if EASY Taxis are truly pulling the plug and where the tax issues will go from here.

Uber reaches milestone in Nairobi

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