Uber and Careem Rates to Shoot up in UAE
- Ride-hailing apps Uber and Careem are upping their prices in the UAE, attributing the inflation to the introduction of VAT
- The average fare increase is expected to be 1%, only a fraction of the total fare cost
- Much of the technology used by Careem is subject to VAT, so the company will charge tax on the part of the fare which represent their technology cost or profit margin
- This taxes would allow drivers to “earn a little more” to make up for the earnings lost through additional taxes
- Uber is an international transport service provider, popular because of the convenience of booking a taxi through an app
- Careem is a UAE-based ride-hailing service, valued at USD 1 billion, with operations in over 50 cities across the MENA region
- Value Added Tax (VAT) is a general consumption tax that is added to products and services at every stage of its production, which differs in value from country to country
- VAT of 5% was introduced on goods and services across UAE from 1st January 2018
- VAT is designed to tax only the value added by a business on top of the services and goods it can purchase from the market
