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Kenyan Digital Taxi Drivers Threaten To Down Tools Over New Digital Taxi Regulations

February 22, 2022

Kenyan digital taxi drivers have threatened to deactivate their applications due to the government’s delay to publish the Digital Hailing Service laws (TNC Rules 2022), which were ratified by the Senate labor committee chaired by Senator Johnson Sakaja.

The Digital Taxi Forum (DTF) issued a seven-day ultimatum on Friday, saying they will boycott and turn off Uber, Bolt, Little Cab, and any other apps operating in Nairobi, Nakuru, Mombasa, Kisumu, Nyeri, and any other town or city if they did not comply.

Here Is What You Need To Know

The National Transport and Safety Authority (NTSA) proposed legislation that would, among other things, bar digital hailing service operators from charging a commission of more over 15%.

Most ride-hailing companies in Kenya currently charge a commission of at least 20%, with Uber taking the biggest cut at 25%.

The failure of the Transport Cabinet Secretary, James Macharia, to gazette the Digital Taxi Regulations, according to Secretary-General (SG) of DTF Wycliffe Alutalala, has resulted in serious suffering for drivers and car owners who have long decried unfair regimes by international ride-hailing firms.

“It is unfortunate that one year down the line, CS Macharia has either refused, neglected, declined, or ignored to gazette the Regulations for reasons best known to himself,” lamented SG Alutalala.

If implemented, the law will also compel overseas digital taxi companies to establish a subsidiary in Kenya and pay a Sh500,000 application cost as well as a Sh300,000 yearly renewal fee.

Under the proposed law, Operators of digital hailing services are banned from levying or charging any additional costs, levies, or fees in addition to the commission.

If passed, the law will allow ride-hailing companies to report the name, driver’s license number, and vehicle registration number of a rogue driver who has been deactivated from the platform due to misconduct that poses a threat to public safety to the National Transportation Safety Administration (NTSA).

“Any person who contravenes any provision of these regulations commits an offense and is liable on conviction to a fine not exceeding Sh20,000 or to imprisonment for a term not exceeding six months, or both,” the proposals read in part.

Uber and Bolt had opposed to the capping of commissions at 16 percent in a letter to the Ministry of Transport dated November 29, 2021, claiming that it was “discriminatory and disincentivizing to investment in the business.”

“While the proposed regulations are largely progressive, certain components are discriminatory, specifically the proposed 15 percent cap on commissions, Setting a precedent of such prohibitive regulations could lead to a broader impact on the industry. The proposed regulatory pricing control will only serve to limit innovation and competitiveness in the ride-hailing industry,” the firms said.
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Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer

Nigeria To Tax Twitter, Facebook, Other Foreign Digital Service Providers

June 8, 2020

Nigeria’s Federal Government has concluded plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira, otherwise known as over-the-top (OTT) services providers in Nigeria such as YouTube, Facebook, Twitter, WhatsApp, Blackberry Messenger and many others. This is one of the major fallouts of the new finance Act which now subject all multinational digital companies operating abroad with significant economic presence in Nigeria to taxation.

*Nigeria’s Vice President Yemi Osinbajo*

“So, most digital and multinational technology companies do not have a physical presence in Nigeria, yet make significant income in Nigeria from online activities. They pay no tax to Nigeria because they do not have a physical presence in Nigeria, now we are no longer relying on physical presence,” Nigeria’s Vice President Yemi Osinbajo had earlier said in February, 2020.

Here Is What You Need To Know

The Minister of Finance, Zainab Ahmed, had issued the Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019. The order aimed to impose tax on a foreign entity with respect to certain services or digital transactions if it had a Significant Economic Presence in Nigeria.
It further stated that the finance minister may by order, determine what constituted SEP in Nigeria.
By this move, Nigeria is following the steps of many countries which have policies that guide these services.
Only companies that have a physical presence in the country were being taxed previously

“Under the new Act, once you (foreign digital company) have a significant economic presence in Nigeria, you are liable to (digital) tax whether you are resident here or not,” Osinbajo had earlier noted.

For Association of Telecommunications Operators of Nigeria (ALTON), the umbrella body of telecom operators in the country, it is not right that a company providing traditional telecommunications services has to meet certain regulatory requirements, like those concerning data protection and taxes while a company providing comparable services over the web does not.a

An over-the-top (OTT) media service is a streaming media service offered directly to viewers via the Internet. OTT bypasses cable, broadcast, and satellite television platforms that traditionally act as a controller or distributor of such contents.

Gbenga Adebayo, chairman, ALTON, recently said that:

“We are beginning to see the need for regulators to look at regulating technology instead of services.
“These over-the-top services have social, economic and security implications. If they are not licensed, it means they are not regulated, and in that case, there is no limit to the scope of what they can do. There is also no control over services and content they may provide,” he said.

Nigerian Communications Commission (NCC) which until now has insisted on technology neutrality of the OTTs may be forced to facilitate the revenue generating process with the right technological devices to ensure transparency.