Uber, Careem face $100 million tax bill in KSA
- Uber and its Dubai-based subsidiary Careem are facing a combined tax bill worth $100 million imposed by the Saudi authorities according to a report from Bloomberg.
- The bills date back several years and include cumulative penalties.
- UAE-based Fetcher is considering filing for liquidation because of a disputed $100 million tax bill in KSA.
Saudi Arabia has slapped several technology firms, including Uber Technologies Inc. and its Dubai-based subsidiary Careem, with tax bills worth tens of millions of dollars, according to people with knowledge the matter.
Uber and Careem face a combined bill worth around $100 million, two of the people said. The claims are related to a dispute over how to calculate the value-added tax owed over the past few years by gig economy firms versus their individual contractors -- and include hefty penalties for late payment, the people said.
Several of the companies are trying to negotiate with the kingdom’s Zakat, Tax and Customs Authority, they said. The tax authority didn’t respond to a request for comment. Uber and Careem both declined to comment.
The disputes draw Saudi Arabia into a global debate over how to tax the activities of gig or “sharing economy” platforms like Uber, Airbnb and TaskRabbit, which rely on individual drivers, couriers or hosts that often fall below taxation thresholds. The U.K. has also looked at toughening up tax rules on activities in the sharing economy. But the unexpected costs could spook investors at a time when Crown Prince Mohammed bin Salman and Saudi officials are trying to attract multinational firms to the kingdom and boost foreign investment.
The issue burst into public view this month, when a top investor in Dubai courier app Fetchr -- once among the Middle East’s most promising startups -- said the company was considering filing for liquidation after becoming “insolvent” because of a disputed $100 million tax bill in Saudi Arabia.
But the issue is broader than Fetchr and is affecting other tech companies operating in the kingdom, the people said.