Mexico tax plan for riding hailing firms may soon be mandatory: Cabify
MEXICO CITY: A tax withholding plan in Mexico for drivers at ride-hailing firms envisaged as voluntary when it was unveiled earlier this week could become obligatory in 2020, Spanish company Cabify said on Friday.
Mexico’s government on Monday outlined the scheme due to be implemented on June 1, and Cabify, Uber Technologies and several other companies said they would participate.
Chinese rival Didi said it would not take part to begin with, however, prompting criticism from Cabify and others that their absence from the program could distort the market.
“What’s been discussed with the finance ministry is that this year it’ll be a voluntary program … and it’s very likely that next year it’ll be part of … the budget spending plan or a new law,” Ramon Escobar, Cabify’s director in Mexico, told reporters on a conference call.
When asked if that meant it would become binding, he said “that’s the conversation we’re having today.”
Mexico’s finance ministry did not immediately respond to a request for comment.
A Didi spokesman said the company will “continue to comply with all tax laws and obligations, and we will continue to encourage our driving partners to do the same.” The firm would continue to analyze its participation in the scheme, he added.
The scheme foresees a monthly value-added tax (VAT)withholding rate of 8per cent and an income tax rate ranging from 3per cent to 9per cent, according to Uber.
(Reporting by Sharay Angulo and Julia Love; Editing by Sonya Hepinstall)