Careem, a popular ride-hailing service, has seemingly come to an upbeat agreement with Sindh govt as a way forward for the company’ smooth operations in the province. During the hearing in front of Sindh High Court on Wednesday, the government’ counsel informed the court that Careem will now obtain permits under the Motor Vehicles Ordinance, 1965, to continue operating as a service provider.
In order to cater the specific needs of the newly-inducted service providers, it was reported that Sindh government and the transport ministry have prepared a draft legislation to address the concern of bringing such companies under the umbrella of taxation. Surprisingly, Careem seemed to have no restrictions or objections on this new arrangement. Reportedly, the company’ M.D, Mr. Junaid Iqbal has admitted that from the start of our operations in Pakistan, Careem has expressed all (such) service providers to be fully regulated.
The disagreement between Careem and the Government escalated when the government wanted Careem to take route permit and operate as a transportation service. However, with this new agreement, Careem will remain a digital marketplace. Additionally, it has been highlighted that both parties are working in conjunction to formulate new frameworks, which will play a pivotal role in governing digital marketplaces.
The build up to this situation:
On 30th January 2017, Careem’ services were temporarily banned, when a notification was issued to the traffic regulatory authorities in Punjab alleging that ride-hailing service (Careem & Uber) were illegally operating in Pakistan should be brought under the tax grid.
The missive stated that both companies were operating without route permits, fitness certificates and registering their cars with any regulatory body. Hence a strict action was being administrated to address this problem.
As a response to all the commotion, Dr. Umar Saif, Chairman of PITB, remarked that all these missives were internal documents aimed to be reviewed; the hype was created when these documents were leaked prematurely. He also revealed that tax stipulations were mentioned (beforehand) when these ride-hailing services were brought in the country, and they had agreed to our terms & conditions. Saif further remarked that we are working on a radical tax structure that will enable us to regulate these services. More importantly, he stressed that these services had not been banned, rather they’ll be undergoing a transition which will add benefits to the national treasury.