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Uber files a petition to nullify law that caps service fees at 18%

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Uber Kenya has appealed to Kenya’s Apex court to annul the new digital taxi-hailing regulations that cap the commission fee at 18 per cent down from 25 per cent.

Uber says the cap would cause the company’s earnings to take a hit and prevent them from investing further in Kenya.

The regulation is set to come into effect in the coming weeks. The regulations have been in a development phase since 2016 when the drivers first protested at the 35 per cent commenter price reduction by uber that caught lawmakers’ attention.

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In the filing, as quoted in TechCrunch, Uber says, “The introduction of 18% as the ceiling for the allowable commission has the potential to stifle innovation and reduce the petitioner’s economic feasibility of investing in the market,” the court files said, filed by Coulson Harney LLP. The filing continued:

The Kenya Revenue Authority is presently in the process of finalizing digital service tax regulations and VAT regulations that would impose additional taxes of 1.5% and 14% on the petitioner’s (Uber) service fees. This coupled with the proposed cap in the commission will have a major impact on the petitioner’s revenue from the Kenyan market, which will adversely impact the Kenyan market prioritization for investments.

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Uber argues that Kenya is a free market where ride-hailing companies have the right to negotiate commercial agreements without the need for external influence. Uber also says the regulations were gazetted without following due process and public participation.

According to Techcrunch, Uber also faulted the condition that all ride-ailing companies must obtain a transport network license from NTSA to operate which the company argues is not a transport service but an app offering intermediate service.

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Uber feels the regulations are discriminatory because they only allow Kenyan personal identification numbers to obtain the mandatory license and as such, only entities legally registered in Kenya and have physical offices in the country qualify for the permits.

Besides, that, ride-hailing companies are also required to share drivers’ and riders’ data upon request of authority which Uber feels is a contravention of the Data protection Act

Speaking on the new regulations, Lorraine Onduru, Uber East and West Africa’s head of communication said,” we remain committed to Kenya and ensuring that more drivers and riders can experience the benefits of ride-hailing”.

She added, that some aspects of these regulations, such as the commission reduction and requiring companies to be registered in Kenya, are not conducive to doing business in Kenya and are not good for drivers or riders as they deter foreign investment into the country and limit the role private businesses can play in supporting and growing the Kenyan mobility sector.”

Although Uber has promised to stay amid the back-and-forth regulation issues, the company recently exited the Tanzanian market after the country introduced a 15 per cent cap on commissions and things might toughen on the Kenyan end as well.

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Val Lukhanyu
Val Lukhanyu
I cover technology news, startups, business and gadget reviews

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