Taxman calls on Grab, Uber drivers

Ride-hailing firms working with Iras to enable those driving for them to e-file their returns

A passenger getting off a private-hire car at the taxi stand of International Plaza. PHOTO: ST FILE

Dodging the taxman will become more difficult in the gig economy, as going cashless allows for better electronic tracking of payments. And the taxman has his sights next on Uber and Grab drivers.

The Sunday Times understands that the Inland Revenue Authority of Singapore (Iras) has approached the two ride-hailing firms, which have amassed over 40,000 drivers since arriving here in 2013, to work out an arrangement for the drivers to file their tax returns automatically. Doing so also limits their ability to underdeclare earnings.

Unlike cabbies' earnings, the takings of ride-hailing drivers are captured by their respective phone apps.

An Iras spokesman said: "To simplify tax filing and ease compliance for our taxpayers, Iras continually seeks ways to explore initiatives with third parties and platform providers to automate the transmission of income information directly into our tax systems."

She said the authority has done the same for property and insurance agencies. "Likewise, Iras is collaborating with Uber and Grab to make it more convenient for drivers with pre-filling of their income information in their electronic tax form."

When e-filing is available, the tens of thousands of Uber and Grab drivers will be unable to avoid paying taxes or under-declaring what they earn.

Driver Elliot Lin, 32, said: "If you have to pay, you have to pay."

Mr Lin said he is driving part-time, and the extra income he draws from driving would mean "an incremental tax increase of less than $100".

Not so for others. A 50-year-old who drives for Grab and Uber and claims to be drawing around $9,000 a month said: "This is going to be a problem. Not just for me. I think a lot of drivers will have an issue. I don't think self-employed people declare their full income.

"I'm very shocked. I may go back to driving taxis."

While there is no similar arrangement for cabbies - who accept mostly cash fares - ST understands that once Singapore goes cashless, taxing taxi drivers according to their actual take-home pay should become more feasible.

Likewise, hawkers, market stallholders and other business people may not be able to dodge the taxman once cashless payments become the norm.

Iras is also reaching out to others in the so-called "sharing economy", which includes people who rent out their homes - fully or partly - via platforms such as Airbnb. Iras said it has made available information on its website on "the taxable income of those in sharing economy".

As for Uber and Grab themselves, Iras said companies are liable for corporate tax on any income just like any other company operating in Singapore. Both Uber and Grab said they were working to comply with Iras' requests.

Singapore University of Social Sciences economist Walter Theseira said: "It's only fair that people pay the same income taxes regardless of whether the money was earned through self-employment or wage employment."

He added that it was more important to look at Central Provident Fund contributions. "Self-employment through private-hire or taxi-driving is excessively attractive financially because drivers do not have to pay CPF contributions.

"This raises their take-home earnings significantly... While this may appear 'good' in the short run, it puts the drivers at risk of not being able to finance their homes, or support themselves in retirement," he said.

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A version of this article appeared in the print edition of The Sunday Times on September 17, 2017, with the headline Taxman calls on Grab, Uber drivers. Subscribe