Not all the ride-sharing companies are on board with Mexico’s plans to withhold taxes.
Mexico’s government on Monday detailed plans to collect estimated taxes from ride-share companies such as Uber, Cabify and Rappi, but China’s Didi said it would not take part in the arrangement, sparking friction within the industry, Reuters reported.
While less known here, Didi is the world’s second-largest ride-share company, behind Uber. It started locally in December.
The country has historically under-performed in tax collection and has sought ways to ensure workers pay their share of earnings to the government.
The monthly value-added tax withholding rate will be 8 percent and the income tax rate will range from 3 to 9 percent starting June 1, said Uber, which officially agreed to the plan.
“With this new scheme, Uber will be able to calculate, withhold and pay directly to the Mexican tax authorities the amount of income tax and VAT that its drivers and delivery drivers owe every month,” Uber said in a statement.
So far, drivers — who are considered contractors — have had to declare their own taxes in Mexico. Uber has mostly successfully beaten back attempts around the world to make it treat drivers as employees, arguing that its main business is a platform that brings riders and drivers together.
Other companies that have agreed to the new tax system include Cabify, Bolt, Beat, Cornershop, Rappi, SinDelantal and Uber Eats, the Finance Ministry said.
Didi had been expected to participate in the program but withdrew late last week, Reuters reported, citing an unnamed person with knowledge of the matter.
The Chinese firm said in a statement that it would not join the voluntary program but would analyze participating in the future once it understood the implications for its drivers. Didi said it was in “full compliance” with current regulations in Mexico.
News that Didi was opting out drew criticism, with Cabify suggesting it could distort the market.