As Nigeria enters 2026, e-hailing drivers are confronting an unexpected financial challenge. Members of the Amalgamated Union of App-based Transporters of Nigeria (AUATON) report that a 10 percent tax burden has been applied to every trip on the inDrive platform, effectively increasing commissions from 9.99 percent to more than 20 per cent per ride.

The union says this development stems from the application of a 7.5 percent Value Added Tax (VAT) on top of the platform’s service charge, which some drivers describe as a “double burden” that was not clearly communicated.

AUATON National Ex-officio, Jossy Adaraniwon, explained that “the government’s 7.5 percent VAT against the inDrive 4.99 percent commission service charge can only apply to the amount due to inDrive as commission, which should be between the company and the government, and not on the trip fare that has already been charged 7.5 per cent VAT.”

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He added, “This means the total commission should be 12.5 per cent, being 4.99 percent commission plus 7.5 percent VAT. However, from the invoice narration, all indications show that inDrive has increased its commission from 9.99 per cent to 12.5 per cent, contrary to its claim of 4.99 percent.”

The dispute highlights a broader tension in Nigeria’s evolving tax landscape, particularly how digital services are classified and taxed. While traditional transport providers such as flag-down taxis and private drivers remain exempt under current tax regulations, app-based operators are now facing new compliance obligations that can directly affect driver income.

Adaraniwon said the union is urging the Federal Government to reconsider the VAT imposed on e-hailing services, arguing that the policy creates an uneven playing field. “Other flag-down transporters operating on the streets, at garages and car parks are not levied VAT for rendering the same service, which is exempted under the new tax administration. Imposing a 7.5 percent VAT on e-hailing transportation services provided by our members adds an unnecessary burden on their income, affects their purchasing power and lowers their standard of living,” he said.

For drivers, the impact is immediate. Increased commission deductions reduce net earnings per trip, affecting daily living expenses and the ability to sustain operations, particularly for those relying solely on e-hailing income. For the platforms, clarity on tax treatment and transparent invoicing becomes critical to prevent disputes with both drivers and regulators.

The situation also underscores the growing intersection of digital business models with Nigeria’s tax enforcement policies. As more services migrate online, questions about fairness, consistency, and communication in tax applications will become central to ensuring that both operators and service providers can operate sustainably.

Meiza Nigeria