Members of the Amalgamated Union of App-Based Transporters of Nigeria (AUATON) have accused app platforms and tax authorities of imposing a double value-added tax burden on drivers, a move they say is eroding earnings at a time of rising fuel and living costs.
The union said a review of recent inDrive trip invoices shows a 7.5 per cent VAT charged directly on the trip fare, alongside a second 7.5 per cent VAT listed as “service payment VAT” linked to the platform’s commission. The combined effect, AUATON claims, has pushed total deductions well above previous levels.
Nigeria e-hailing VAT
AUATON’s statement, signed by National Ex-Officio Comrade Jossy Adaraniwon, said drivers are now subjected to a combined deduction of about 10 per cent on every trip, taking total commission and tax deductions from roughly 9.99 per cent to in excess of 20 per cent in some cases. The union argued that VAT should be charged only on the commission retained by the platform and not on the full fare, which the union says has already attracted VAT.
“By our calculation, VAT on a 4.99 per cent commission should result in a total effective deduction of about 12.5 per cent, not the higher figures currently reflected in drivers’ invoices,” the union said. It described the invoicing as lacking transparency and accused inDrive of effectively increasing its commission without public acknowledgement.
The dispute has two elements: the way platforms itemise commissions and taxes on driver invoices, and the federal policy decision to apply VAT to e-hailing services. AUATON contends that traditional street and park-based transporters who offer comparable services are not subject to the same VAT treatment, which it describes as discriminatory.
“Singling out e-hailing drivers for a 7.5 per cent VAT is unjustifiable. It places an unnecessary burden on our members’ earnings, reduces their purchasing power, and ultimately affects their standard of living,” the union said, calling on tax authorities to suspend the policy and open meaningful talks with drivers and app companies.
So far there has been no public response from inDrive addressing the union’s specific invoice claims. The platform’s stated commission rate, according to AUATON’s statement, remains 4.99 per cent, a figure the union says does not match deductions observed on driver invoices.
Analysts and industry observers say the issue highlights a wider problem in the regulation of digital services and taxation. Clear guidance is required to ensure tax is applied in a way that is administratively feasible and fair to small-scale providers who rely on thin margins.
For drivers already squeezed by higher fuel costs, the added deductions are significant. AUATON has called for immediate engagement between tax authorities, app companies and driver representatives to review the invoicing structure and the broader VAT policy.
If unresolved, the dispute could prompt further industrial action or legal challenges, increasing pressure on regulators to provide swift clarification. For now, drivers and unions say they seek transparency, a review of tax application to app-based services, and protections to ensure that taxation does not unfairly target one category of transport provider over another.
Key Takeaways:
- Union alleges drivers face two separate 7.5% VAT charges, cutting take-home pay amid rising costs.
- AUATON says VAT should apply to platform commission only, not the full trip fare, citing invoices showing both charges.
- Drivers claim commissions effectively rose above advertised 4.99%, and call for suspension of the policy and stakeholder talks.
- Calls for clarity on Nigeria e-hailing VAT and fair treatment of app-based drivers compared with traditional transport operators.
