Double VAT, Double Trouble: E-Hailing Drivers Push Back Against Rising Platform Taxes
Nigeria’s fast-growing app-based transport economy is heading into a new phase of tension, as e-hailing drivers warn that overlapping tax deductions are quietly eroding livelihoods and threatening the sustainability of digital mobility platforms.
At the centre of the controversy is inDrive, whose driver-partners say they were ushered into 2026 with a sudden double Value Added Tax (VAT) deduction regime that has pushed total platform charges sharply higher—without prior notice, consultation, or regulatory clarity.
What Changed—and Why Drivers Are Alarmed
According to the Amalgamated Union of App-Based Transporters of Nigeria (AUATON), drivers operating on the inDrive platform began noticing two separate VAT deductions on each completed trip from January 1, 2026.
One deduction appears as a “service payment VAT”, while another is simply labelled “VAT”, effectively increasing combined commission and tax deductions from 9.99 per cent to roughly 12.5 per cent per ride.
For drivers already grappling with high fuel costs, vehicle maintenance, insurance, and inflation-driven household expenses, the increase is far from cosmetic.
“This is not just about numbers on an invoice,” AUATON officials argue. “It directly reduces take-home income in an economy where margins are already thin.”
A Structural Problem in Nigeria’s Gig Economy
The controversy exposes a deeper fault line in Nigeria’s digital labour ecosystem: policy decisions affecting gig workers are often made without gig workers at the table.
AUATON maintains that meetings between app companies and government regulators frequently exclude driver representatives, even though drivers ultimately bear the cost of new fiscal or compliance measures.
This governance gap fuels mistrust—especially when new deductions appear abruptly and platforms fail to provide clear explanations or breakdowns.
Who Is Responsible for the Extra VAT?
While VAT is a statutory tax, AUATON says it remains unclear which authority authorised the additional deduction—whether it stems from federal tax harmonisation, state-level levies, or internal platform restructuring agreed upon behind closed doors.
The silence from the platform has only heightened anxiety. Drivers report that attempts to reach inDrive through association channels have gone unanswered, with customer support designed to engage individuals rather than organised labour groups.
More troubling, drivers claim that refusal or inability to absorb the extra deductions results in automatic ride-blocking, preventing access to subsequent trip requests.
Uneven Tax Burdens, Uneven Playing Field
Another flashpoint is competitive fairness.
AUATON notes that traditional transport operators—such as flag-down taxis, park-based drivers, and informal transporters—do not appear to face similar layered deductions.
This raises questions about whether app-based drivers are being disproportionately targeted in Nigeria’s evolving tax architecture, potentially distorting competition within the urban mobility sector.
Why This Matters Beyond Drivers
E-hailing platforms are now integral to Nigeria’s urban economy—supporting employment, easing mobility, and complementing public transport gaps.
Excessive or poorly coordinated taxation risks:
- Reducing driver supply as earnings fall
- Increasing ride fares for commuters
- Weakening trust between platforms, regulators, and workers
- Undermining Nigeria’s digital economy narrative
In the long run, unchecked fiscal pressure could slow innovation and push drivers back into informality—exactly what digital platforms were meant to reduce.
The Call for Dialogue, Not Disruption
AUATON is not rejecting taxation outright. Instead, it is demanding clarity, consultation, and equity.
The association is urging:
- Immediate explanation from inDrive on the dual VAT deductions
- Transparent disclosure of the legal basis for the charges
- Inclusion of driver unions in government-platform policy discussions
- Alignment of transport reforms—such as CNG conversion—with the realities of app-based operators
As Nigeria modernises its tax system, the message from the gig economy is clear: efficiency must not come at the expense of fairness.
BRANDECONOMY INSIGHT
Nigeria’s digital transport platforms sit at the intersection of innovation and regulation. If policymakers treat app-based drivers purely as revenue points rather than economic partners, the sector risks sliding into instability. Sustainable taxation must balance government needs with worker viability—or the promise of the gig economy will quietly unravel.
