Tax Regimes Governing Drivers of Taxis and Private Hire Cars
Ministry of FinanceSpeakers
Summary
This question concerns Mr Sitoh Yih Pin’s inquiry regarding the tax regime disparities between taxi and private hire car drivers and whether there are plans for alignment. Minister for Finance Heng Swee Keat explained that while taxi drivers can deduct car-related expenses like rental and fuel, private hire drivers are currently ineligible for such deductions. This distinction exists because many private hire drivers operate part-time, and the policy aligns with national efforts to manage the private car population for both individuals and corporations. Private hire drivers can still claim non-car expenses, including third-party operator commissions, administrative charges, and the proportion of mobile phone costs used for their services. The Minister concluded that the tax regimes will not be harmonized for now due to the differing regulatory structures and business models governing both sectors.
Transcript
23 Mr Sitoh Yih Pin asked the Minister for Finance (a) whether there is a disparity between the tax regimes governing drivers of taxis and private hire cars and, if so, what are the reasons for the differences; and (b) in view of the similarities between both types of point-to-point transport services, whether the Ministry has plans to bring the tax regimes in line with each other.
Mr Heng Swee Keat: Taxi drivers are allowed to claim tax deduction for expenses incurred in the production of their income. These tax-deductible expenses include vehicle rental fee, diesel and parking charges.
As for private hire ride-hailing car drivers, deduction for tax is not allowed in respect of expenses incurred on the car. This is because such drivers cannot be assumed to use their cars predominantly for business purposes. Many drive on a part-time or casual basis. This treatment supports our national policy to manage the car population and is applied to both corporate and individual taxpayers. For example, companies are similarly not allowed to claim tax deduction on any expenses incurred for a private car.
Private hire ride-hailing car drivers can, however, claim deduction for other non-car expenses. Such allowable deductible expenses include commission paid to third-party operators, administrative charges imposed by third-party operators, and the proportion of expenses for mobile phones used in the course of providing their services.
As the regulatory regimes and business models for taxi and ride-hailing services remain different, there are no plans to harmonise the tax regimes for now.