Ride hailing app Uber has announced price increases for its service in the UAE and Saudi Arabia following the introduction of value added tax.
In blog posts, the company said the 5 per cent tax did not apply to transport but was applicable to marketplace services like those it provides through the app in both countries.
To compensate for this the company said it would be increasing fares on all of its ride options, including uberX, UberSELECT, UberBLACK, UberXL, UberONE and UberVIP, by 1.7 per cent in the UAE.
In Saudi Arabia, the firm said an additional passenger fee of approximately SAR0.50 ($0.13) would be applied for uberX rides from February.
The new price structure in the kingdom will see the basic cost of a fare rise from SAR3.10 to SAR3.25, the cost per minute from SAR0.18 to SAR0.21, the cost per kilometre from SAR0.80 to SAR0.92 and the minimum fee from SAR7.00 to SAR7.50.
“The change in fare prices allows drivers to earn a little more to make up for the additional tax that affects their earnings,” the company said.
A similar fare increase is expected from Middle East rival Careem.
Uber and Careem fares are already 30 per cent more expensive than traditional taxis in the UAE due to the country’s transport laws.
The two have been trialling cheaper ride options in partnership with Dubai’s Roads and Transport Authority to access a wider customer base.
Careem said it would roll out its cheaper Go service in Dubai this year.