Original Research
Should Uber drivers be considered employees for South African income tax purposes?
Submitted: 01 July 2021 | Published: 22 November 2021
About the author(s)
Mariam Hussein, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South AfricaShaun Parsons, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South Africa
Riyaan Mabutha, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South Africa
Magdel Zietsman, College of Accounting, Faculty of Commerce, University of Cape Town, Cape Town, South Africa
Abstract
Orientation: Uber is a leader in the gig economy both internationally and in South Africa. One of the key elements of Uber’s business model is that drivers operate as independent contractors rather than employees. Whilst this may reduce costs, it may also negatively affect tax collection.
Research purpose: This study considers whether Uber drivers should be classified as employees or independent contractors in South Africa for employees’ tax purposes.
Motivation for the study: As the gig economy expands, uncertainty exists as to how traditional approaches to taxation apply and the extent to which they remain appropriate to new business models that have non-traditional relationships with their participants. This is evident by the extent of disputes arising internationally, and particularly in the United States of America (USA), where Uber was founded.
Research approach/design and method: This study engages in comparative legal research to determine the extent to which attempts to resolve this question in the USA may inform the South African context.
Main findings: The lack of consistent classification outcomes in the USA suggests that it may be difficult to reach a conclusive classification of Uber drivers in South Africa for employees’ tax purposes using the current tests. Whilst these tests may be adapted, this study supports calls for rethinking the link between tax collection and traditional employment relationships.
Contribution/value-add: This study contributes to the development and interpretation of South African tax legislation in the context of new technologies and business models, and provides recommendations for rethinking the approach to tax collection in these contexts.
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