Are yellow plates a feasible option for Uber, Grab?

The government has urged Uber and GrabCar to become business entities and apply for yellow license plates for their armadas, which identify cars designated for public transportation, to create a level playing field with conventional taxis.

Some have questioned whether yellow plates would be the best choice for ride-hailing apps in their bid to legalize their operations in Indonesia. 

Thejakartapost.com made some simple calculations and found that car owners working with ride-hailing apps would pay lower administration costs if they drove yellow-plated cars, compared to the costs they must bear for their private cars at present.

A yellow-plated Toyota Vios, which is widely used in taxi armadas, bears annual tax of Rp 269,000 while a private car, featuring a black license plate, needs to pay 10 times more, at Rp 2.7 million.

Referring to Transportation Ministry information, the cost to undergo a road worthiness test is Rp 100,000 per vehicle every six months, or Rp 200,000 per year. It usually takes one hour to complete the test.

Routine licenses cost car owners Rp 150,000 for the permit, plus Rp 25,000 for a travel time card. The license is valid for five years, thus the annual cost is Rp 35,000.

In total, adding the extra cost for license and scrutiny tests, car owners who joined with Grab and Uber would only have to pay Rp 504,000, far less than the Rp 2.7 million they would otherwise pay annually for their private car.

Indonesian Taxation Analysis Center (CITA) tax expert Yustinus Prastowo agreed that operating as public transportation vehicles would allow Uber and GrabCar drivers to pay lower administrative costs. Their cars would also not be subject to value-added tax.

"If they [Uber and GrabCar] use black plates as they are doing now, they are subject to value-added tax," he said, noting a 2003 Finance Minister Decree that excludes taxi services from the tax.

Profit scheme

Yustinus added that if the government wanted to make sure that Uber and GrabCar paid the required tax, the solution would be more complicated than issuing them with yellow plates. For example, the government must assess the profit-sharing scheme between app developers and the drivers or car owners.


"Conventional taxi drivers have their fees or commissions automatically deducted for income PPh [tax]. What about the profit sharing in app-based transportation? Who will deduct or pay the tax? Do the drivers pay their income tax?" he said.

Therefore, he argued that the yellow plates were not the answer. The best solution, according to him, would be for both types of taxis to play by the same rules to guarantee some of the principles of private transportation such as tax liability, car quality inspections and customer service.

"It would be good to have them both running under the same regulations. However, vehicle owners with the apps may be reluctant to change their plates to yellow," He said.

Yustinus suggested that app-based taxis use special plates for their vehicles, instead of converting to yellow plates. "The plates may be black, but with a distinctive added mark," he said.
thejakartapost.com, Jakarta | March 24 2016