By Ramona Barrett
December 2016
Uber entered the Taiwan market in 2013.
Outraged by its growing popularity, local taxi drivers held a major protest earlier this year.
Luckily, or so it seemed, they found an ear in government.
In an effort to protect the domestic taxi industry, which includes 80,000 legally operated cabs, the Taiwan government has subject Uber to increasing legal obstacles.
Though, instead of curbing to pressure to leave the market, Uber has gone toe-to-toe with the government, challenging it to bring its laws up-to-date with innovation in the industry.
Uber is registered in Taiwan as an information services company, though it is a well-known transportation company.
Taiwan views this as a major misrepresentation of its services.
To make matters worse, it operates its transportation services illegally by using private drivers and cars without business operation permits.
In addition, according to Taiwan Vice Transportation Minister Wang Kuo-tsai, they fail to honor labor and health insurance premiums for private drivers, or to settle disputes between private drivers and consumers.
To comply with existing rules and regulations in Taiwan, Uber would need to apply to the government to set up a legal taxi service company and employ qualified drivers and taxi cabs.
Making it clear that Uber would need to fall in line, Wang stated the “government won’t enact a new law or amend the existing rules just for one single company.”
Still, Uber refuses to do.
Uber Taiwan’s general manager Ku Li-kai stated that Taiwan does not need another taxi service company, and setting one up is not in line with their business model.
Instead, they would be willing to negotiate with the government for a more mutually beneficial plan.
Keep in mind that Taiwan is one of Uber’s fastest growing markets, with approximately 10,000 registered drivers and 1 million members.
Back in July, Taiwan announced a three-pronged approach to curb Uber, and it appears to be following through with its plans.
Just a month later (August), Taiwan ordered Uber to pay back taxes owed since it entered the market in 2013, an amount then estimated to be a hefty $6.3 million.
This came as a result of the Taiwan government changing its tax structure for foreign online businesses, bringing Uber on the hook.
In response, Uber told Reuters: "Uber is meeting all of its tax obligations under relevant local laws."
In an alternative attempt to curb Uber, just last month (November) Taiwan called for Apple and Alphabet (the parent of Google) to remove Uber, as well as its newly launched UberEATS, from their mobile application stores.
“Uber has not done what it says it will do. So, we are looking at another way by requesting its apps be removed from Apple and Google [app stores],” said Liang Guo-guo, spokesperson for Taiwan’s Directorate General of Highways.
They did not clarify how they would handle already downloaded Uber applications.
In addition, it remains to be seen if people will find alternative ways to download the application.
Uber has expressly challenged the island to amend its laws to keep up with innovation in the industry, as it faces being potentially banned due to regulatory breaches.
Uber’s chief adviser David Plouffe warned, if "Taiwan wants to be a Silicon Valley of Asia, potentially pushing out an innovative company like Uber is not the right message."
Otherwise, they might just get left behind.
He pointed out that other countries have actually been supportive of Uber, passing more than 100 laws to allow them to operate more smoothly.
He also noted some of the benefits of allowing Uber to remain, including more jobs and spending to stimulate their economy.
An open letter penned by Uber stated, “by promoting Taiwan as ‘Asia’s Silicon Valley’ and appointing a digital minister, your commitment to establishing a tech-friendly policy environment for startups to thrive is clear,” but the legal obstacles posed “directly threaten the interests of over a million Taiwanese citizens, especially the mothers, fathers, retirees, professionals, and the otherwise unemployed who have come to rely on the economic opportunities Uber has created.”
Taiwan did not answer that call in the way Uber had hoped they would.
Back in July, Taiwan’s three-pronged approach to cracking down on Uber included slapping them with hefty fines until they succumbed to legalizing their operations.
Several amendments were proposed to the Highway Act for illegal transportation services, including an increased penalty, revocation of driver and vehicle licenses for up to two years, and a 10% reward for reporting illegal activity.
To fight back, Uber published advertisements on the front page of four major newspapers in Taiwan.
One advertisement stated: “The government suppresses new technology. So much for Asian Silicon Valley!”
Another read: “We embrace the power of moving the nation forward, but the government is imposing a NT$25 million penalty as a barrier.”
The advertisement also encouraged people to sign a petition asking the Taiwan government to amend the Highway Act to list Uber as “internet transportation service providers.”
Uber was not successful in its attempt to sway lawmakers.
Last week, the Taiwan legislature passed the amendment bill that will drastically raise the maximum fine for illegal passenger transportation services from between NT$50,000 (approximately $1500) and NT$150,000 (approximately $4600) to up to T$25 million (approximately $780,000).
This is the highest level for illegal transportation services fines in the world.
This is even higher than the fine for drunk driving on the island.
To date, Uber has racked up NT$66.05 million worth of fines, and their drivers have been fined NT$20.028 million on the island.
UberEATS motorcyclists who deliver food have also been fined.
In the past, Uber operations have suspended sporadically due to police coming down on them.
But as a result of this new law, provisions of which are expected to take effect next year, operators may have to close up shop for good.
In response, Uber stated “we are very disappointed to see the Legislative Yuan pass the amendment bill raising fines against driver-partners on the Uber app to the largest anywhere in the world” but “we will continue to seek a constructive conversation with the Taiwanese government to ensure Taiwan gets the full benefits that ridesharing brings to riders, drivers and cities. We will also study the legislation before deciding on our next steps.”
Just days after the Highway Act amendment was passed, Uber Taiwan began a new campaign offering coupons worth up to NT$10,000 (US$312) to customers for posting a selfie with an Uber driver (and a corresponding hashtag) on Facebook.
Some drivers were reluctant to appear in the selfies for fear of it being used as evidence against them in light of the new amendment.
Based on recent events, it seems this battle between Uber and Taiwan will not be ending any time soon.
Note that Uber has been encountering similar legal obstacles in other Asian markets, including Japan, Korea, Thailand, and Vietnam.
In the US it is banned in specific parts of Alaska, Alabama, Florida, New York, Texas, and the entire state of Nevada.
Sources:
- http://www.chinapost.com.tw/editorial/taiwan-issues/2016/11/21/484530/p1/Startups-need.htm
- http://fortune.com/2016/12/16/uber-taiwan/
- http://fortune.com/2016/11/16/taiwan-apple-google-uber-app-store/
- https://international.thenewslens.com/article/56189
- http://www.chinapost.com.tw/taiwan/business/2016/07/19/472671/MOTC-announces.htm
- http://mashable.com/2016/08/22/uber-taiwan-tax/#Poz.Cug5YSqq
- http://www.thedailystar.net/bytes/the-uber-controversy-1321321
- http://www.taipeitimes.com/News/taiwan/archives/2016/11/29/2003660218