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Uber Technologies Inc's (NYSE:UBER) competitors in the taxi industry will not face a 20% VAT charge on their profit margins outside of London following a court ruling on Monday that overturned a previous decision.
The Court of Appeal reversed the ruling that private-hire operators enter into a contract with passengers, sparing them from the value-added tax (VAT) obligations.
The original case was initiated by Uber after a 2021 Supreme Court decision classified its drivers as workers, affecting Uber's tax obligations, Reuters reports.
Uber sought to establish that private-hire taxi operators enter into contracts with passengers, which London's High Court affirmed last year.
This decision imposed a 20% VAT on operators. However, the Court of Appeal's reversal came after challenges from Delta Taxis and Veezu, who argued against the tax imposition.
Also Read: Uber's Hong Kong Operations In Limbo As Government Plans Regulation For Ride-Hailing Services
Delta's lawyer, Layla Barke-Jones from Aaron & Partners, hailed the ruling as "a victory for the taxi industry and all those who depend on it."
She emphasized that avoiding the VAT imposition would protect passengers and taxi firms outside London from additional financial burdens.
An Uber spokesperson said the company would review the judgment and consider further steps. The spokesperson also highlighted the inconsistency in requirements for operators between London and the rest of England and Wales.
UBER stock has gained more than 58% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Transportation ETF (BATS:IYT) and Fidelity Electric Vehicles And Future Transportation ETF (BATS:FDRV).
Price Action: UBER shares are trading lower by 0.39% at $72.15 at the last check on Monday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock
