US-based ride-hailing giant Uber has been overhauling its business operation in India for the past couple of months.
The ride-hailing firm has moved its entire India business to Uber India System and recently shifted its operation reporting to Amsterdam based Pierre-Dimitri Gore-Coty, who as vice president heads the company’s Europe, Middle East and Africa business.
The move is to foster more synergies in the company’s similar business and product markets such as India and sub-Saharan African countries.
The company has been restructuring its business to improve its operational efficiency and its large clients-base in the country.
According to sources close to the development, Uber is trying to localise and improve its operations. The old business structure had been acting as a roadblock for the US-based ride-hailing firm and its corporate business, they added.
Uber’s corporate clients’ tax deductions to its foreign entity often led to delays in payment, said an ET report.
‘Payments to a foreign entity are treated as forex outgo for which the government demands we deduct 43% TDS on the transaction. Uber says this is inaccurate given the tax treaty between India and the Netherlands,’ the report quoted a corporate client of Uber as saying.
The process makes Indian clients more conservative as the applicable tax rate goes up while dealing with a foreign entity. In contrast, the applicable tax rate ranges from 2% to 10% for the same process to an Indian entity.
Many corporate clients, close to 15, have left Uber and moved to its Indian rival Ola due to its cumbersome payment process.
Ola corporate, which reportedly accounts for close to 6% of its total revenue, claims to work with over 7,000 companies.
This is not the first time that the US-based ride-hailing firm has restructured its business in India.
Five years ago, Uber had received an RBI instruction over violation of the two-factor authentication norm for credit card payments for routing the transaction through the Netherlands. Soon after, the ride-hailing firm partnered with Paytm to offer an alternate payment mode.
Uber now realises that to scale in India, they need to change the way they run their business operation and address corporate mobility.
And of late, Uber has also been ramping up its technology and R&D teams in India.