Government’s plan to ‘formalise’ and regulate taxis in South Africa

Transport minister Fikile Mbalula has established a national relief fund for taxi and e-hailing operators, to offer support after the impact of the Covid-19 pandemic. But to qualify, operators will need to subject themselves to tighter regulation.

First announced in June 2020, the relief fund is not compensation for loss of revenue due to lockdown restrictions, but rather forms part of general government assistance.

However, the directive also aims to effectively formalise the taxi sector, with applicants having to meet a number of strict conditions before they qualify for funding.

“This relief must be looked at through the long-term view of the opportunity created by Covid-19 pandemic to achieve (the) long-term sustainability of the industry through formalisation and ultimately subsidisation,” Mbalula said when the fund was first announced.

“We need to subsidise the taxi industry. With none of the rail services operational, all people are dependent on the taxi industry to get to work. We must understand subsidisation in this context.”

To qualify for the relief fund, taxi operators must be:

  • A South African citizen or permanent resident in the republic;
  • In possession of a valid operating license or permit or receipt as proof of application for renewal of an operating license;
  • The association to qualify for the taxi relief fund must be a registered association in terms of the National Land Transport Transition Act.

To qualify for the relief fund, e-hailing operators must be:

  • A South African citizen or permanent resident in the republic;
  • In possession of a valid operating license or professional driving permit.

Extra conditions 

In addition to the above requirements, the directive states that the following conditions must also be met to qualify for funding:

  • At the commencement of the national lockdown the taxi operator must be in possession of operating license or permit, and have been operating for the previous 180 days;
  •  The taxi operation must be formally registered as a business entity;
  • The business must be registered for income tax and other applicable taxes related to running a business in South Africa;
  • The registration process should also include registration of employees with the Skills Development Levy (SDL), Unemployment Insurance Fund (UIF), Compensation for Workplace Injuries, Diseases and Death (COIDA) as well as compliance with the Sectoral Wage Determination by the Minister of Labour;
  • The taxi operator must transfer the operating licence or permit into the name of the company;
  • The e- hailing driver must be registered for income tax;
  • The funds to be paid only into the business account.

Formalisation 

Over and above these conditions, all taxi operators will be required to transfer their operating licenses to business entities within seven years from the date of submission of the application for the taxi relief fund.

The taxi operator must ensure that within a period of two years from the date of submission of application that the employees in his employment will be registered under the name of the company established and registered with the Unemployment Insurance Fund.

In the case of cars, minibuses, and midibuses that are still financed, the taxi operator must ensure that within 5 years they change from the owner to the company.

The cut-off date for the application of the taxi relief fund is 30 September 2021.


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Government’s plan to ‘formalise’ and regulate taxis in South Africa