Platforms not responsible for rides

One of the terms laid out by the platforms and which users agree when using them is that the relationship being entered into is one between the rider and the fleet. The platforms, they would have you believe, are only providing the online infrastructure to match the two together.

So, the drivers aren’t directly employed by the platforms, and the cars aren’t bought by them either. What the platforms get is a roughly 20% commission per ride, depending on the specific agreements in place between the platforms and the fleet companies.

Fleet companies vary in size and power, with the largest being WT Global that owns 269 vehicles. There were 4,787 cars registered as garage hire vehicles as of December 2023, according to the National Statistics Office.

Then there are the platforms which include eCabs, Bolt and Uber. ECabs, the only Maltese platform, operates as a sort of hybrid, operating its own fleet of cars and employing drivers which it uses together with the third-party fleet companies to keep up with the demand.

In companies where drivers are employed, they receive a salary on the basis of their contract as one would expect of your average job. Another set up, which is prevalent in the industry, is a 50/50 split of the generated revenue between the fleet owner and the driver, a fleet owner who spoke with Lovin Malta said.

This, they said, was because is more attractive to workers, giving them the freedom to work when they choose while also increasing their take-home pay.

How much money is generated?

Let’s take an average driver who works in Malta for a dodgy fleet company for a year. Say they generate €26 in revenue per hour of work in peak months and €17 per hour in off-peak months.

Let’s also assume that there are four months of peak traffic and that drivers work for and that they work 12 hours a day for 27 days a month. This could obviously vary; in fact, some drivers have said they would work shifts as long as 16 hours.

But taking a conservative estimate of 12 hours this would see a single driver generate €33,696 during the four peak months and €44,064 over the remainder of the year. For simplicity’s sake let’s round it up to €80,000 generated by a driver in a single year.

Assuming a 50/50 split, as our sources have indicated is the most common arrangement, we would have a situation where both the driver and the company get €40,000. The source explained that out of its share, the fleet company needs to pay the 20% commission to the platforms, 18% in VAT to the taxman as well as any costs associated with maintenance and upkeep of the vehicle. From their share, drivers must pay tax and the cost of fuel for the car.

This is where it gets messy.

The source estimated that roughly a third of all trips are paid for in cash meaning fleet companies could realistically declare as little as 60% of their income.

Moreover, they said that the vast majority of drivers – including those getting paid a 50/50 split – are, as far as authorities are concerned, employed on minimum wage contracts. As such their declared salary is the lowest one could legally pay an employee on a part-time or full-time contract. In reality, however, the drivers are earning a lot more than what their contract states and this is all going untaxed.

Continuing with our example, let’s assume that out of the €40,000 owed to it, the fleet company pays the €14,400 owed in VAT payments (18% of the total €80,000 generated in rider-fleet transactions) and the €16,000 in commissions owed to the platforms on the basis of a 20% rate. Let’s also deduct €3,000 for maintenance costs, €4,000 for license fees and insurance and €6,000 in other expenses including fines and wear and tear, this would leave the owner with a loss of roughly €3,600 or about €1,700 if the driver puts in a 16-hour shift.

A car being driven for 24 hours by more than one driver will see fleet companies making €2,800 every year of each car – assuming of course all the VAT is being paid. If we assume only 60% is being declared the profit generated by a car in use for 24 hours shoots up to €14,000 every year.   

In addition to VAT lost due to undeclared rides, the fleet owner said that the treasury was also being denied tax revenue due on the transaction between the fleet owner and the platforms –the transfer of the 20% owed to the platforms.

Since the money paid by riders first goes into the fleet company’s account, it is then up to the platforms to invoice the fleet companies for their share of the pie. Since two of the three platforms are owned by companies based outside of Malta they argue that they are not obliged to charge VAT in Malta.

Driver is King

So, what about the drivers? They need to pay for fuel as well as their share in tax and National insurance. Let’s assume that they spend €10,000 a year on fuel. If we assume that our driver is, as far as local authorities concerned, working on a minimum wage full time contract, his total tax and NI contribution would be €1,335.

A driver working up to 12 hours a day will take home €27,545. At 16 hours, it’s €40,000. An employee in Malta earning a salary in that region would be paying at least €7,000 a year in taxes

The nature of platforms is to strive to increase their volumes while fleet companies work to increase profitability. With no oversight of the industry, this has resulted in a situation where drivers are paying far less tax than they should be, but they’re also working extremely long hours to do so. It also means that fleet companies are failing to declare a significant portion of their transactions allowing them to continue driving prices down while edging out operators that follow the rules.

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