Israeli Ministry of Transportation May Prosecute Uber Executives

The Israeli Ministry of Transportation is considering prosecuting Uber Israel's executives and has recently summoned Uber Israel's CEO for investigation.

The threat of criminal prosecution for Uber Israel arises from the Uber Night service offered in Israel. The service, which has been running in a pilot phase in Israel for a number of months, enables private car owners registered with the service to drive passengers at night when public transportation is not available. The fee that passengers pay is referred to as “reimbursement” for the drivers' expenses, such as fuel.

The Ministry of Transportation maintains that the service violates the transportation regulations prohibiting a person from driving “passengers for a fee or other consideration” without an appropriate license. Uber maintains that the regulation does not prohibit reimbursement for fuel costs and car depreciation. Uber charges drivers 25% commission from the reimbursement paid to the driver.

The Ministry of Transportation also advised the Israeli Tax Authority of the Ministry's investigation, on the basis of the Ministry's assumption that Uber drivers have also failed to file tax reports on the income earned from the service. The Ministry is also investigating a traffic accident in which an Uber driver was involved and is looking into the incident's insurance implications.

The Ministry of transportation distinguishes Uber Night service from similar carpooling services (such as Waze Carpool and Moovit Carpool) in that other services connect passengers with drivers already on their way to the desired destination, while Uber Night drivers are on-call to be dispatched to pick up passengers and drive them to their desired destination.

Uber responded to the Ministry's allegations indicating that the service was designed in accordance with existing regulation and operates similarly to other comparable services. Source: TheMarker (in Hebrew), by Oren Dori.