Why Uber could leave Brazil

New regulations approved by the Brazilian government this week could mean that Uber and companies that provide similar services would be unable to operate in the country.

Earlier this week, the majority of lawmakers approved the main text of a bill, which makes ride-hailing services - such as Uber, Cabify and several local equivalents - a "public interest" activity.

The regulations turn cars providing services through the transportation apps, into taxis, with the same regulations applied including specific permits from city authorities, taxi license plates and meters, making it nearly impossible for such private firms to operate.

According to the bill, drivers working through apps like Uber will also be required to pay taxes on their earnings and carry insurance for passengers.

The new bill complicates things even more for the transportation apps - these companies had been previously allowed to coexist with taxis in cities such as São Paulo, home to the largest South American market for Uber and its equivalents.

Back in 2015, São Paulo mayor at the time, Fernando Haddad, created a new class of transportation service to accommodate the new mobility alternatives. The discussion then evolved into a situation where companies could operate based on a online credit purchase scheme and effectively buy the right to have cars working under their apps - and pay taxes to operate.

The scheme pioneered in São Paulo not only proposed to provide the Mayor's office with information on rides and set caps for the number of vehicles that can work under each tool, but also has been generating enough cash over the past year to build a hospital with 200 beds in the city.

Brazilian taxi unions and many politicians have accused companies such as Uber of unfair competition and local taxi drivers are expected to put considerable pressure on legislators to make the bill, which still needs to be cleared by the Senate, into law.

Uber said in a statement that the bill represents "a backward law that does not seek to regulate [its service] but to turn it into a taxi [operator] and forbid its urban mobility model."

The company added it expects the debate around technology to continue in the Senate to "ensure that the voice of millions of people in Brazil who wish to have their right of choice is heard."