Mobile taxi app Uber has suffered another regulatory setback today as Berlin’s State Department of Civil and Regulatory Affairs has banned the company from operating within the city limits and threatened a €25,000 fine if it doesn’t comply, the BBC reports. Uber has said that it will challenge the ban.

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“The decision from the Berlin authorities is not progressive and it’s seeking to limit consumer choice for all the wrong reasons,” said Uber’s general manager in Germany, Fabien Nestmann. “As a new entrant we’re bringing much-needed competition to a market that hasn’t changed in years.”

Berlin officials cite passenger safety

Berlin officials said that they were banning Uber to protect people from non-approved drivers operating unlicensed vehicles, possibly without the correct insurance in case passengers get hurt in a car accident. They also said that the decision protects drivers who could get into a lot of trouble if their auto insurance doesn’t cover passenger transport.

The assumption behind the order, which seems pretty obvious, is that Uber is offering passenger transport services and that it has to follow the same regulations as other taxi services. The mundane objections about unlicensed cars and lack of proper insurance show just how unexceptional Berlin authorities consider Uber’s business model to be.

Uber may have trouble playing by its own rules

For all of its talk about disrupting the moribund taxicab industry, one of the main reason Uber is able to undercut the competition is that it has avoided paying livery taxes and fees by asserting that the app it uses isn’t a taximeter. The company has successfully argued in some jurisdictions that because its app doesn’t actually connect to the car in any way (it calculates the trip distance using GPS), old laws don’t apply. Anyone who has watched Amazon fight to avoid paying sales taxes so that it can more easily undercut brick and mortar competitors will be familiar with the dynamic.

The Berlin ban isn’t about taxes, but it’s important that the decision casually ignores the app/taximeter distinction and treats Uber as any other passenger transport company. As Uber becomes more popular worldwide (it’s already in more than 40 countries) it will eventually have to deal with local governments that would like to see their laws followed and their taxes paid. The wheels of government might move slowly, but they do move, especially when tax revenue is being left on the table.