Online taxi-hailing company Uber has suspended its services in neighbouring country Tanzania.

The US taxi-hailing giant cited the Tanzanian government’s legislation that hiked fares and reduces its commissions.

According to Uber, the legislation rendered the situation difficult to operate under.

"The pricing order proposed by the Land Transport Regulatory Authority (LATRA) makes it challenging for platforms like Uber to continue to operate," Uber said.

The new regulation that saw the fares double to Tsh900 comes into effect this month while the maximum commission for taxi-hailing companies has been reduced from 33 per cent to 15 per cent.

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The Director-General of LATRA, Gilliard Ngewe issued a statement on Thursday defending the move saying it was aimed at maintaining competition and affordability.

Ngewe asked all the taxi-hailing companies to comply with the new rules and regulations to boost the Tanzanian economy.

"We remind all the ride-hailing companies to abide by the rules and regulations of doing business in order to boost the economy," Ngewe said.

Uber said they are still available to work with the Tanzanian government and are ready to resume their services once the pricing dispute is resolved.

"We remain available to work with regulators on building a framework for technology to thrive so that we can re-launch and provide a service loved by so many," Uber said.