The controversial ride-sharing giant Uber has launched a legal challenge seeking to overturn a directive by the Australian Tax Office (ATO) that would force its drivers to pay the Goods and Services Tax (GST).

Lawyers representing Uber lodged an application with the Federal Court on Friday, arguing the ATO's policy "unfairly targets" drivers and should not have been announced while a review of the tax system is underway.

"To be very clear, we believe all our driver-partners should pay their appropriate share of tax and meet their tax obligations," the company said in a statement.

"However, we feel they have been unjustly singled out by the ATO for different tax treatment than truck drivers, bike messengers, Airbnb hosts or any other participant of the sharing economy."

Thousands of Uber drivers across Australia were earlier this year ordered by the ATO to register for the GST by August 1.

The ATO argued anyone who provides ride-sharing services such as Uber are providing "taxi travel" under GST law.

The decision could mean passengers will be hit with a 10 per cent increase in fares.

The Australian Taxi Industry Association (ATIA) described the challenge as "yet another example of multi-billion-dollar companies wanting to make money in Australia but not pay local taxes".

"The ATO's decision to make ride-hailing drivers register for GST simply treats them exactly the same as Australian taxi drivers," ATIA chief executive Blair Davies said.

"UberX drivers provide point-to-point passenger transport services for commercial reward, it's just a form of taxi service.

"Having to charge GST for those services and remit that GST to the ATO doesn't disadvantage uberX drivers compared to taxi drivers, it just treats them exactly the same."

Mr Davies rejected Uber's argument that it should be taxed differently because it is part of the "sharing economy".

The ATO took a different stance on Airbnb — a digital service linking travellers to hosts with a spare room or home — arguing the accommodation providers are not operating a hotel or bed and breakfast and are not required to register for GST.

Uber argues drivers using its platform should not be treated differently.

"Over fifty jurisdictions around the world have recognised ride-sharing as a new model requiring updated regulations that reflect its unique attributes," the company said in a statement.

"The guidance by the ATO has tried to fit a new technology model from today into a 1990s regulatory framework that was written long before this technology ever existed."

The ABC approached the ATO for comment and a spokesperson said its lawyers were "considering the matter".