Controversial ride-sharing company Uber will increase prices by approximately 10 per cent on its UberX service, starting immediately on Friday.

The controversial ride-sharing company announced the plan after the Australian Tax Office's ruled UberX drivers must begin paying the goods and services tax from August 1.

The price hike comes alongside Uber's announcement it will challenge the ruling in the Federal Court. The company said the decision puts Uber drivers "in a different position" to other driving services and house-sharing platforms, such as Airbnb, who are not required to collect GST until they turnover $75,000 a year.

UberX will comply with the court decision for the moment but intends appealing. Dominic Lorrimer

"Uber believes all of its driver partners should pay their appropriate share of tax," the company said in a statement on Friday. "However, we believe driver partners and riders are being unfairly singled out, and so Uber is challenging the ATO's position in the Federal Court of Australia."

The ATO has maintained its decision was consistent with current GST law and drivers have been given between late May and last weekend to prepare then begin collecting the tax.