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UPDATE 2-Brazil debates weaker bill on car-hailing apps after Uber lobbying

(Rewrites with debate on compromise amendments)

BRASILIA, Oct 31 (Reuters) - Brazil's Senate discussed amendments that would water down a hotly disputed bill to regulate car-hailing services like Uber Technologies Inc on Tuesday after the chief executive of the U.S. company warned it could make its business unworkable in the country.

Dara Khosrowshahi, who held talks with senior Brazilian officials in the capital Brasilia, has called on senators to remove rules in proposed legislation that would require Uber drivers to be licensed with their local municipalities, like taxis, and to use their own cars.

Uber has said that, if the bill is approved in its current form in the Senate on Tuesday, it would undermine its ability to operate in Brazil, its second-biggest market, by making it too expensive and bureaucratic for many of it drivers.

That would harm the livelihoods of the 500,000 people driving for the app in Latin America's largest economy, according to Uber.

Following an appeal by Khosrowshahi for greater dialogue and more sensible regulation, the Senate leadership allowed discussion of amendments that removed the requirements that drivers own their cars and have red license plates used in Brazil by public transport vehicles.

A vote on the legislation was expected later on Tuesday.

Even with a compromise, the bill would still subject each driver to local city licensing, taxes and other regulations, said an Uber spokesman.

The crackdown in Brazil comes after authorities in London decided not to renew Uber's operating license last month and highlights the legal threats mounting against its fast-growing foreign operations.

Khosrowshahi struck a conciliatory tone in an interview with a Brazilian newspaper, suggesting Uber was open to finding compromise with local lawmakers, a break in style with his pugnacious predecessor, Travis Kalanick.

"In the past we were a bit aggressive but we have to understand that it's not just about what we want and reach compromises," Khosrowshahi told O Estado de S. Paulo. "We are not against regulation. Regulating services like Uber is totally appropriate."

However, after talks with Finance Minister Henrique Meirelles in Brasilia, the executive struck a more strident tone, saying that the future of the ride-hailing app in Brazil "depends on the decisions of the government".

If amended by the Senate, the bill will have to return to the lower house for approval of the changes before it can be signed into law by President Michel Temer. An aide to Temer suggested in April he might veto some of the regulations that turn the car-hailing app drivers into taxis.

UBER, TAXI DRIVERS PROTEST

Hundreds of taxi and Uber drivers lined on the opposite sides of the esplanade in front of Brazil's Congress to demonstrate for and against the bill.

Uber's executive spokesman for Brazil, Fabio Sabba, told Reuters he was punched in the face by a taxi driver as he gave a media interview inside the Senate building.

"I'll have to find another job. I was unemployed and driving an Uber car is my family's only source of income," said Abel Balbino, 50, from the neighboring state of Goias. "This PLC-28 law will not allow me to use my wife's car for Uber."

Taxi drivers bused into Brasilia by unions said Uber's lower fares had cut their income by almost half.

"Uber is destroying our age-old profession with unfair competition," said Antonio Barbosa, who traveled 26 hours from the northern state of Bahia to protest.

In a study issued hours before the Senate was due to vote, Brazils antitrust regulator CADE found that car-hailing apps had improved the market for individual passenger transport by increasing competition. CADE said apps like Uber, Cabify and 99 should lead to less regulation rather than more.

In recent days, the car-hailing companies have urged Brazilians by WhatsApp and social media to press their senators to vote against the measure, which was authored in the lower house by a congressman from the leftist Workers Party backed by taxi cooperatives and unions.

Khosrowshahi took over in August from Uber co-founder Kalanick, assuming the daunting task of mending the company's public image, repairing frayed investor relations and rebuilding employee morale after a string of crises.

Khosrowshahi's trip to Brazil, first reported by Reuters on Friday, followed a recent visit to London.

"We had a very constructive dialogue and I think we will be able to resolve their concerns," he said of the London trip.

Khosrowshahi told Estado that Uber was making security its top priority in 2018 after his teams in Brazil, Mexico and other parts of Latin America raised concerns about the issue.

In February, Reuters reported that a surge in violence against Uber drivers in Brazil last year was forcing executives to rethink the use of cash payments and admit they had underestimated security risks here. (Reporting by Anthony Boadle and Brad Haynes; Editing by Daniel Flynn and Bill Rigby)