The General Department of Taxation has currently requested the Ho Chi Minh City Department of Taxation to collect data and inspect tax compliance of Uber Vietnam Ltd. and GrabTaxi Co., Ltd. since their establishments in Vietnam. In addition, the Ho Chi Minh City Department of Taxation must also check tax compliance of two traditional taxi businesses in the area.
About 31,000 vehicles participate in Grab, Uber applications in Hanoi and Ho Chi Minh City. Photo: Internet
Traditional taxi firms claim to be subject to a variety of taxes and charges, while Uber, Grab are only subject to a tax of 4% to 5% of revenue.
Accordingly, with about 30,000 vehicles in Hanoi and Ho Chi Minh City, traditional taxi firms must pay an average tax of VND2,000 billion annually. While the taxation department only collects about VND20 billion annually from 31,000 contracted vehicles, most of them participate in Uber, Grab applications.
"The total tax paid by Grab last year was just VND5.8 billion but it reported a net loss of more than VND400 billion. The problem is Grab’s registered capital of only VND20 billion but reported a loss of over VND400 billion, so where this source of money comes from?," said Mr. Ta Long Hy - Chairman of the HCMC Taxi Association.
Mrs. Nguyen Thi Hanh - Director of Personal Income Tax Management, said that it is necessary to impose a suitable tax policy for foreign enterprises operating in Vietnam without legal entity status.
Approximately 31,000 vehicles participate in Grab, Uber applications in Hanoi and Ho Chi Minh City.
According to Mrs. Hanh, in case these enterprises do not have accounting books, they must pay tax by fixing on turnover, including value added tax and corporate income tax, which are now charged 3% and 2% respectively.
However, the representatives of the technology taxi firms claim they do not evade taxes. "Grab is a technology company and does not own any means of transport". “We combine with cooperatives and transportation service providers to exploit the availability of idle vehicles," said Jerrry Jim - Director of Grab Vietnam.
"We understand that one of the government’s concerns is how to reduce traffic jams," said Jim. "We are working actively with the authorities to comply with Vietnamese law."
In the near future, the Ministry of Transportation will provide information to the tax administration to clarify Uber and Grab tax compliance. Mr. Nguyen Hong Truong – the Deputy Minister of the Ministry of Transportation said he would work with the Ministry of Finance, especially the General Department of Taxation to share documents and discuss tax management options.
According to the General Department of Taxation, not only Uber, Grab but also more than half of traditional taxi businesses have reported errors in their documents; therefore, they did not pay corporate income tax. Some traditional taxi businesses did pay tax but at avery low level.
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