Ministry of Finance clarifies tax calculation method for Uber, Grab
By An Nhien
October 13, 2017 | 07:52 AM GMT+7
New ride-hailing apps such as Uber and Grab are coming under criticism from traditional taxi companies in Vietnam, who claim that tax policies give them preferential treatment.
Uber and Grab are coming under criticism from traditional taxi companies in Vietnam.
On October 11, the Ministry of Finance (MOF) affirmed that it is reasonable to tax transportation firms differently when they have different business models.
MOF states enterprises which can determine their turnover and expenses should be subjected to corporate income tax (CIT). Otherwise, the tax should be levied at the rate applicable to foreign contractors. Accordingly, traditional taxi firms must pay a value-added tax (VAT) of 10% and CIT based on the turnover and expenses they have declared to determine taxable income.
Regarding Uber’s transportation business, Uber B.V Netherlands Co., Ltd., does not meet the conditions for paying VAT by the deduction method and insists on not paying the CIT based on the turnover and expenses they have declared to determine taxable income.
Thus, Uber is subject to a VAT rate of 3% on the revenues they earned. Uber B.V Netherlands Co., Ltd., which provides the connecting software service and signs contracts with transportation organizations and individuals will be taxed.
Uber Vietnam Ltd is authorized by Uber B.V Netherlands to declare and pay VAT to the State budget. Therefore, MOF collects the tax, calculated in percentage, from this unit, with the 3% rate of the turnover for VAT and the 2% rate of the turnover for CIT.
Besides, 5% is the tax rate that Grab is paying, according to the regulations of Circular 219 of the MoF. Since GrabTaxi Co., Ltd was established in Vietnam; this unit is subject to the tax rate applicable to scientific and technological services.
Regarding Grab’s transportation business, the General Department of Taxation has issued official documents to some provincial tax departments. These agencies are guiding tax policies to be uniformly implemented under the principle of cooperation contracts like Uber.
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