Vietnam gets tough on Uber in alleged tax evasion case

By Thanh Thanh Lan September 12, 2016 | 02:32 am PT

It's official: Uber has been ordered to adhere to new rules that require it to declare and pay taxes in Vietnam.

After a long legal back-and-forth between policymakers and Uber, the popular ride-sharing service has now officially been ordered to adhere to new rules that require it to declare and pay taxes in Vietnam.

Under the regulations introduced by the Ministry of Finance, Uber International Services Holding B.V. must pay a value added tax rate of 3 percent on its revenue and a 2-percent corporate income tax.

The unit, based in the Netherlands, is responsible for the service in Vietnam. It has been accused of providing transport services in Vietnam without paying taxes for two years.

Uber is also required to pay taxes on behalf of Vietnamese drivers, which includes a 3-percent value added tax and a 1.5-percent personal income tax.

Deputy Minister of Finance Do Hoang Anh Tuan once conceded that it was impossible for the authorities to look for every single individual in thousands of Uber drivers to collect taxes, so Uber itself must be responsible for payments.

As Uber B.V. is based in the Netherlands, Uber Vietnam or another authorized organization will declare and fulfill its obligations in its stead, said the ministry.

Uber, a smart phone application that connects drivers with people who need a ride, first entered Vietnam in 2014 but to date, it has yet to contribute money to the country’s state revenue.

Transport authorities estimated that Uber Vietnam could earn an average monthly revenue of VND30 billion ($1.3 million) from the 20 percent commission that Uber drivers have to pay for each ride.

A tax expert told VnExpress that even the new policy and effort cannot ensure tax collections from Uber Vietnam or another representative.

“If the local representative doesn’t comply with the rules, Vietnam still loses money because Uber B.V is too far away,” he said.

In October last year, Uber proposed legal frameworks for providing ride-hailing services in Vietnam but the proposal was rejected as Uber did not designate a legal entity that would sign contracts with Vietnamese partners.

The Ministry of Transport then asked Uber to revise its proposal, but no further action has been taken since.

At present, only Grab Taxi, a Malaysia-based company and Vietnam’s Vinasun have received permission from the authority to launch e-hailing car services in Vietnam.

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