The Finance Ministry said Uber BV, a company based in the Netherlands, does not meet the conditions for paying the value-added tax (VAT) under the deduction method, and the corporate income tax (CIT) on the basis of revenue and expenses declared.
The company shall instead pay a VAT rate of 3% and a CIT rate of 2% in line with Circular 103/2014/TT-BTC dated August 6, 2014 and Circular 60/2012/TT-BTC dated April 12, 2012 issued by the Finance Ministry providing guidance on foreign contractors with taxable incomes.
Besides, companies and cooperatives engaged in transport business which are set up in accordance with laws and sign contracts with Uber BV to conduct business activities shall declare and pay VAT and CIT in relations to the revenue earned under their contracts, excluding revenue earned by the Dutch company.
Meanwhile, individuals who sign contracts with Uber BV shall pay a VAT rate of 3% and a personal income tax rate of 1.5% corresponding to the revenue earned under their contracts.
Notably, according to the ministry, the General Department of Taxation issued Official Letter 384/TCT-TNCN dated February 8, 2017 on the tax policy for business cooperation activities of Grab Taxi Company.
Some traditional taxi firms proposed the Finance Ministry apply their tax revenue assessment as Uber and Grab, or allow them to pay the VAT at the rate of 5% instead of the current 10%. Besides, they also petitioned the ministry to apply taxes on their foreign rivals based on their full revenues.
In response to their proposal, the ministry said, according to prevailing tax regulations, transport business companies are subject to a VAT rate of 10%, with reduction of their input costs applicable. That traditional taxi firms ask for a VAT rate of 5% is unreasonable.
In regard to the CIT, the ministry said transport businesses must declare all of their revenues and pay their taxes. For each organization or individual engaged in transport business in the form of a turnover-sharing business cooperation contract, it is obliged to pay their taxes on the revenue which is divided in line with their agreements.
The ministry explained that if revenues of Uber and Grab all generated by their customers are determined to be taxable, this will lead to overlapping and unreasonable taxes. This is because Uber enjoys a mere 20% of the whole transport revenue, with the remainder going to organizations and individuals in partnership with Uber.
Under their business contracts, these organizations and individuals shall declare and pay tax according to the regulations applicable to the turnover they are entitled to.
Data of the tax sector shows among 10 passenger transport enterprises with large turnover in HCMC, only Mai Linh Travel Co Ltd and Thanh Buoi Tourism Co Ltd generate deductable VAT, but do not generate payable VAT.
Some other companies which have the ratios of VAT on their turnover of less than 3% are Gia Dinh JSC, Saigon Tourist Transport Co, and No.10 Transport Cooperative.