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MoF provides tax guidance to Uber

Released at: 22:42, 13/09/2016

MoF provides tax guidance to Uber

Photo: Uber Vietnam

Finance Ministry issues decision detailing Uber's tax obligations.

by Hong Nhung

The Ministry of Finance (MoF) has recently requested the Netherlands-based Uber International Services Holding BV authorize its subsidiary, Uber Vietnam, or a third party to declare and pay taxes for its taxi transport services in Vietnam.

MoF has issued guidelines for tax collections to the Uber parent company, stating it must pay taxes as a foreign establishment that operates and earns income in Vietnam without having resident offices. The parent company must therefore authorize Uber Vietnam or another organization to fulfill tax payments due under contracts signed with enterprises and individuals in the transport business.

It is not able to pay value added tax (VAT) under the deduction method so MoF will apply the direct method on its total revenue.

Specifically, Uber will be charged value added tax on its sales at a rate of 3 per cent. Corporate income tax (CIT) on revenue is at 2 per cent.

The tax payable for drivers will be paid by the company at a rate of 3 per cent for VAT and 1.5 per cent for personal income tax on their earned income.

Uber Vietnam told VET on September 12 that it welcomes the progress being made in clarifying its taxation status and will comply with directions.

“This is clear evidence of cooperation between the government and private enterprises to reach a solution,” it wrote in response to questions from VET. “We are working closely with the government on specific guidelines for implementation.”

Uber collects all transport fares through card payments. Drivers use their own vehicles and receive 80 per cent of the fare while the remaining 20 per cent goes to Uber.

Tax authorities will not collect taxes directly from drivers, with the organization being authorized to declare and pay tax for Uber BV also representing drivers in tax declarations and payments.

The General Department of Taxation previously put forward an option whereby organizations and individuals doing business in transport services as Uber partners are responsible for withholding and paying taxes on behalf of Uber, according to the proportion in the sales sharing agreement. This option was not preferred by many financial experts.

Mr. Dinh Trong Thinh, a senior economist at the Vietnam Institute of Finance, proposed tax collections from Uber via money transfer from the company’s service users. “Tax authorities must work closely with banks in order to control transaction services and international payments and also need a developed information technology system,” he said.

Uber entered Vietnam in July 2014 and its tax status has remained controversial ever since.

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