Photo taken of a Uber driver in Ha Noi. Uber and its drivers should pay tax to the authorities as it is considered a transportation firm. — VNS Photo Truong Vi

HA NOI (Biz Hub) – A representative from the Vietnamese tax watchdog said it was important to clarify the legal basis for taxing Uber and Uber taxi drivers in order to prevent tax avoidance.

Nguyen Quang Tien, director of the General Department of the Taxation's Department of Tax Reform and Modernisation, said on Tuesday that the performance of tax payment obligations by Uber's taxi drivers must now be checked first while Viet Nam needed to have policies to better tax the increasingly popular car hailing service for the income it received from its operations in Viet Nam.

Tien said that under the established regulations, the car transportation service was a line of business which had requirements (business registration certificate) for operations.

In case of Uber, Tien said, the company signed contracts with local car owners to become its drivers. However, many Uber drivers may not be possessing business registration certificates to run a transportation service, thereby making it illegal, according to Tien.

While Uber previously affirmed that the company was compliant with laws, checks were still needed, especially, on tax payment of drivers, he stressed.

Tien said that authorities managed to collect Uber's share of taxes, but it was difficult to collect the drivers' share of taxes.

Controversial

The operation of Uber in Viet Nam was managed by its parent firm Dutch-based Uber International Holding B.V.

Uber collected all the transport fares through card payments. Uber drivers used their own vehicles and shared 20 per cent of revenues with Uber while the remaining 80 percent went into their pockets.

The tax-paying rules for Uber, which were issued recently by the General Department of Taxation, had resulted in a controversy about their effectiveness in management as there was a possibility of tax avoidance, according to experts.

The tax watchdog said that Uber was not a transportation service firm but a company using technology solutions to connect transportation, which determined how the company would pay taxes.

If Uber was determined as a transport technology solution provider, the car hailing service firm would have to declare taxes for the share of 20 per cent that it got from drivers. If Uber was determined as transportation firm, it must declare and pay taxes for 100 per cent of its revenue.

As Uber had no representative in Viet Nam, its local partner drivers would be in charge of a claim on taxes and pay them on behalf of Uber, according to rules set by the tax authority.

Experts, however, said that under the Viet Nam's established laws, the entity that directly received payments from customers would be the one to declare and pay taxes, meaning that this would be the responsibility of Uber B.V. and could not be passed on to it partner drivers.

Nguyen Thai Son, former official of HCM City Department of Taxation, was quoted by Tuoi Tre (Youth) newspaper as saying that there would be high risk of tax losses as most Uber cars were private and it was difficult to collect taxes from them.

Deputy Minister of Finance Do Hoang Anh Tuan said to the newspaper that the ministry asked the General Department of Taxation to report about Document 2529 about tax-paying rules for the operations of Uber in Viet Nam.

According to Tuan, Uber was a transportation firm as its revenue came from the transportation business, and added that it must be responsible for declaring and filing taxes on its incomes in Viet Nam, not its drivers.

Tran Ngoc Tam, director of HCM City Department of Taxation, said that the tax watchdog would continue to work with Uber on its tax payment obligation. "It is important now that the legal basis for taxing Uber be clarified." – VNS