The Netherlands-based ride-hailing firm Uber International Services Holding B.V has filed a lawsuit against the HCM City tax department after it decided to forcibly collect tax, Nguoi Lao Dong (Labourer) newspaper reported.

Earlier the department had sent a notice to Uber that it had to pay VND66.68 billion (US$2.94 million) in tax arrears by December 23, but the company only paid VND13.3 billion ($586,000).

Uber B.V. filed a complaint with the General Department of Taxation and the Ministry of Finance (MoF) on the grounds that it had fulfilled its tax obligations under the Double Taxation Avoidance Agreement signed between Viet Nam and the Netherlands.

But the MoF said Uber B.V. is not entitled to tax exemption under the agreement since it generates its income in Viet Nam through a network of local partner drivers.

The tax department then asked five banks - Vietcombank, Eximbank, Sacombank, ACB, and VietinBank - to appropriate fares paid to Uber through bank accounts and send to it instead of to Uber International Holding B.V. The seizure is to be done between January 1 and 10.

Uber then decided to take the department to court.

On December 29 the HCM City People’s Court, after considering Uber’s petition, ordered the tax department to suspend the enforcement measures until its final verdict.

Responding to the court order, Tran Ngoc Tam, director of the department, told Nguoi Lao Dong (Labourer) newspaper that the department is fully compliant with regulations but has to furnish appropriate evidence to the court.

Earlier, after inspecting Uber’s tax records since it began operations in Viet Nam in 2014, the department had ordered the company to pay the tax arrears in addition to a fine of VND10.3 billion ($453,000) for false declaration of tax.

Uber said it has followed all Vietnamese laws in signing electronic contracts with transportation units and individuals. It said it would continue to complain about the tax.

Uber’s total revenue from its Viet Nam operations between 2014 and mid-2017 amounted to VND2.7 trillion ($119 million), but the company paid a mere VND76.8 billion ($3.4 million) in taxes, according to the General Department of Taxation.

Traditional taxi companies have used the tax issues to accuse Uber and Grab of unfair competition.

In recent years the number of Uber and Grab taxis has exceeded the figure projected by HCM City planners. Their fleet now number 21,000, while the city’s taxi demand is estimated at only 11,000-12,000.

Meanwhile, traditional taxis need a badge and logo and a metre besides having to follow stringent regulations with respect to parking, licensing, roof signage, listed fares and drivers’ uniform.

Between 2014 and mid-2017, when Uber paid a mere VND76.8 billion ($3.4 million) in taxes and Grab paid VND9.5 billion ($420,000), traditional taxi operator Vinasun paid VND1.2 trillion ($53 million) despite having a fleet only one sixth of that of Grab and Uber. — VNS