An Uber taxi picks up passengers in front of a shopping centre in Ha Noi. – VNS Photo Doan Tung

HA NOI (Biz Hub) — The Ministry of Finance has issued a document on tax payment rules for Dutch-based Uber International Holding BV for its car hailing service in Viet Nam.

The ministry said Uber must pay taxes as a foreign establishment, which operates and earns income in Viet Nam without resident offices. Accordingly, the direct method will be applied on Uber, in which payable tax amount is based on revenue multiplied with tax rate.

The rates are 3 per cent for value added tax (VAT) and 2 per cent for corporate income tax (CIT), which Uber has to pay for its revenue generated in Viet Nam.

The finance ministry asked Uber BV to authorise either its subsidiary Uber Viet Nam Ltd or a third party to declare and pay VAT and CIT.

Individuals who have signed contracts with Uber to provide the taxi service will pay tax on their earned income.

Uber collects all the transport fares through card payments. Uber drivers use their own vehicles and share 20 per cent of their revenue with Uber, while the remaining 80 per cent goes into their own pockets.

The rates for individual drivers are 3 per cent for VAT and 1.5 per cent for individual income tax.

Notably, tax authorities will not collect taxes directly from drivers, instead the organisation that is authorised to declare and pay tax for Uber BV will represent drivers for the declaration and payment of taxes.

Uber entered Viet Nam in June 2014. Since then, tax collection for the US car hailing service application has remained controversial since this was the first service of its kind in the country, triggering worries about the efficiency in collecting taxes as well as the unfairness to other transport firms in Viet Nam. — VNS