HÀ NỘI — The Ministry of Finance has rejected a proposal from traditional taxi companies that the Government cut value added tax (VAT) for them from the current 10 per cent to 5 per cent.

The ministry said according to the reform strategy on tax system during 2011-20, VAT would stand at only one rate of 10 per cent for all kinds of businesses. VAT will be at 5 per cent only for essential goods and at 0 per cent for export goods.

Therefore, there was no basis to accept the HCM City Taxi Association’s proposal on cutting VAT to 5 per cent as well as its complaint that traditional taxis were paying more kinds of taxes and fees against Grab and Uber cars, the ministry said.

According to statistics of tax offices in HCM City, the ministry said corporate income tax paid by taxi companies in the city accounted for only 0.01-0.06 per cent of their total revenue.

The association also proposed all turnover of Grab and Uber cars be taxable, but the ministry said the existing method of calculating tax incurred by Grab and Uber cars was appropriate.

The ministry said if 100 per cent of turnover from transporting customers of the app-based taxis was taxable income, it would be overlapping and unreasonable taxation. Uber only gets 20 per cent of turnover from transporting customers and the remaining 80 per cent would go to organisations and individuals that had business contracts or agreements with Uber.

According to an official letter sent by the ministry to the association, existing regulations on tax, including rate of tax, investment preferential conditions and tax exemption or reduction, are consistently applied for all kinds of enterprises. — VNS