Ministry to determine legal status of Uber

Update: December, 19/2014 - 08:25
A customer uses Uber application to call a taxi. PM Nguyen Tan Dung has ordered the Transport Ministry to determine Uber's legal status in Viet Nam after it was stated that the company failed to meet tax regulations — Photo

HA NOI (VNS) — Prime Minister Nguyen Tan Dung has instructed the Transport Ministry to work with HCM City authorities to determine Uber's legal status in Viet Nam.

Uber launched its service in HCM City in July and has since signed contracts with 200 licensed transport firms. It started operating in Ha Noi in October.

Transport officials said in early December that the company was not qualified to provide transport services because it failed to meet tax regulations.

Uber communications head for South Asia Karun Arya previously told local media that Uber did not operate any vehicles or drivers, but only helped build a bridge between passengers and licensed transport firms.

In an interview with online newspaper Vietnam Plus, Nguyen Quang Tien, director of the Ministry of Finance's Department of Tax Reform and Modernisation, said tax officials recently met with a representative from Uber International Holding B.V. and determined the income source of Uber in Viet Nam.

According to Tien, Uber said it generated income from new account and cancellation fees as well as trip costs. The account fee was returned to the customer once his or her credit card was approved, so it did not count toward Uber's revenue.

Tien said Uber was planning to transfer 80 per cent of its revenue (trip costs) to local transport firms that it signed with and keep a 20 per cent service fee.

According to Tien, Uber would soon release the names of transport firms that it had partnered with.

Uber also informed tax officials during the meeting that local transport firms should be responsible for fulfilling tax obligations, based on contracts signed with Uber.

According to Tien, Uber International Holding B.V. in Netherlands would sign this and Uber Viet Nam would only focus on supporting activities, marketing and training, which means that currently Uber Viet Nam has not generated revenue.

Tien said tax authorities were working on two options for holding Uber accountable for paying taxes in Viet Nam. The first option would be requiring Uber International Holding B.V., the mother company in the Netherlands, to pay 3 percent of value-added tax on revenue generated from the transport cost and 2 per cent of the business income tax since Uber International Holding B.V. still directly participates in Viet Nam operations.

The second option would be requiring Uber to pay 5 per cent of the value-added tax and business income tax based on its total revenue in Viet Nam.

Regarding regulating the revenue of Uber as well as its partner transport firms, Tien said relevant agencies could track the company's activities and receipts stored in host computers in Viet Nam and abroad to determine if there were tax violations. — VNS