The Vietnamese Ministry of Finance has issued a new tax plan for Uber taxi service after its recent rule requiring drivers to pay tax on behalf of the ride-hailing company proved unpopular.

Under the new tax rule, Uber will have to pay a total tax of 5%, including a 3% value-added tax and a 2% corporate income tax

Uber, a smartphone app allowing people to hail a private car, has operated in Vietnam since June 2014. Uber drivers use their own vehicles and only have to share 20% of each ride’s fare with the company, with the remaining 80% going to their own pockets.

Dutch-based Uber B.V issues invoices for rides and handles revenues in Vietnam, but has paid no taxes to date.

Under the Vietnamese Ministry of Finance, the newly-issued tax policy, Uber will have to pay a total tax of 5%, including a 3% value-added tax and a 2% corporate income tax, on revenue generated from rides offered in Vietnam.

Meanwhile, transport companies and drivers under contract with Uber will have to pay 3% value-added tax and 1.5% income tax.

Dutch-based Uber B.V is also required to authorise its subsidiary in Vietnam or a third party to declare and pay those taxes.

The tax-paying rule for Uber issued in June by the Finance Ministry's General Department of Taxation, drew public controversy about their effectiveness in management as there was a possibility of tax avoidance.

According to the criticised rule, Uber would only have to declare and pay taxes on the 20% share it received from drivers.

However, experts said that it would be high risk of tax losses as most Uber cars were private and it was difficult to collect taxes from them. 

Uber was a transportation firm as its revenue came from the transportation business, and so it must be responsible for declaring and filing taxes on its incomes in Vietnam, not only its drivers.

One of its rivals in Vietnam, Grab, has completed registration and is paying taxes.

Dtinews