Grab spells out reasons behind controversial fee increase

GrabBike riders went on strike to protest Grab's decision to hike fees

Grab’s latest increase of fees to fulfil its tax obligations have triggered concerns among drivers that they would earn less as passengers switch to other transportation service providers. Grabcar and GrabBike fees were raised by 5-6 per cent starting from December 5 to ensure drivers’ income following a raise to the value added tax (VAT) following Decree No.126/2020/ND-CP.

In a statement responding to protests, Grab said that it places top priority on legal compliance in Vietnam. Grab is strictly compliant with the Law on Value Added Tax 2008, Law on Tax Administration 2019, their guiding documents, and especially Decree 126, which took effect on December 5. Some points in Article 7 in Decree 126 stipulate that organisations and individuals that declare tax on behalf of taxpayers must fully implement the regulations on tax declaration and tax payment.

If organisations do business with individuals, the individual does not have to declare tax directly. Organisations have the responsibility to declare VAT on the entire turnover of business cooperation activities in accordance with the tax law and tax administration of the organisation without discrimination of business cooperation results, and at the same time, declaring and paying income tax on behalf of individuals.

According to the provisions of Decree 126, Grab is imposed 10 per cent VAT, which is applied to all revenue from transportation business, including the transport revenue of the driver partner. Therefore, in order to comply with this regulation, Grab has proposed a suitable rate and at the same time deducts the 10 per cent VAT from the trip costs users pay. Fees for the use of the application (discount) applied to the driver partner remain the same.

According to Decree 126, individuals cooperating with a business (in this case, the driver partner) are not directly required to declare and pay tax. The business is responsible for collecting and paying taxes on behalf of the driver partner. Therefore, Grab will deduct the payable tax, make a declaration, and pay it on behalf of driver partners, in compliance with Decree 126. All tax collection on behalf of Grab is paid to the State Treasury and is confirmed by the tax authorities to fulfil tax obligations.

"Before and immediately after Decree 126 was issued, Grab has been actively giving comments on the impact of the decree and repeatedly submitted documents to seek guidance on the implementation of the decree. concentration. However, so far Grab has not received any official response from these agencies. Grab values ​​and listens to feedback from users and partners. We are actively working with authorities to balance the rights and benefits for stakeholders," it stated.