Grab surpasses Vinasun in tax contribution in 2018

Grab ran circles around Vinasun in tax payments in 2018

Although Grab has been accused of tax evasion by its rival Vinasun and traditional taxi associations, the ride-hailing firm has been making growing contributions to the Vietnamese state budget. The company paid VND441 billion ($19.17 million) in taxes in 2018, according to Document No.195/TB-CCT-KK, KTT&TH issued by Ho Chi Minh City’s District 10 Tax Department on January 7, 2019.

According to Vinsaun's consolidated financial report for the fourth quarter of 2018, the company paid VND144 billion ($6.26 million) to the Vietnamese state budget, which is only one-third of Grab’s tax payment.

With regards to tax management and the supervision of ride-hailing firms, Minister of Transport Nguyen Van The said that the companies are less likely to engage in tax evasion as the tax authorities have very broad oversight. “The state agencies ensure a fair playground for both local and foreign companies, ride-hailing and tradition taxi firms alike,” he added.

Clarifying this issue, Minister of Finance Dinh Tien Dung said that the ministry has researched and applied the current tax policies to collect tax from electronic contract-based vehicles. Currently, the Law on Tax Administration has been uniformly applied to different types of enterprises in terms of tax rates, preferential conditions, as well as tax exemption and reduction. Accordingly, enterprises which can determine their turnover, expenses, and corporate income like Grab, Mai Linh, or Vinasun need to submit a tax declaration on their own.

For foreign contractors like Uber, the tax authorities can determine their revenue but not expenses. Thus, foreign contractors must pay a fixed rate of value-added tax (VAT) and corporate income tax based on their turnover and expenses. These methods ensure a balance of tax payment among businesses.

“According to the statistics of nine ride-hailing firms including the likes of Grab and FastGo, the companies have to pay VND437 billion ($19 million) in taxes in 2018 and in the first four months of 2019. So far, they have paid VND415 billion ($18.04 million) in taxes,” he added.

According to Minister Dung, the Ministry of Finance has requested the Ho Chi Minh City Department of Taxation to examine Uber’s taxes during 2014-2016 to collect VND66.68 billion ($2.9 million) in taxes. As of August 31, 2018, Uber had already completed the payment of tax arrears.

In the coming time, Minister Dung said that the ministry will add these issues to the Law on Tax Administration and relevant policies. The tax authorities will proactively examine the tax affairs of these businesses to avoid tax evasion, in addition to providing information and implementing electronic invoices for passenger transportation activities under electronic contracts.