Grab Vietnam refutes accusations of tax evasion

Jerry Lin - Country head of Grab Vietnam

Do you have any comments on the recent accusations of tax evasion?

When Grab enters a new market, we always abide by tax regulations as well as ensure co-ordination with regulatory authorities. Grab is committed to actively contributing to local economic development.

Grab is legally established in Vietnam, so all business activities are legal, with strict inspection and supervision by Vietnamese state management agencies.

The General Department of Taxation (GDT) confirmed that Grab Vietnam has fulfilled its tax obligations in the three-year period from 2014 to 2016. Meanwhile, Ho Chi Minh City’s District 10 Tax Department has confirmed that Grab Vietnam paid VND142 billion ($6.24 million) to the Vietnamese state budget in the first ten months of 2017.

In addition to fulfilling our tax obligations, Grab has guided driver partners to declare and pay tax on a monthly basis in an effort to support local tax authorities. This scheme helps ease tax administration and avoid tax losses with an automatic and transparent transaction control system based on technology and software licensed by tax authorities.

Grab issues automatic electronic VAT invoices for customers as well as declaration forms for personal income tax deduction for partners every year, as prescribed by law.

There are complaints of inequality between the tax obligations of traditional taxi firms and technology-based ride-hailing businesses. What are your views about this?

The Law on Enterprises promulgated by the National Assembly promotes the principles of fairness and encouragement of various economic sectors to develop alongside each other.

At all press conferences and through official media channels, the Ministry of Finance and GDT stated that existing tax policies, including tax rates, investment incentives, tax reduction and exemption policies, shall apply uniformly to different types of enterprises.

Regarding tax payments, Official Dispatch No.5093/TCT-TNCN dated November 3, 2016 by GDT and Official Dispatch No.384/TCT-TNCN dated February 8, 2017 by the provincial tax department stipulate tax policies are uniformly applicable to businesses under a revenue-sharing business co-operation contract arrangement.

Accordingly, Grab’s revenue comes from collecting commissions after each ride (calculated as a percentage of the overall fare), which is around zero to 25 per cent. Grab pays taxes for the revenue earned from the fare, while driver partners are responsible for declaring and paying taxes on their revenue.

You have to take a holistic approach to Grab’s tax obligation, especially as its collaboration model is based on a ride-hailing app. It should cover both the tax obligations of Grab and its partners, including drivers, co-operatives, and car rental companies.

In addition, there are big differences between Grab and traditional firms’ tax contribution because Grab’s revenue comes from connection fees for the fare. Also, Grab is not allowed to deduct asset depreciation because the firm does not own the fleet of vehicles. Meanwhile, traditional taxi companies can get 100 per cent deduction on their fleets and relevant expenditures.

What do you say about the allegation that Grab has reported losses for three years in Vietnam to transfer VND1 trillion ($44 million) overseas?

It is a groundless accusation: Grab has not transferred money overseas to avoid taxation. Similar to all legally established businesses in Vietnam, Grab abides by all requirements from the country’s tax and administrative authorities. In particular, Grab is under the close supervision of the State Bank of Vietnam, where it holds its bank account.

Meanwhile, foreign exchange is under tight control in Vietnam. Thus, all of Grab’s transactions have been governed by foreign exchange regulations.

As a startup, Grab has actively promoted investment towards long-term operation and growth. Vietnam is one of the key markets of Grab. Therefore, we will continue to invest in technology, operating systems, human resources, as well as research and development activities in the country to bring more benefits to local people, which will ultimately contribute to Vietnam’s entrepreneur development.