Tax department confirms Grab claim

Grab's claims on stellar tax payments are proven true

In notice No.14393/TB-CCT-KK, KTT & TH, dated November 27, 2017, the department has confirmed that Grab paid over VND140 billion to the state budget in the first ten months of this year. The announcement was issued to counter allegations about Grab paying less in taxes than it publicly claimed.

Grab has issued an official response to local press rumours about its tax obligations in Vietnam in the first ten months of 2017 as well as during its operations in Vietnam since 2014.

Nguyen Thu An, marketing manager of Grab Vietnam, said that Grab’s tax contribution to Vietnam has increased significantly in the past few years.

This official announcement refutes the unproven allegations that Grab is failing to fulfil its tax obligations as well as operates with losses in Vietnam. Grab follows the principle of “always respecting the law.” Thus, the firm takes a consistent approach to the market, focusing on greater co-ordination with local partners, tax agencies, and regulatory authorities.

“Grab has worked closely with tax agencies and committed to developing the local economy. Grab's tax contributions abide by the law as we have been having straightforward and clear discussions with Vietnamese tax agencies and regulatory authorities from the beginning. We know that not all technology companies do the same,” Grab co-founder Tan Hooi Ling stressed at a recent meeting with local media.

She noted that Grab feels grateful and fortunate as the company receives strong support from driver partners, customers, and corporate partners.

In the official response, Grab stressed that the firm always makes sure its bookkeeping service is in compliance with the law and accounting practices in Vietnam.

Most recently, the General Department of Taxation (GDT) has announced the inspection results for Grab’s operations from 2014 to 2016 at a press meeting on October 27, 2017. The GDT confirmed that Grab Vietnam has fulfilled its tax obligations in the three-year period. This announcement is a testament to the company’s on-going efforts to comply with local tax policies.

Under the pilot programme, Grab Vietnam has guided driver partners to declare and pay taxes 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.

Grab also employs technology and software licensed by tax agencies to issue electronic VAT invoices for customers automatically as well as declaration forms for personal income tax deduction every year as prescribed by law.

Tan Hooi Ling (left), co-founder of Grab, and Jerry Lim (right), country head of Grab Vietnam, shared their thoughts about the allegation that Grab operates in the red in Vietnam, collecting fares by technology to evade taxes and competing unfairly with traditional taxi operators. Tan Hooi Ling - Grab co-founder Two years ago, we gained the trust of the Vietnamese government after considerable discussions and have built out a close partnership ever since. We are very grateful for the Vietnamese government because they are willing to test new technology and innovation with a broad vision. When Grab enters a new market, we always commit to long-term investment. In Vietnam, we not only invest in technology, but also local people to drive business and the country forward. We have achieved certain successes in the number of investors, talented employees, and financing. In the first ten months of 2017, Grab’s tax contribution to the Vietnamese state budget amounted to VND140 billion ($6.16 million). We are proud to say that the achievements come from our strong initial investment. We believe that when the platform is in place, the investment will bring long-term benefits for the country and its people. Jerry Lim - Country head of Grab Vietnam When you compare Grab’s tax payments with those of traditional taxi companies, you should cover both the payments of Grab and its partners, including drivers, co-operatives, and car rental companies. This sum would reflect Grab’s actual tax contribution to the state budget. According to tax calculation methods prescribed by law, software development companies enjoy lower tax rates than taxi operators. Grab takes only 20-25 per cent from its customers for each fare and pays taxes after revenue earned from the fare. Meanwhile, Grab is not allowed to deduct asset depreciation because the firm do not own the fleet of vehicles. However, traditional taxi companies can get 100 per cent deduction on their fleets and relevant expenditures. Despite the 20-25 per cent earnings from each fare, we spend much on marketing activities. I agree with Ling that our revenue generated in this initial stage of development is mainly used to reinvest in the company's operations.

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