Authorities determined to support Uber’s legal status

10:39 | 25/12/2014
Prime Minister Nguyen Tan Dung has instructed the Ministry of Transport (MoT) to work with Ho Chi Minh City authorities to determine Uber’s legal status in Vietnam.

Uber launched its service in Ho Chi Minh City in July and has since signed contracts with 200 licensed transport firms. It started operating in Hanoi in October. Transport officials said in early December that the company was not qualified to provide transport services because it failed to meet tax regulations.

Uber however received a thumbs-up from Minister of Transport Dinh La Thang and he urged the ministry to find a way to better manage the service but also allow it to continue being a convenient option for people in Vietnam.

“If the type of business software used by Uber is not yet included in Vietnam’s legal system, then it is our responsibility to adapt and legalise it,” Thang stressed.

Karun Arya, Uber’s head of communications for South Asia, previously told local media that Uber does not operate any vehicles or drivers, but rather acts as a link between passengers and licensed transport firms.

In an interview with newwireVietnam Plus, Nguyen QuangTien, director of the Ministry of Finance's Department of Tax Reform and Modernisation, said tax officials had recently met with a representative from Uber International Holding B.V. and determined the income source of Uber in Vietnam.

According to Tien, Uber’s profit is made from new account and cancellation fees as well as trip fares. The account fee is returned to the customer once his or her credit card is approved, so it does not count toward Uber's revenue.

Uber was planning to transfer 80 per cent of its revenue (trip fares) to local transport firms that it has signed with and keep a 20 per cent service fee, he added.

Uber also informed tax officials during the meeting that local transport firms should be responsible for fulfilling tax obligations, based on contracts signed with Uber. Accordingly, Uber would soon release the names of transport firms it had partnered with.

Local tax authorities are working on two options for holding Uber accountable for paying taxes in Vietnam. The first option would be requiring Uber International Holding B.V., the mother company in the Netherlands, to pay three per cent of value-added tax on revenue generated from the transport cost and two per cent of the business income tax since Uber International Holding B.V. directly participates in Vietnam operations.

The second option would be requiring Uber to pay 5 per cent of the value-added tax and business income tax based on its total revenue in Vietnam.

Regarding regulating the revenue of Uber as well as its partner transport firms, Tien said relevant agencies could track the company's activities and receipts stored in host computers in Vietnam and abroad to determine if there were any tax violations.

The MoT has recently confirmed that examining Uber’s operation was not to ban the company from operation but rather to direct Uber to find a solution that best suit the local regulations and satisfy the country’s development needs. The MoT, in principle, has given a green light for the app.

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By By Trang Nguyen

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