General Department of Taxation speaks up Grab increase of charges on drivers

VCN – The tax administration department on small and medium enterprises and business household, individuals (General Department of Taxation) sent a document to request Grab to explain why it is making an excuse of applying tax policy in Decree 126 to increase freight charges on drivers.
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Source: Internet

The Tax administration Department on small and medium enterprises and business household, individuals said that according to Decree 126/2020/NĐ-CP, organisations doing business with individuals (including technology taxis) are responsible for declaring value added tax (VAT) and issue invoices on all revenue in accordance with regulations on the tax rate and tax declaration of the organisation.

In recent years, due to a lack of specific guidance on tax policies for business cooperation models with individual, the implementation of tax declarations for the Grab model has been inconsistent and in contravention of regulations.

Decree 126 of the Government is a guiding document on tax administration, so it only specifies clearly tax declaration for business cooperation models with individuals and new regulations on VAT policies for public transport are unchanged, and the previous 10% VAT rate is still applied.

Therefore, new regulations in Decree 126 do not increase the obligations of individual drivers (because drivers are only subject to personal income tax of 1.5% if their revenue is more than VND 100 million VND), they do not increase rate of freight charge (as the 10% VAT policy for transport has not changed, but is still applied so far).

Therefore, Grab is responsible for adjusting the taxable price structure to ensure it does not affect consumers as well as driver income.

The General Department of Taxation affirmed Grab's responsibility to declare VAT is defined as a transport business, not a technology business.

The facts are Grab plays a decisive role on freight charge rates, decides policies for customers and is responsible for transactions with customers, so Grab is responsible for fulfilling its legal obligations in all fields (including tax liability) to State authorities, obligations to clients and matters related to justice (if any) are true to the nature of economic activity that arises.

"The fact that Grab changed the price policy and discount rate for drivers as of December 5 and said that due to the impact of Decree 126 resulted in an increase in rates from 8% to 18% for each type of service and in different areas, at the same time reducing the proportion to the driver by 7% is not correct," the document of the General Department of Taxation states.

On December 9, the General Department of Taxation invited Grab representatives to explain this issue. Customs news will continue to inform on this issue.

By Thùy Linh/Thanh Thuy

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