Uber withdraws its lawsuit, is tax debt of over VND 53 billion collected?

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Continue to recover Uber's tax debt

Voluntarily withdraw the lawsuit

The Ho Chi Minh City (HCMC) People's Court has issued a decision to suspend the administrative suit of Uber B.V against the HCMC Tax Department.

After finishing the investigation, in early September, 2017, HCMC Tax Department issued a decision on administrative sanction for tax violations and collected more than VND 66.68 billion from the Uber BV company (Netherlands).

After the decision was issued, Uber appealed against the General Department of Taxation and the Ministry of Finance for the reason that the company did not have to pay tax under the Double Taxation Avoidance Agreement between Vietnam and the Netherlands. The Ministry of Finance also issued a formal written reply, accordingly, Uber's appeal against the decision on collecting VND 66.68 billion tax from the HCMC Tax Department was rejected.

According to the Ministry of Finance, based on the provisions of the Tax law and the results of tax inspections at Uber Vietnam Co., Ltd., Netherlands Uber BV has income generated in Vietnam through its permanent office in Vietnam. Therefore, the Company is obliged to pay the contractor tax as prescribed.

However, disagreeing with the above results, the company has just paid VND 13.3 billion and failed to pay the rest of 53 VND billion, and filed a lawsuit against HCMC Tax Department to the HCMC’s Court.

The HCMC Tax Department has implemented coercive measures as per regulation to enforce the company to pay the rest of over VND 53 billion of nearly VND 67 billion of tax arrears. Accordingly, the HCMC Tax Department has now sent a written request to related banks for deduction of the entire amount to be transferred to the customer’s accounts for enforcement, but this measure was ineffective because Uber did not open its account in Vietnam’s banks.

In early 2018, the HCMC People's Court has also issued a decision to suspend the administrative lawsuit of Uber B.V against the HCMC Tax Department for the reason that Uber B.V had not been authorized by Uber in the Netherlands, so it did not have the legal capacity to be a petitioner

Recently, Uber B.V Company has voluntarily withdrawn its lawsuit against the HCMC Tax Department, so the HCMC People's Court has suspended the lawsuit.

Continuing to collect the tax arrears

Talking to reporters on the possibility of recovering the tax debts of Uber, lawyer Truong Xuan Tam, Ba Ria-Vung Tau Bar Association said that Uber is no longer operating in Vietnam, but it is still operating in many countries in the world, so in order to recover the above tax arrears, the tax agency may submit an application to the international court of arbitration for assistance. Accordingly, the tax office may transit the relevant documents and records through a judicial mandate. However, this measure is quite expensive.

Lawyer Nguyen Ngoc Tuan, Director of Viet A Tax Accounting Law Firm said that the tax debt of VND 53 billion at the HCMC Tax Department is likely to be collected. In the case where Uber does not voluntarily pay the debt, the tax agency may base on the Law on domestic business to recover the debt. If Uber is no longer headquartered in Vietnam and sold the brand, its buyer will be liable for Uber’s debt.

According to the HCMC Tax Department, Uber’s withdrawal of its lawsuit is a positive act. It also shows that this company is very willing to deal with its debt to the state budget of Vietnam.

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The current difficulty is that Uber is no longer in Vietnam. As a result, the HCMC Tax Department has reported and asked the General Department of Taxation to help the unit solve the problem of collecting Uber’s taxes from the international system. At the same time, the General Department of Taxation is requested to soon develop management mechanisms and policies for new and special business methods such as e-commerce and shared business.