The General Department of Taxation said Grab is responsible for adjusting the taxable price structure not to impactconsumers as well as the driver's income.

Illustrative photo.

According to Decree 126, in the form of organisations in business cooperation with individuals (including technology taxis), the organisation is responsible for declaring value added tax (VAT) and issuing invoices on total revenue according to the organisation's tax rate and tax declaration regulations. The organisation only deducts, makes authorised declaration and payment of personal income tax for individuals in accordance with the law on personal income tax (the tax table in Circular 92), regardless of revenue sharing between the organisations and individuals.

Regarding the impact of Decree 126 on Grab, the General Department of Taxation said that in recent years, there has been no specific guidance on tax policy for the form of organisations in business cooperation with individuals. Therefore, the tax declaration for the Grab model is not unified and inconsistent with regulations.

Government Decree 126 is a guiding on tax administration, so it only specifies more clearly about tax declaration for the form of organisations in business cooperation with individuals and does not provide new regulations on VAT policies. Therefore, the VAT policy for public transport does not change and the tax rate of 10% is applied as before.

The new provisions in Decree 126 do not increase the obligations of the driver (the driver is only subject to personal income tax of 1.5% if the turnover is more thanVND 100 million), does not increase transport cost (because the 10% VAT policy for transport has not changed).

Therefore, the General Department of Taxation said Grab is responsible for adjusting the taxable price structure not to affect consumers as well as the driver's income.

In addition, Grab is definedas a transportation business and not a technology business,because of the fact that Grab plays a decisive role on transport price and policies with customers and is responsible for customer transactions. Therefore, the responsibility of Grab for fulfilling all legal obligations (including tax liability) to the State agencies, obligations with customers and judicial matters (if any) is consistent.

Regarding Grab’s changing its policy on prices and discount ratesfor drivers as of December 5, the General Department of Taxation saidthe reflection on the mass media in recent days that Grab said due to the impact of Decree 126increased the transport price from 8% to 18% for each type of service and in different regions, and cutthe percentage divided by 7% for drivers is not correct.

On December 9, the General Department of Taxation met with Grab representatives on this issue. At the meeting, the General Department of Taxation explained clearly to Grab that Decree 126/2020/ND-CP had no change in VAT policy. Decree 126 specifies the obligation of VAT declaration for business cooperation is performed by the enterprise. The firmmust declare VAT on the total turnover of business cooperation activities.

Grab is a transport business andthe enterprise shall declare VAT by the deduction method, the VAT rate is 10% and the enterprise is deducted input VAT as prescribed.

At the meeting, arepresentative of Grab has not yet clearly informed the General Department of Taxation about the increase in prices and discounts for drivers due to the impact of Decree 126.