Ho Chi Minh City Taxi Association has just sent a document to the Ministry of Finance and the General Department of Taxation, expressing its agreement with tax regulations related to Grab as prescribed in Decree 126.

The General Department of Taxation has requested Grab Co., Ltd. to speak
accurately about the price structure adjustment in recent times. Photo: Internet

According to the Association, Clause 2, Article 3 of Decree No.10/2020/ND-CP on auto transport business and conditions for auto transport business stipulates that “auto transport business” includes one or more main transport activity (coordinating, driving or transport cost pricing) carried out to transport passengers or goods on the road for profit. With this provision, Grab is a transport business unit.

Therefore, Ho Chi Minh City Taxi Association completely agrees and supports the VAT regulations in Decree No.126/2020/ND-CP detailing a number of articles of the Law on Tax Administration.

"We think that this is an important legal corridor for all types of transport business to respect and comply,” the association stated in the document.

Regarding the application of Decree 126 by Grab has been given a strong reaction by drivers because they are considered subject to VAT + 1.5% personal income tax, the association said that Grab has calculated to get benefits for itself.

The association also cites point c, Clause 5, Article 27 of Decree 126 on the responsibility for tax declaration and payment “if the organization does business cooperation with individuals, the individual shall not directly make tax declarations, the organizationis responsible for declaring value added tax (VAT) for total revenue”.

Thereby, the Ho Chi Minh City Taxi Association said that with this regulation, Grab is anorganization that must make authorized declaration and payment for consumers but with the Grab's current calculation, it will place the burden on the drivers.

The association said that tax regulations for activities like Grab “will create a fairer and healthier business environment among types of transportation businesses, including taxis and similar type of transport”.

Recently, the General Department of Taxation also issued Official Letter No. 5270/TCT-DNNCN requesting Grab Co., Ltd tospeak accurately about the price structure adjustment.

Accordingly, the General Department of Taxation affirmed that Decree 126 specifies the responsibilities of organizations in the form of organizations 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.

Thus, 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 over VND100 million), does not increase the transport cost (because the 10% VAT policy for transport has not changed).

Moreover, the Ministry of Transport has also affirmed Grab's business is transportation. Therefore, the General Department of Taxation requested Grab Co., Ltd to be cautious in its speech when giving explanations to the public and drivers about the increase in the price structure due to the impact of Decree 126, avoiding creating public opinion and misunderstanding about the State's laws on tax policies.

At the same time, Grab Co., Ltd needs to improve social responsibility for employees and drivers in Vietnam to contribute to a healthy and fair business environment for mutual development.