Tax authorities respond to information that Uber and Grab drivers are 'shocked' by being charged back taxes

Recently, some information in the press has reflected that Uber and Grab drivers were "shocked" because they were charged additional taxes when selling their cars because they registered their cars as individual business households.

In response to these complaints, the Hanoi Tax Department has just widely informed taxpayers about a number of tax, fee and charge policies related to individuals doing transportation business from the time of purchasing the vehicle to the time of selling the vehicle.

Accordingly, buyers of cars with less than 10 seats that are not used for passenger transport will have to pay a new registration fee with a license plate of 2-20 million VND for Region I (Hanoi, Ho Chi Minh City). In Region II (other centrally-run cities, provincial cities and towns), the fee is 1 million VND; in the remaining localities, it is 200,000 VND.

Meanwhile, if a car with less than 10 seats is owned by an individual doing passenger transport business and is registered for the first time in Hanoi (area I), the registration fee and license plate fee is only 500,000 VND. This fee will be paid to the police.

During the transportation business, individuals in the transportation business paying taxes according to the lump-sum method with a revenue of 100 million VND/year or less will not have to pay VAT, personal income tax and business license fees.

For individuals doing business with a revenue of 100 - 300 million VND/year, the business license fee must be paid of 300,000 VND; from 300 - 500 million VND, it must be paid of 500,000 VND; over 500 million VND, it must be paid of 1 million VND. VAT payable = VAT taxable revenue x 3%; Personal income tax payable = Personal income taxable revenue x 1.5%.

Particularly for business individuals participating in business cooperation contracts with Uber and Grab, Uber and Grab (or authorized organizations) must be responsible for declaring and paying taxes on behalf of individuals who have signed business cooperation contracts with Uber and Grab at a VAT rate of 3% and personal income tax of 1.5% calculated on the revenue the individual receives under the contract.

If an individual in the transportation business only conducts business activities under a cooperation contract with Uber or Grab, he or she does not have to declare and pay taxes at the Tax Department.

Regarding the obligation to pay the State budget arising from the liquidation of assets, in case an individual engaged in passenger transport business sells assets, he/she must pay VAT, personal income tax and purchase individual invoices from the directly managing tax authority. Accordingly, the amount of VAT payable = VAT taxable revenue x 1%. The amount of personal income tax payable = PIT taxable revenue x 0.5%.

In which, taxable revenue is the revenue including tax (in case of taxable cases) of the total proceeds from the sale and liquidation of assets determined according to the contract for sale and liquidation of assets regardless of whether the money has been collected or not.

In case an individual registers for transportation business but in reality does not generate transportation revenue or does not meet the conditions for transportation business, the tax authority will not issue/sell individual invoices. The Tax Department where the individual registers for business will consult with the business registration authority to handle the matter according to regulations.

According to Economics & Urban