An Uber taxi picks up passengers in front of a shopping centre in Hanoi (Source: VNA)

Hanoi (VNA) – The Ministry of Finance has issued a document on tax payment rules for Dutch-based Uber International Holding BV for its car hailing service in Vietnam.

The ministry said Uber must pay taxes as a foreign establishment, which operates and earns income in Vietnam without resident offices. Accordingly, the direct method will be applied on Uber, in which payable tax amount is based on revenue multiplied with tax rate.

The rates are 3 percent for value added tax (VAT) and 2 percent for corporate income tax (CIT), which Uber has to pay for its revenue generated in Vietnam.

The finance ministry asked Uber BV to authorise either its subsidiary Uber Vietnam Ltd or a third party to declare and pay VAT and CIT.

Individuals who have signed contracts with Uber to provide the taxi service will pay tax on their earned income.

Uber collects all the transport fares through card payments. Uber drivers use their own vehicles and share 20 percent of their revenue with Uber, while the remaining 80 percent goes into their own pockets.

The rates for individual drivers are 3 percent for VAT and 1.5 percent for individual income tax.

Notably, tax authorities will not collect taxes directly from drivers, instead the organisation that is authorised to declare and pay tax for Uber BV will represent drivers for the declaration and payment of taxes.

Uber entered Vietnam in June 2014. Since then, tax collection for the US car hailing service application has remained controversial since this was the first service of its kind in the country, triggering worries about the efficiency in collecting taxes as well as the unfairness to other transport firms in Vietnam.-VNA