Difficulties in Uber debt collection

Uber’s tax debt has been difficult to collect before it “sells itself” to Grab. Photo: ST.

(The grammar is difficult here - is, “sells itself”, a famous quotation by someone? Or does “sells itself” mean, ‘sells itself to itself’, due to Uber owning a 27% stake in Grab and Uber’s ex-CEO is on the Grab board of directors. Otherwise the sentence should be, ‘Uber’s tax debt was difficult to collect before it sold itself to Grab’)

Whose – who pays?

Uber’s tax debt has been difficult to collect before it “sold itself” to Grab. Earlier, the Tax Department of Ho Chi Minh City decided to collect and fine Uber nearly 66.7 billion VND. At this moment, Uber had paid only 13 billion VND, it disagreed to pay the rest and carried out procedures to file a lawsuit against the tax department for this decision. But while the court was handling the case, Uber Southeast Asia “sold itself” to Grab. So, although it is not in Vietnam, the trouble that Uber left is quite a lot.

Talking to the Customs Newspaper, a Grab Vietnam representative said Uber has pledged to be responsible for resolving all issues related to outstanding tax obligations. Refusing to answer any issues related to tax arrears, the Grab representative stated "please send it to Uber". Along with that, Grab also confirmed that the acquisition of Uber's operations in Southeast Asia does not change the type of business as well as the legal status of Grab in Vietnam of GrabTaxi Co., Ltd. As a result, GrabTaxi Co., Ltd continues to fulfill its obligation to declare and pay tax in accordance with current law. It seems that the acquisition of Uber does not affect the business situation as well as debt situation of this business.

When Uber publicly sold it to Grab, Vietnamese authorities said a lot about the new business must inherit the obligations of the old business. A representative of Ho Chi Minh City Tax Department also confirmed that there is no problem of losing 53 billion VND of Uber’s tax debt and said that, because Grab did not provide a contract transfer agreement, the tax authorities have not yet taken the next step. On the Uber side, so far, this business still "ignores" and the debt is not paid as has been the situation over the past several months.

How to identify legal basis?

From the legal standpoint, some argue that, in principle when trading with Uber, Grab had to agree to all elements when paying for Uber, so Grab will have to withhold taxes. However, this cannot be ruled out causelessly as the merger transaction dossier together with the terms of agreement between the two parties have not been clarified. Even analysis and judgments of the authorities are based on general principles and regulations, which may not be accurate. Because, in order to get accurate assessment of the situation, it needs to know clearly the terms of the transaction.

Mr. Nguyen Nam Binh, Deputy Director of Tax Department of Ho Chi Minh City, said that with the deal between Grab and Uber, it needs to clarify what are the binding terms for the stakeholders in their contracts. In this case, the payer will depend on the transfer contract specifying who will pay the tax. However, the tax office has sent a letter to Grab, proposing to report the merger, it has not received any response. Tax authorities are waiting for official reports from Grab, so there are no specific solutions.

According to Lawyer Ha Huy Phong, Director of Inteco Law Firm, member of the Hanoi Bar Association, on the basis of accessible information, if Uber Netherlands is determined not to pay tax, the tax collection is beyond the ability of the Tax Authority and is even considered a loss. The revenue that Uber got from drivers was transferred directly to the Netherlands, so the subject of tax debt is Uber Netherlands. Tax administration, including measures for enforcement of tax administrative decisions, is a state administrative activity which is effective only within the territory and jurisdiction that Vietnam has the right. Administrative measures of the Vietnam’s Government will not be valid in the territory of another country.

On the other hand, that Grab assumes it has no responsibility to pay Uber's tax debt is a one-sided opinion. To prove that under the agreement, Uber's side is responsible for solving the tax debt problem, at least Grab must also prove on the basis of a document agreement between the two sides as Uber ignores the issue, the Uber’s office has been shut down, and the Uber personnel in Vietnam are mostly dissolved.

Obviously, Uber's tax collection is not easy. If it is able, the authorities should have done it when Uber was still operating in Vietnam, not wait until now. However, on the side of management agencies, representatives of the General Department of Taxation still asserted, tax agencies are actively resolved and the state budget will not lose this tax.

Recently, the Tax Department of Ho Chi Minh City has written a request to Grab to provide contracts and documents related to Uber’s transfer of capital, transfer of rights, market share. In addition to providing the contract and documents related to the transfer, the Tax Department of Ho Chi Minh City requires Grab also to determine the tax obligation to pay tax on the transfer.

According to the Tax Department of Ho Chi Minh City, the transfer of capital, business transfer, business market shares in Vietnam of Uber B.V Company is subject to corporate income tax in Vietnam. Therefore, the Tax Department of Ho Chi Minh City noted the responsibility of GrabTaxi Co., Ltd, in the declaration of tax payment for the activities of receiving the transfer of capital, transfer of business market shares in Vietnam of Uber Company in accordance with the Law Tax administration and guidance documents. The Tax Department Ho Chi Minh City also noted to Grab that Uber still owes the State budget. The duration of Grab for providing to the tax office is no later than April 2018.

Associate Professor Dinh Trong Thinh, Academy of Finance: