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The deal has left tax payments unresolved and questions remaining about a potential market monopoly. Tax authorities in Ho Chi Minh City have once again sent a request to Grab in Vietnam asking the company to provide details concerning its recent acquisition of rival Uber’s Southeast Asia business.
The reason for the request is due to the fact that Grab is legally obliged to pay tax on the transfer of capital and business market share following the deal.
Vietnam’s tax law states that all income generated by foreign companies operating in the country should be subject to tax, regardless of where they are based.
Organizations and individuals that receive capital from foreign organizations are required to declare and pay tax on behalf of those foreign organization, tax authorities cited the law as saying.
With details of the Uber- Grab deal remaining undisclosed, authorities are still unsure how to calculate how much the latter owes in tax.
Uber also allegedly still owes Vietnam’s government $2.3 million in taxes required, but claims that according to Vietnam’s agreement on double taxation avoidance with the Netherlands, that figure is inflated.
Grab has previously said that the $2.3 million is down to Uber, and has refused to pay the firm’s outstanding debt.
Grab’s decision violates Vietnamese law and international practices, said lawyer Doan Van Hau, chairman of the Vietnam Lawyers’ Commercial Arbitration Center.
Quoting Vietnamese law, Hau said that Grab was responsible for paying all of Uber’s back taxes.
Ho Chi Minh’s tax department previously asked five local commercial banks to help it collect the outstanding sum from Uber, but failed to do so as the company did not have a bank account in Vietnam.
Uber has since filed two lawsuits against Ho Chi Minh’s tax department.
Grab is also under investigation by Vietnam’s Ministry of Industry and Trade for violating the Competition Law in its acquisition of Uber.
Malaysia, the Philippines and Singapore are all requesting details of the acquisition.
