HCMC court drops Uber’s lawsuit against tax demand
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A court in Ho Chi Minh City has dismissed a lawsuit against the city’s tax department by Uber after the ride-hailing firm asked the court to stop the department from charging it with a million-dollar sum of tax.
The HCMC’s tax department earlier asked five local commercial banks to help collect more than VND53 billion ($2.34 million) of what it believed was back taxes from Uber between January 1 and 10 of 2017.
Instead, Uber Vietnam, a subsidiary of Uber International Services Holding B.V. based in the Netherlands, then filed a lawsuit against the department.
On December 29, the department received an emergency notice from the court, saying that its collection of tax from Uber would be put on hold.
The court has since dropped the lawsuit because Uber Vietnam “does not have the required legal status for such a case.”
At the same time, it has also removed the suspension on tax collection, a source from the department said on Wednesday.
“With this new decision from the court, the HCMC’s Tax Department will continue to force Uber to pay tax by asking for help from commercial banks,” said an official from the department who wished to remain anonymous.
Specifically, Uber will have to transfer its income into the bank accounts of the tax department instead of handing it over to its headquarters in the Netherlands as it has been doing so far.
This process will last until the tax authorities collect enough $2.34 million in tax from the company.
In September, the department ordered Uber to pay VND66.7 billion of back taxes and tax evasion penalties by December 23.
But the company has only paid VND13.3 billion. It has complained to Vietnam’s Ministry of Finance that it is not subject to paying taxes according to Vietnam’s agreement on double taxation avoidance with the Netherlands, where it is based.
Uber International Services Holding B.V. has been repeatedly accused of tax evasion since bringing its ride-hailing business to Vietnam in mid-2014.
Yet Vietnam’s finance ministry said the company has to pay taxes for the income it generates in Vietnam.
Traditional taxi companies in Vietnam have used the tax issues to accuse Uber and Grab for putting up unhealthy competition.
Questions & Answers
Q.Why did the court dismiss Uber's lawsuit against the tax department?
Why did the court dismiss Uber's lawsuit against the tax department?
The court dropped the lawsuit because Uber Vietnam, the subsidiary that filed it, "does not have the required legal status for such a case." This rendered their challenge against the tax demand invalid.
Q.What is the total amount the HCMC tax department is trying to collect from Uber?
What is the total amount the HCMC tax department is trying to collect from Uber?
The department is seeking a total of VND66.7 billion, which includes both back taxes and tax evasion penalties. Uber has so far paid VND13.3 billion of this amount.
Q.How will the tax department proceed with collecting the outstanding tax from Uber?
How will the tax department proceed with collecting the outstanding tax from Uber?
Following the court's decision, the department will resume its efforts, asking commercial banks to transfer Uber's income directly to the tax department's accounts until the full amount is collected.
Q.Why does Uber believe it should not pay the taxes demanded by Vietnam?
Why does Uber believe it should not pay the taxes demanded by Vietnam?
Uber claims it is not subject to paying taxes in Vietnam due to the country's agreement on double taxation avoidance with the Netherlands, where its parent company is based.
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