After Uber merges with Grab, Grab will be obligated to pay the VND53.3 billion ($2.33 million) tax arrears that Uber has delayed paying to the Ho Chi Minh City Department of Taxation.

Uber’s rolling tax arrears might be taken over by Grab after the merger

This was announced by Dang Duy Khanh, deputy head of the Inspection Department under the General Department of Taxation, according to newswire Dantri.

“We need to review the terms of the purchase contract between Uber and Grab. If the two parties agreed that Grab will shoulder Uber’s tax obligations, Grab will have to pay the VND53.3 billion ($2.33 million) to the tax department. In case the tax obligation was not mentioned in the contract, we will have to find a solution to collect the tax arrears. In any case, the arrears will have to be paid,” Khanh stated.

By the December 23 deadline, Uber only paid VND13.3 billion ($585,665) of the VND66.68 billion ($2.94 million) of its tax arrears. The department decided to take enforcement measures to collected the missing sum but failed.

Referring to this incident, Deputy Minister of Finance Vu Thi Mai previously affirmed that along with the tax arrears, Grab will have to prepare a report and submit its financial statements for tax payment after the deal is completed. The tax ratios include 5 per cent of corporate income tax and 5 per cent of value-added tax.

Furthermore, Khanh added that despite the fact that the deal took place outside of Vietnam and that Uber has not been legally incorporated in Vietnam, the authority will definitely collect the VND53.3 billion ($2.33 million) in tax arrears.

There is precedent of collecting tax from a deal taking place outside of Vietnam, such as the deal of Central Group purchasing Big C from Casino Group.

Notably, in June 2016, the General Department of Taxation requested French Casino Group and Thai Central Group to declare and pay a transfer tax worth VND3.6 trillion ($161.2 million) on the transfer of Big C Vietnam’s supermarket chain.

At first, Central Group said that it had no obligation to declare and pay tax on the deal, while Casino Group and the management board of Big C Vietnam refused to comment, however, the authorities issued solutions to ask the buyer (Central Group) to pay VND2 trillion ($87.7 million) in tax after the deal.

The appearance of Uber and Grab has impacted the operations of traditional tax firms, including Mai Linh Central JSC, an arm of Mai Linh Group.

Notably, according to the financial statement of Mai Linh Central, in 2017 the firm reported a decrease of 3 per cent in net revenue from supplying services, falling to VND648.9 billion ($28.4 million).

In the taxi sector alone, the company’s revenue decreased to VND515.4 billion ($22.59 million) in 2017 from VND555.9 billion ($24.3 million) in 2016.

The revenue from the franchise of the Mai Linh brand saw a plunge of VND3.2 billion ($140,265) to VND1 billion ($43,832) on-year. Besides, its after-tax profit decreased by 40 per cent to VND4.3 billion ($188,481) last year.

VIR

Prudential, Manulife, and FWD were among the first insurance firms to transfer insurance transactions to digital platforms, who are now followed by Chubb Life, Generali Vietnam, and Hanwha Life.

Recently, the Vietnam-based arm of FWD insurance firm launched the online purchasing option for “FWD cancer care,” a life insurance package which promises customers to pay the entire sum assured for cancer diagnosis at any stage.

Previously, in October 2017, the insurance firm also launched a personal accident insurance package for 100,000 customers on Tiki.vn, a Vietnam-based e-commerce shopping platform, which was only tradable on the firm’s online platform, providing customers with protection against risk of death and accidental injuries.

Additionally, FWD’s online insurance trading process was reported to be free of direct consultation with insurance agents, offering relatively shorter processing duration than the conventional method.

Additionally, FWD’s online insurance trading process was reported to be free of direct consultation with insurance agents which were regarded as cost-ineffective for the majority of customers since insurance consultation charges at such firms appeared relatively costly.

Thus, insurance policies drafted on the online platform were previously legally acknowledged, ameliorating legal matters encountered in the traditional method.

In addition, Manulife previously initiated online insurance trading services by launching three different types of insurance products priced VND600,000-1.5 million (US$26.34-65.85), offering exclusive benefits on the online trading platform.

Likewise, in order to keep up with the late trend in the insurance sector, US-invested insurance firm Prudential revealed plans to launch new insurance products on its online trading platform in 2018.

A representative of a Vietnam-based insurance firm asserted that customers will likely lean towards conducting insurance purchases on the online platforms due to the time-saving product selection process that brings the time needed to draft and issue an insurance policy down to a mere 10-20 minutes.

The representative also added that insurance firms would also be required to consider strategic partnerships with e-commerce firms in order to “digitalise” their conventional insurance business.

VIR