Vietnam Eyes Help from Banks to Collect Uber’s Tax

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By Lien Hoang

Officials in Vietnam looking to collect tax from Uber as it exits the country are weighing an option to have domestic banks freeze some payments to the ride-hailing service.

Uber has about 53 billion dong ($2.3 billion) in outstanding tax debt. The law allows tax authorities to intercept customer payments through domestic banks if it deems a company’s tax bill is still due. But in this case, it is more complicated.

Grab, the ride-hailing rival, acquired Uber’s Southeast Asia arm in March, and Uber halted its service in Vietnam April 8. Thus, Grab may have to pick up Uber’s tax tab. Authorities have ordered Grab to submit the acquisition contract so they can assess whether Grab should pay Uber’s back taxes.

“Actually the Ho Chi Minh City Tax Department has not yet used compulsion to recover the money that Uber still owes,” Nguyen Nam Binh, the department’s deputy director, told Bloomberg Tax April 16.

“My tax agency is seeking opinions from the Finance Ministry and the General Tax Department on how to further collect this debt from Uber,” he said, referring to a debt of about 53 billion dong ($2.3 billion). “That includes bank measures of course, but we must consider which measures to use.”

‘Strictly Uber Matter’

“This is a strictly Uber matter that does not concern Grab,” a representative of Grab Vietnam told Bloomberg Tax April 16. “Grab did not acquire Uber’s legal entity in Vietnam, which legally would continue to be accountable to resolve its tax issues with the Vietnamese tax authority.”

Uber referred requests for comment from Bloomberg Tax to Grab.

Intercepting Netherlands-bound Payments

Both companies have their regional headquarters in Singapore but Uber books profits for tax purposes through the Netherlands.

“I understand that tax authorities have the right to enforce the tax payments by interfering in bank transactions, as they have done,” Rajah & Tann LCT Lawyers partner Tran Chi Anh told Bloomberg Tax April 16.

But, while authorities argue that Grab could be on the hook because it acquired Uber’s assets and liabilities, Anh said that may not apply to this deal.

“The Grab/Uber merger in Vietnam is a share swap deal, not a company acquisition,” she said.

Under the agreement, Grab is taking over Uber’s operations and assets in eight countries in the region.

But the deal remains in legal limbo, facing scrutiny from anti-trust agencies in Vietnam, Malaysia, and the Philippines.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bloomberglaw.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

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