Grab has explained why the company decided to increase the percentage it took from the fares of GrabBike and GrabExpress services since the beginning of this year.
The company started collecting a share of 23.6 per cent of GrabBike and GrabExpress fares from January 1, an increase of 3.6 percentage points, which was opposed by drivers.
Nguyen Trung Thanh, manager of GrabBike and GrabExpress, said the increase was not a revenue-sharing policy of Grab to raise the fee the company collected from its partner drivers. Instead, the increased share was the tax amount the company declared and contributed to the State budget on behalf of the drivers following a guidance from the tax authority.
Accordingly, Grab Viet Nam helped collect three per cent of value-added tax and 1.5 per cent of individual income tax on its partner drivers’ share of 80 per cent of the total fare, which was equivalent to 3.6 per cent of the total revenue.
The tax collection was only applicable to drivers who earned a revenue of VND100 million (US$4,380) a year, Thanh said.
In 2016-17, Grab Viet Nam used its budget to pay taxes for drivers to support its partner motorbike drivers.
Grab entered Viet Nam in February 2014 with a legal capital of VND20 billion, but posted an aggregated loss of more than VND938 billion.
Its total revenue in 2014-16 was VND1.755 trillion, and the company paid more than VND142 billion in taxes to the State budget during the period.
In August last year, Grab increased the percentage it took from fares from 15 per cent to 20 per cent.
With the increase in the share Grab collected, together with reductions in support policies of the company and harsh competition as the number of drivers grew, the income of Grab drivers has significantly decreased.
Tran Ngoc Tuan, a 28-year-old driver, said the increase was unreasonable, adding drivers wanted to pay tax themselves.