Headlines 06/09/2019 10:02 SA

Example of calculation of PIT and VAT for Grab riders and drivers

Tường Vy

This is one of the contents of the Notice of Ho Chi Minh city’s Tax Department regarding tax obligations of persons entering into transport business cooperation.

The Notice specifies that, if a person entering into transport business cooperation contracts with any service provider like Grab Co., Ltd.:

- receives revenue distributed under a cooperation contract plus other revenues generated from any other business activities, which amount to greater than 100 million dong/year (calendar year), he/she must pay taxes.

Example: In case of receiving 96 million dong in the revenue distributed under a contract with Grab plus 8 million dong offered as a bonus on top of such revenue each year, which totals 104 million dong per annum, he/she will have to pay taxes.   

- The tax amount payable is composed of VAT and PIT calculated according to the following formulas:

+ VAT = Earned revenue X 3%

+ PIT = Earned revenue X 1.5%

Example: If the earned revenue is 120 million dong per annum, the tax amount payable will be defined as follows:

+ VAT = 120 million dong x 3% = 3.6 million dong.

+ VAT = 120 million dong x 1,5% = 1.8 million dong.

- Other bonuses on top of such revenue:

+ are not subject to VAT.

+ are subject to 1% PIT.

- Rewards for service quality based on star ratings:

+ are not subject to VAT;

+ are subject to 10% PIT if each reward is 2 million dong or more.

Notes:

- Individual taxpayers are not allowed to deduct petrol and vehicle servicing, etc. costs from taxable revenue.

- Individual taxpayers are not entitled to family tax relief credits as such revenue is not deemed as income gained from salaries or wages.

>> CLICK HERE TO READ THE ARTICLE IN VIETNAMESE

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