Hundreds of GrabBike riders on Monday turned off their app and gathered at the company’s office to protest its increased commission rate after the government raised tax.
The office of ride-hailing firm Grab in Hanoi’s Cau Giay District was swamped by large, green-clad-rider crowds demanding the company reimpose its previous rate of commission.
The gathering came after Grab increased its commission on each GrabBike trip from 20 percent to 27.27 percent starting December 5 following the government’s newly-imposed 10 percent value-added tax per general ride-hailing trip, a move seeking to create a level playing field for traditional tax firms.
The Grab riders said they had called for a strike via Facebook over the weekend and on Monday morning shut down their apps, traveling around Hanoi in groups to protest the increased commission rate.
Hung, a rider who asked to be identified by his first name only to avoid company retribution, called the new commission rate “cruel” since after fuel costs are taken into account, he only retains around 50-60 percent of the fare for each trip compared to the previous 70 percent.
Son, who partnered with Grab last year, works 15-16 hours a day in Hanoi to be able to transfer VND6-7 million a month to his family in central Thanh Hoa Province.
“I’m worried the increased commission rate will make it impossible to take care of my family. I support paying taxes but I want Grab to share the tax burden with drivers.”
Before the new tax policy took effect, Grab drivers got to keep around 80 percent of the fare, while the company only paid 10 percent tax on its 20 percent income. The driver paid 3 percent VAT on his 80 percent.
Although the new tax policy no longer requires drivers to pay their 3 percent VAT, they said their actual income per trip has dropped because Grab has raised its commission to make up for the higher VAT.
Grab’s calculations show drivers’ income would have been reduced by around 7.3 percent with the new tax policy.
However, a Grab spokesperson said the company on Dec. 5 had hiked its fares by 5-6 percent to reduce drivers’ loss of income to around 1 percent.
“The new fares still ensure Grab’s competitiveness on the market. Grab already bears a part of VAT to share the burden with customers and driver partners during this difficult time,” the spokesperson stated.
But this hike in rates does not satisfy drivers, who said the increase might see customers opt for competing services and make their income fall even more.
Vietnamese officials have long been pondering whether ride-hailing companies are technology service providers or transport companies, but the new decree makes it clear they are the latter.
Ta Thi Phuong Lan, deputy head of the department of tax administration for small and medium enterprises and individuals, said VAT rates for companies like Grab and Gojek have hitherto been too low and tax authorities need to raise it to the correct level.
Although Lan said the new tax rate is not aimed at drivers, the latter say they are victimized now Grab raised the commission rate.
“We just want Grab to go back to the 20 percent commission rate, maybe an increase of 2 percent or 3 percent would be fine, but over 7 percent is too much,” Hung said.
The rider said he and his colleagues would continue to boycott the app and drive around Hanoi in the next couple of days, hoping to “put a dent” in the company’s revenues and urge it to lower the commission.
This article was originally published in Vnexpress
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Source: Vietnam Insider