Grab hit with drivers’ strike over higher take rates in Vietnam

Grab Vietnam has been under fierce opposition from both drivers and tax authorities in the country following its move to increase both its fees and take rates.

Starting on December 5, Grab Vietnam has increased fees for GrabCar and GrabBike by 5% to 6% and its take rates from over 20% to nearly 30% for GrabBike drivers, and more than 30% for GrabCar.

Grab drivers in downtown Hanoi, Vietnam. / Photo credit: Tech in Asia

According to Grab, the increase was meant to fulfill its tax obligations in the country following a new decree on tax management. The commission rate remains unchanged, it says.

Prior to December 5, drivers had to pay 3% value added tax (VAT) on 80% of the income that they would earn from a ride, while Grab would keep 20% and pay 10% tax.

But with Vietnam’s new tax policy, service providers such as Grab are required to declare and pay 10% VAT on the entire amount earned from a ride.

The resulting increase in Grab’s fees and take rates has set off strikes by hundreds of Grab drivers in recent days. It has also led to intense pressure on the company from both tax authorities and the public.

Disagreements remain between all sides on who should bear the tax hike: Grab, consumers, or drivers.

Drivers fear that with higher take rates, the burden to pay tax has been shifted to their side. Meanwhile, tax authorities have told local media that drivers are not responsible for paying a higher tax rate with the new policy.

After a meeting with tax authorities on Wednesday, Grab Vietnam said in a statement that it was very disappointed with the outcome. Both sides didn’t reach an agreement on how to implement the new decree.

In the statement, Grab reaffirms that it is fully compliant with local laws and is working with the authorities to ensure the rights and benefits of all stakeholders.

Grab is currently dominating Vietnam’s ride-hailing space, with close to 75% market share, according to ABI Research. It claims to have 190,000 drivers for both GrabCar and GrabBike in the country.

Vietnam remains one of the most important markets in Southeast Asia for the ride-hailing firm. In 2019, Grab announced a US$500 million investment in the country, and in March, the company was ordered to pay more than US$200,000 in damages to the traditional taxi company Vinasun over competition issues.