A court in Ho Chi Minh City has halted a case brought by Uber B.V. against the municipal tax department, as the local company claiming to legally represent the ride-hailing service is in fact not authorized to do so.

Tran Ngoc Tam, head of the Ho Chi Minh City tax department, confirmed to Tuoi Tre (Youth) newspaper on Thursday that he was informed of the lawsuit suspension by the municipal People’s Court in the morning.

The court rejected the case as the entity that had filed the lawsuit lacks the eligibility to do so, Tam said.

The suit, a show of protest by the ride-sharing app after it was asked to pay VND66.68 billion (US$2.95 million) in back taxes by the city's taxman, was filed on December 20, 2017 by Chu Xuan Binh, a representative of Uber Vietnam Co. Ltd.

Uber Vietnam is authorized by the Netherlands-based Uber B.V. to oversee its business in the Southeast Asian country.

However, the Ho Chi Minh City People’s Court said that the authorization document, legalized by Vietnamese authorities in November 2016, contains no clauses showing that the Dutch-based company entitles its Vietnamese unit to file a lawsuit or appear in court in Vietnam on its behalf.

The court has therefore suspended the case as per Vietnamese law.

Uber retains the rights to file another lawsuit to request the court to handle the case, or lodge an appeal against the suspension decision, according to the Ho Chi Minh City People’s Court.

An illustration picture shows the logo of car-sharing service app Uber on a smartphone next to the picture of a taxi sign. Photo: Reuters

Tax row turns into saga

The showdown between Uber Vietnam and tax authorities in the southern Vietnamese metropolis began when the ride-hailing service ignored a request to pay the VND66.68 billion back taxes late last year.

The firm later filed a petition against the tax claim to Vietnam’s Ministry of Finance, reasoning it had fulfilled its tax duties in the Netherlands in accordance with a treaty against double taxation signed between the European country and Vietnam.

The petition was dismissed, with the finance ministry asking the company to pay the full amount as demanded by the Ho Chi Minh City taxman.

With Uber Vietnam showing no signs of paying the taxes, the Ho Chi Minh City tax department gave it an ultimatum to pay the amount within ten days from December 12.

By that deadline, Uber Vietnam had only agreed to clear VND13.3 billion ($585,903) out of the total tax arrears, prompting the tax department to enact a coercive measure -- calling on five local banks to freeze the accounts of the company from January 1 to 10, 2018.        

During this period, all money channeled into Uber Vietnam accounts at VCB, Eximbank, Sacombank, ACB and Vietinbank would be directed to that of the city’s tax department, instead of the Uber B.V. in the Netherlands.

The coercive measure was intended to be lifted only after the department receives the remaining VND53.3 billion ($2.35 million) worth of taxes owed by Uber Vietnam.

Uber Vietnam then brought the issue to court, with the court eventually taking a ‘temporary urgent measure,’ preventing the tax department from enacting its coercive action.

Now that the ‘temporary urgent measure’ has been nullified along with the lawsuit suspension, the tax department will consider restarting its plan to freeze Uber Vietnam accounts at those five major banks, Tam said.

“We will have an internal meeting to decide on when and for how long the account freezing plan should take place and inform the banks involved later,” he added.

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