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Vietlaw Weekly Newsletter No. 353

fa-folder-open Business Management

New criteria for determination of SMEs

fa-check-circle Decree 39/2018/ND-CP dated March 11th, 2018 of the Government on detailing a number or articles of the Law on support for small and medium-sized enterpries

This Decree provides guidelines for the Law on support for small and medium-sized enterprises (SMEs)

One of the new noticeable points of this Decree is the amendments to criteria for determining SMEs eligible for special support policy

Accordingly, a SME shall be determined as follows:

- A microenterprise in the sector of agriculture, forestry and aquaculture and industry and construction has an annual average of 10 employers or fewer who have make contributions to social insurance and total annual revenue is not more than VND 3 billion or total capital is not more than VND 3 billion. A microenterprise in the trade and service sector has an annual average of 10 employers or fewer and total annual revenue is not more than VND 10 billion or total capital is not more than VND 3 billion.

- A small enterprise in the sector of agriculture, forestry and aquaculture and industry and construction has an annual average of 100 employers or fewer who have make contributions to social insurance and total annual revenue is not more than VND 50 billion or total capital is not more than VND 20 billion. A small enterprise in the trade and service sector has an annual average of 50 employers or fewer who have make contributions to social insurance and total annual revenue is not more than VND 100 billion or total capital is not more than VND 50 billion

- A medium-sized enterprise in the sector of agriculture, forestry and aquaculture and industry and construction has an annual average of 200 employers or fewer who have make contributions to social insurance and total annual revenue is not more than VND 200 billion or total capital is not more than VND 100 billion. A medium-sized enterprise in the trade and service sector has an annual average of 100 employers or fewer who have make contributions to social insurance and total annual revenue is not more than VND 300 billion or total capital is not more than VND 100 billion.

This Decree takes effect from the date of signing and replaces Decree No. 56/2009/ND-CPfa-minus-circle dated June 30th, 2009.

File attachment:

English file-pdf ND39_11032018CP[ENGLISH].pdf (English translation)

Vietnamese file-word ND39_11032018CP.doc (Vietnamese)

Vietnamese file-pdf ND39_11032018CP.pdf (Vietnamese)

fa-folder-open Domestic Investment

Conditions for investing in small and medium-sized startup companies

fa-check-circle Decree No. 38/2018/ND-CP dated March 11th, 2018 of the Government on investments in small and medium-sized startup companies

This Decree provides for entities, and conditions for, investing in small and medium-sized startup enterprises.

“Startup” is a small and medium-sized enterprise (SME) that is established to implement its business ideas based on the exploitation of intellectual property, technology and new business models and is able to grow quickly (Clause 2 Article 3 of the Law on provision of assistance for small and medium-sized enterprises).

Under this Decree, inventors in startups may be venture capital funds and domestic and foreign organizations and individuals.

Forms of investment may be contribution of capital to establishment of startups, purchase of shares or stakes of startups or establishment or contribution of capital to establishment of venture capital funds.

For enterprises, they are entitled to use their science and technology development funds to invest in startups in accordance with regulations of the Law on technology transfer and regulations of this Decree. However, enterprises must apply for registration of additional business sectors regarding venture capital at company registration offices.

With regard to a venture capital fund, it is not considered a juridical person and established by capital contributed by not more than 30 investors according to the fund’s Charter. The fund is only allowed to invest in a startup not exceeding 50% of the startup’s charter capital.

This Decree takes effect from the date of its signing.

File attachment:

English file-pdf ND38_11032018CP[ENGLISH].pdf (English translation)

Vietnamese file-word ND38_11032018CP.doc (Vietnamese)

Vietnamese file-pdf ND38_11032018CP.pdf (Vietnamese)

fa-folder-open Borrowing

Regarding withholding tax on loan interest and costs to be paid to a foreign contractor

fa-check-circle Official letter No. 724/TCT-CS dated March 2nd, 2018 of the General Department of Taxation regarding tax policy

According to the General Department of Taxation’s opinions, in case an enterprise incurs costs of capital arrangement, commitment charges upon borrowing loans from a foreign bank, these costs and charges shall be subject to withholding tax if they are separated from loan interests.

Before paying the costs of capital arrangement, commitment charges to the foreign bank, the enterprise has to withhold, pay value added tax (VAT) and enterprise income tax (EIT) on behalf of the foreign bank according to Circular No. 103/2014/TT-BTC.

The VAT paid on behalf of the foreign contractor shall be deducted if the prescribed conditions are met. Particularly, EIT shall be included in deductible expenses only when the costs and charges paid to the foreign contractor do not include EIT.

File attachment:

English file-pdf CV724_02032018TCT[VLO].pdf (English translation)

Vietnamese file-word CV724_02032018TCT.doc (Vietnamese)

Vietnamese file-pdf CV724_02032018TCT.pdf (Vietnamese)

fa-folder-open Certificate of Origin (C/O)

Regarding difference between HS code on C/O and that on customs declaration

fa-check-circle Official letter No. 1079/GSQL-GQ4 dated April 16th, 2018 of the General Department of Vietnam Customs regarding difference between HS code on C/O and HS code on customs declaration

According to Article 26 of Circular No. 38/2015/TT-BTCfa-exclamation-circle , if HS code on a C/O is different from that declared on the customs declaration, customs office shall base on declared information about name of goods, HS code, goods description declared on the customs declaration, C/O, documents included in the customs documentation, results of physical inspection of goods (if any) in order to determine the C/O’s validity.

If the difference between HS code on C/O and the declared HS code does not affect nature of the imports, such C/O may be accepted. However, if the customs office has grounds to determine that the imports on the C/O are not the imports as declared, the C/O shall be rejected.

File attachment:

English file-pdf CV1079_16042018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV1079_16042018TCHQ.doc (Vietnamese)

C/O shall be rejected if signature sample has not been announced by issuing agency

fa-check-circle Official letter No. 1085/GSQL-GQ4 dated April 16th, 2018 of the General Department of Vietnam Customs regarding issue relating to certificate of origin (C/O)

According to this Official letter, in principle, a customs office shall only considers accepting C/O which is signed by a competent official announced to customs office of importing country by the issuing agency of exporting country.

Accordingly, if the customs office can determine that the signature on the C/O is not included in the list of seal and signature samples which the C/O issuing agency has announced to customs office of importing country, such C/O shall be rejected.

File attachment:

English file-pdf CV1085_16042018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV1085_16042018TCHQ.doc (Vietnamese)

Regarding difference between HS code on C/O and that declared on customs declaration

fa-check-circle Official letter No. 558/GSQL-GQ4 dated March 1st, 2018 of the General Department of Vietnam Customs regarding issues relating to certificate of origin (C/O)

According to opinions of the General Department of Vietnam Customs, if there are differences between HS code, name of goods on C/O and those on the declaration without affecting nature of the imports, the customs office may consider to accept the C/O’s validity.

However, if the customs office has grounds to determine that the imports on the C/O are not the imports as declared, such C/O shall not be accepted.

File attachment:

English file-pdf CV558_01032018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV558_01032018TCHQ.doc (Vietnamese)

Paper C/O and electronic C/O have equivalent validity

fa-check-circle Official letter No. 548/GSQL-GQ4 dated March 1st, 2018 of the General Department of Vietnam Customs regarding issue relating to electronic certificate of origin (C/O) form D

According to Article 25 of Circular No. 22/2016/TT-BCT, paper C/O and electronic C/O have equivalent validity. As the result, enterprises may either submit paper C/O or electronic C/O in order to enjoy preferential rates.

File attachment:

English file-pdf CV548_01032018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV548_01032018TCHQ.doc (Vietnamese)

Regarding declaration of invoice issuer in C/O form JV

fa-check-circle Official letter No. 549/GSQL-GQ4 dated March 1st, 2018 of the General Department of Vietnam Customs regarding issues relating to certificate of origin (C/O)

According to Appendix 7 of Circular No. 10/2009/TT-BCT, with regard to C/O form JV issued for goods imported from Japan, if there is a commercial invoice issued by a third country, it is required to declare information about name and address of the invoice issuer at box No. 08.

However, if the commercial invoice is issued by a third company whose head office is located in the same country of the exporter (Japan), this is not the commercial invoice issued by a third country. As the result, it is not required to declare information about name and address of the invoice issuer at box No. 08.

File attachment:

English file-pdf CV549_01032018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV549_01032018TCHQ.doc (Vietnamese)

fa-folder-open Culture - Sports

Amendments to provisions on the business of prize-winning electronic games for foreigners

fa-check-circle Circular No. 57/2017/TT-BTC dated June 2nd, 2017 of the Ministry of Finance on amending and supplementing a number of articles of Circular No. 11/2014/TT-BTC of January 17, 2014, guiding a number of articles of the Government’s Decree No. 86/2013/ND-CP of July 29, 2013, on the business of prize-winning electronic games for foreigners

According to this Circular, an enterprise engaged in the business of prize-winning electronic games for foreigners must meet the requirements regulated at Article 5 of Decree No. 86/2013/ND-CPfa-exclamation-circle and the amendments at Clause 2 Article 1 of Decree No. 175/2016/ND-CP.

The purchase, re-export or destruction of tokens must comply with Article 14 of Decree No. 86/2013/ND-CPfa-exclamation-circle , Clause 4 Article 1 of Decree No. 175/2016/ND-CP; Article 8 of Circular No. 11/2014/TT-BTCfa-exclamation-circle and relevant regulations.

The dossier, procedures and contents of examination and consideration for grant of a business eligibility certificate must comply with Articles 20 and 21 of Decree No. 86/2013/ND-CPfa-exclamation-circle , and Clauses 7 and 8, Article 1 of Decree No. 175/2016/ND-CP.

This Circular takes effect from July 17th, 2017.

File attachment:

English file-pdf TT57_02062017BTC[EN].pdf (English translation)

Vietnamese file-word TT57_02062017BTC.doc (Vietnamese)

Vietnamese file-pdf TT57_02062017BTC.pdf (Vietnamese)

fa-folder-open Import and export policies

Policies of duty-free goods sale in border-gate economic zones shall be expired from March 1st, 2018

fa-check-circle Official letter No. 3072/BTC-CST dated March 19th, 2018 of the Ministry of Finance regarding issues relating implementation of import duty exemption policy under Circular No. 201/2012/TT-BTC, Circular No. 81/2013/TT-BTC and Decision No. 72/2013/QD-TTg

According to this Official letter, the import duty exemption policy for goods which are agricultural products not yet processed, with investment support of the Vietnamese party, planted in Cambodia regulated at Circular No. 201/2012/TT-BTC and Circular No. 81/2013/TT-BTC are still effective.

However, the policies of duty-free goods sale to tourists in border-gate economic zones regulated at Decision No. 72/2013/QD-TTgfa-minus-circle have been expired from March 1st, 2018 (according to the announcement at Decision No. 01/2018/QD-TTg).

With regard to policy on import duty and export duty incentives for projects invested in border-gate economic zones, from September 1st, 2016, it is no longer carried out according to Decision No. 72/2013/QD-TTgfa-minus-circle . Instead, it shall be carried out according to the Law on import and export duties No. 107/2016/QH13, Decree No. 134/2016/ND-CP and Official letter No. 15120/BTC-CST dated October 25th, 2016.

File attachment:

English file-pdf CV3072_19032018BTC[VLO].pdf (English translation)

Vietnamese file-word CV3072_19032018BTC.doc (Vietnamese)

fa-folder-open Information Technology

Conditions for doing business in camouflaged sound recording, video recording devices and software

fa-check-circle Decree No. 66/2017/ND-CP dated May 19th, 2017 of the Government on prescribing the conditions for doing business in camouflaged sound recording, video recording and positioning devices and software

This Decree prescribes the security and order conditions for doing business in camouflaged sound recording, video recording and positioning devices and software.

Accordingly, only the following business establishments can do business in camouflaged sound recording, video recording and positioning devices and software (Clause 2 Article 6):

a/ Business establishments of the Ministry of Public Security that are granted certificates of satisfaction of security and order conditions by a competent agency of the Ministry of Public Security;

b/ Business establishments of the Ministry of National Defense that are granted certificate of satisfaction of security and order conditions by a competent agency of the Ministry of National Defense;

c/ Business establishments other than those specified above that are granted certificate of satisfaction of security and order conditions by a competent agency of the Ministry of Public Security.

A certificate of satisfaction of security and order conditions does not state its validity duration, except the case in which it is granted to a business establishment operating for a definite time (Clause 3 Article 7).

Business establishments are only allowed to sell camouflaged sound recording and video recording devices and software to subjects permitted by law to use secret sound recording and video recording measures, such as specialized agencies in charge of protection of national security and social order and safety; agencies responsible for executing secret sound recording and video recording measures under the conditions, competence and procedures for special procedural investigation measures prescribed by the Criminal Procedure Code (Clause 5 Article 11).

This Decree takes effect from July 5th, 2017.

File attachment:

English file-pdf ND66_19052017CP[EN].pdf (English translation)

Vietnamese file-word ND66_19052017CP.doc (Vietnamese)

Vietnamese file-pdf ND66_19052017CP.pdf (Vietnamese)

fa-folder-open Quality control

From February 7th, 2018: It is exempt from inspection of quality of imported agricultural machines

fa-check-circle Official letter No. 232/KTHT-CD dated April 3rd, 2018 of the Ministry of Agricultural and Rural Development regarding inspection of quality of imported agricultural machines

According to opinions of the Ministry of Agricultural and Rural Development , from February 7th, 2018, the List of imports and exports in the agricultural sector which must be undergone the specialized management shall be carried out according to Circular No. 28/2017/TT-BNNPTNT.

Accordingly, agricultural machinery, equipment are removed from the list of goods subject to the quality inspection upon the import.

The promulgation of HS codes for the list of agricultural machinery, equipment at Annex 10 of Circular No. 24/2017/TT-BNNPTNT is only for the purpose of determining HS codes rather than for inspecting quality of imported agricultural machines, equipment.

File attachment:

English file-pdf CV232_03042018BNN[VLO].pdf (English translation)

Vietnamese file-word CV232_03042018BNN.doc (Vietnamese)

Vietnamese file-pdf CV232_03042018BNN.pdf (Vietnamese)

fa-folder-open Tax of Contractor

Regarding withholding tax with regard to brokerage service

fa-check-circle Official letter No. 8385/CT-TTHT dated March 5th, 2018 of the Department of Taxation of Ha Noi city regarding withholding tax - related answer

According to Clause 4 Article 2 of Circular No. 103/2014/TT-BTC , investment and trade promotion services performed outside Vietnam are exempt from withholding tax.

Accordingly, in case a Vietnamese company hires a foreign company to perform investment and trade promotion services outside Vietnam such as searching and negotiating in order to select suitable suppliers outside Vietnam, withholding tax shall be exempt in this case.

However, with regard to the brokerage service to sell goods to Vietnam, it shall not be exempt from withholding tax. The Vietnamese company has to withhold and pay withholding tax on behalf of the foreign company.

File attachment:

English file-pdf CV8385_05032018CTHN[VLO].pdf (English translation)

Vietnamese file-word CV8385_05032018CTHN.doc (Vietnamese)

Vietnamese file-pdf CV8385_05032018CTHN.pdf (Vietnamese)

fa-folder-open Textile - Garment - Footwear

The effective date of the National technical regulations on content of formaldehyde in textile products shall be delayed

fa-check-circle Circular No. 07/2018/TT-BCT dated April 26th, 2018 of the Ministry of Industry and Trade on amending Circular No. 21/2017/TT-BCT dated October 23rd, 2017 of the Ministry of Industry and Trade on promulgation of National technical regulations on content of formaldehyde and certain aromatic amines derived from azo colorants in textile products

This Circular is to delay the effective date of the National technical regulations on content of formaldehyde and certain aromatic amines derived from azo colorants in textile products.

Accordingly, the National technical regulations on content of formaldehyde in textile products is only compulsory to apply from January 1st, 2019 instead of from May 1st, 2018 under the earlier regulations.

This Circular takes effect from the date of its signing.

File attachment:

English file-pdf TT07_26042018BCT[VLO].pdf (English translation)

Vietnamese file-word TT07_26042018BCT.doc (Vietnamese)

Vietnamese file-pdf TT07_26042018BCT.pdf (Vietnamese)

fa-folder-open Foreign Investment

Procedures for certifying Vietnam’s residents that are foreign enterprises

fa-check-circle Official letter No. 8378/CT-TTHT dated March 5th, 2018 of the Department of Taxation of Ha Noi city regarding certification of resident entities

Currently, procedures for certifying foreign enterprises being Vietnam’s resident entities under tax Agreements shall be followed the guidelines provided in Clause 6 Article 44 of Circular No. 156/2013/TT-BTCfa-exclamation-circle .

Accordingly, if a foreign enterprise is a taxpayer in Vietnam, the application shall comprises the written request for certification of residence made according to form 06/HTQT and a letter of authorization (if the procedures are carried out via a legal representative) to be submitted to the Department of Taxation of the place where tax registration is applied for.

However, if the foreign enterprise is not a taxpayer, the application shall comprise the written request for certification of residence made according the aforesaid form, the enterprise establishment registration paper, letter of authorization (if the procedures are carried out via a legal representative).

Time limit for settlement is 7 working days, from the receipt of the application.

File attachment:

English file-pdf CV8378_05032018CTHN[VLO].pdf (English translation)

Vietnamese file-word CV8378_05032018CTHN.doc (Vietnamese)

Vietnamese file-pdf CV8378_05032018CTHN.pdf (Vietnamese)