Vietlaw Weekly Newsletter No. 363
Certificate of Origin (C/O)
Some new points relating to electronic C/O form D
Official letter No. 1888/TCHQ-GSQL dated April 10th, 2018 of the General Department of Vietnam Customs regarding electronic certificate of origin (C/O) form D
Relating to electronic C/O form D, the document is to announce that at the General meeting between the Sub Committee on the ATIGA Rules of Origin (SC-AROO) and the Technical Working Group (TWG) held during March 29-30, 2018, the following points have been agreed:
1. In case the electronic C/O form D issued by Malaysia appears technical errors relating to information at Box No. 1 (Export's address), Box No. 2 (Importer's address), Box No. 3 (Port of discharge), Box No. 7 (Address of information about a third party and HS code), Box No. 8 (percentage is not written upon declaration of RVC), Box. 9 (FOB value), Box. 10 (number and date of invoices), customs offices shall base on the paper-based C/O to consider its validity.
2. With regard to calculation unit in the C/O form D, it is uniformly used calculation unit according to the United Nations Code for Trade and Transport Locations (UN/LOCODE) and the United Nations Economic Commission for Europe (UNECE) (For example, with regard to H87 code at Box No. 9 on the C/O, its calculation unit is "PIECE”).
With regard to information with similar meaning on the C/O such as "PIECE", "PCE", "PCS", etc. it shall be considered accepting.
CV1888_10042018TCHQ[VLO].pdf (English translation)
Import and export policies
New list of used commodities prohibited from import and commodities subject to suspension of temporary importation
Circular No. 12/2018/TT-BCT dated June 15th, 2018 of the Ministry of Industry and Trade on elaborate some Articles of the Law on Foreign Trade Management and Government’s Decree No. 69/2018/ND-CP dated May 15, 2018 elaborating some Articles of the Law on Foreign Trade Management
This Circular comes into force from the day on which it is signed.
TT12_15062018BCT[ENGLISH].pdf (English translation)
There is not policy on tax – related debt freezing
Official letter No. 2466/TCT-QLN dated June 20th, 2018 of the General Department of Taxation regarding enforcement of enterprise income tax (EIT) arrears
According to the General Department of Taxation’s opinions, currently, there is no regulation on “tax- related debt freezing” other than the policy on ‘tax deferral” as regulated in Clause 8 Article 5 of Decree No. 12/2015/ND-CP .
Accordingly, if a company is not eligible for tax deferral, it has to fully pay EIT rather than being eligible for debt freezing.
If the company is late for tax payment for over 90 days, it shall be subject to the enforcement of arrears according to Clause 1 Article 2 of Circular No. 215/2013/TT-BTC .
CV2466_20062018TCT[VLO].pdf (English translation)
New guidelines on enterprise valuation in equitization
Circular No. 41/2018/TT-BTC dated May 4th, 2018 of the Ministry of Finance on providing guidelines for financial settlement and enterprise valuation in equitization of state-owned enterprises and single-member limited liability companies 100% charter capital of which by state-owned enterprises
This Circular provides guidelines for financial settlement and enterprise valuation in equitization of state-owned enterprise and single-member limited liability companies 100% charter capital of which is by state-owned enterprises as prescribed in Decree No. 126/2017/ND-CP.
According to the new regulations in Clause 9 Article 2 of this Circular, each equitized enterprise must be applied at least 2 different enterprise valuation methods, in which, it is compulsory to apply the asset-based approach and adopt one or some other suitable methods.
In addition, according to Clause 3 Article 8, welfare and reward funds arising from the date of enterprise valuation to the issuance date of initial business registration certificate for joint stock company shall be used and managed by the equitized enterprise as regulated. The unused funds (if any) shall be inherited and used by the new joint stock company.
This Circular comes into force from June 18th, 2018. The contents prescribed in this Circular will be applied on January 1st, 2018. To replace Circular No. 127/2014/TT-BTC dated September 5th, 2014.
TT41_04052018BTC[ENGLISH].pdf (English translation)
Administration - Society
Fees for printing, duplication and receiving information from state agencies
Circular No. 46/2018/TT-BTC dated May 4th, 2018 of the Ministry of Finance on fees for printing, duplication, photocopying and sending of information as prescribed in Clause 2 Article 12 of the Law on access to information
According to Article 3 of this Circular, applicants for provision of information under the Law on access to information No. 104/2016/QH13 must not pay fees and charges for provision of information.
However, they must pay fees for printing, duplication, photocopying (the specific rates are provided in the attached appendix) and charges for sending of information as requested (according to the rates provided in Circular No. 22/2017/TT-BTTTT)
Particularly, applicants for provision of information must not pay fees for sending information if such requested information is provided electronically or by fax.
This Circular takes effect from July 1st, 2018.
TT46_14052018BTC[ENGLISH].pdf (English translation)
Regulations on internal control systems of banks
Circular No. 13/2018/TT-NHNN dated May 18th, 2018 of the State Bank on internal control systems of commercial banks and foreign banks’ branches
This Circular applies to all commercial banks, including (including state-owned commercial banks, joint stock commercial banks, joint-venture banks, wholly foreign-owned banks and foreign banks’ branches).
According to Clause 2 Article 5 of this Circular, commercial banks, foreign banks’ branches must have internal regulations in compliance with Article 93 of the Law on Credit Institutions and the regulations regulated in this Circular.
Particularly, for a foreign bank’s branch, its Director General (Director) may promulgates the branch’s internal regulations in accordance with the parent bank’s regulations or use the internal regulations promulgated by the parent bank.
Commercial banks, foreign banks’ branches have to prepare internal control reports and submit them to the State Bank, including:
- Annual self-inspection and self-assessment results according to Appendix 1 issued together with this Circular;
- Annual risk management report according to Appendix 2 issued together with this Circular;
- Annual internal capital adequacy assessment report according to Appendix 4 issued together with this Circular;
- Annual internal audit report according to Appendix 5 issued together with this Circular, alongside unscheduled internal audit report.
Time limit for submission of each type of report shall comply with the regulations in Clause 3 Article 7. In each internal control report, it is required to update the problems, limitations and risks that recently arose in the internal control system of each whole commercial bank (including the departments of the headquarters, branches and other affiliates).
In addition, every year, commercial banks, foreign bank's branches also have to carry out internal capital adequacy assessment for between 3 and 5 years (Article 59). However, this provision shall be applied from 2021.
This Circular shall take effect from January 1st, 2019. Commercial bank and foreign bank's branch shall implement the regulations on internal capital adequacy assessment mentioned in Chapter V of this Circular from January 1st, 2021.
To amend, supplement to a number of articles of Circular No. 44/2011/TT-NHNN dated December 29th, 2011.
TT13_18052018NHNN[ENGLISH].pdf (English translation)
Regulations on cooperation in enforcement of court’s decision on bankruptcy settlement
Joint Circular No. 07/2018/TTLT-BTP-VKSNDTC-TANDTC dated June 12th, 2018 of the Ministry of Justice - the People’s Supreme Procuracy - the Supreme People’s Court on cooperation in enforcement of court’s decision on bankruptcy settlement
This Joint Circular sets forth the cooperation in certain procedures for enforcing the court’s decision on bankruptcy settlement.
According, after receiving a court’s notice regarding acceptance of a petition for initiation of bankruptcy process against an insolvent enterprise or cooperatives which is a judgment debtor (obligated to execute the judgment), the head of civil enforcement agency shall issue a decision on temporary suspension of judgment enforcement against its asset(s), other than a judgment forcing the insolvent enterprise or cooperatives to compensate for lives, health, honor or salaries of employees.
The decision on temporary suspension of judgment enforcement shall be made within 5 working days from the date on which the court’s notice is received.
If an enterprise declared bankrupt is a judgment creditor, the civil enforcement agency shall keep the enforcement as per the law. The bailiff shall give a notice of enforcement result to the bankruptcy trustees, asset management enterprise and the bankruptcy judge to plan the division of collected assets.
This Joint Circular takes effect from August 1st, 2018.
TTLT07_12062018BTP[ENGLISH].pdf (English translation)
Regarding EIT with regard to the activity of capital transfer
Official letter No. 82847/CT-TTHT dated December 27th, 2017 of the Department of Taxation of Ha Noi city regarding enterprise income tax (EIT) with regard to the activity of capital transfer
According to Article 16 of Circular No. 151/2014/TT-BTC, if the transferor of capital contributed in Vietnam is an investor outside Vietnam, the Vietnamese party that acquires such capital shall declare and pay EIT on behalf of the transferor.
The calculation of payable EIT on the income from capital transfer shall be carried out according to Article 14 of Circular No. 78/2014/TT-BTC .
In which, the purchase price of the transferred capital is the value of the contributed capital accumulated to the time of capital transfer on the basis of accounting books, documents. However, it should note that the value of the capital contributed on behalf of another investor shall not be included in the purchase price upon the transfer.
CV82847_27122017CTHN[VLO].pdf (English translation)
Certificate of Origin (C/O)
Regarding additional submission of C/O form AK
Official letter No. 2186/TCHQ-GSQL dated April 23rd, 2018 of the General Department of Vietnam Customs regarding additional submission of certificate of origin (C/O) form AK
According to the guidelines in Official letter No. 12802/BTC-TCHQ dated September 14th, 2016, if at the time of registration of customs declaration, an enterprise chooses to apply MFN duty rate because the MFN duty rate is equal to or lower than the special preferential duty rate but then, HS codes of goods are changed resulting in the case in which the MFN duty rate is higher than the already declared rate, the enterprise may additionally submit C/O to enjoy the special preferential duty rate.
It should note that at the time of additional submission, the C/O must be still valid as prescribed.
CV2186_23042018TCHQ[VLO].pdf (English translation)
Regarding transportation costs subject to import duty
Official letter No. 3581/TCHQ-TXNK dated June 20th, 2018 of the General Department of Vietnam Customs regarding transportation costs and costs related to transport
Relating to costs for transport of imported goods, the General Department of Vietnam Customs notes that enterprises are compulsory to add such costs to customs value only when these elements are satisfied:
- They are costs for transport of goods to the first importing checkpoint;
- They belong to the additions regulated at point g Clause 2 Article 13 of Circular No. 39/2015/TT-BTC ;
- They meet the conditions for addition specified in Clause 1 Article 13 of Circular No. 39/2015/TT-BTC ;
The first importing checkpoint with regard to seaway and airway transportation is discharge port written in the bill of lading as prescribed in Clause 8 Article 1 of Decree No. 59/2018/ND-CP.
With regard to transportation costs arisen after the goods are imported to the first importing checkpoint or any costs arisen to the first importing checkpoint but they fail to meet the aforesaid conditions, they shall be not be added to customs value.
CV3581_20062018TCHQ[VLO].pdf (English translation)
Amendments to regulations on customs areas designated
Decree No. 12/2018/ND-CP dated January 23rd, 2018 of the Government on amendments to Decree No. 01/2015/ND-CP dated January 02, 2015 which specifies customs areas; responsibility for collaboration in preventing and controlling smuggling and illegal transportation of goods across borders
This Decree is to replace the Appendix of customs areas designated at land and inland waterway border checkpoints (the details are provided in the Appendix enclosed with this Decree).
This Decree also supplements regulations on determination of customs areas designated in areas used for express delivery. Accordingly, customs areas designated in areas used for express delivery refer to location for concentrated supervision, inspection and gathering of commodities imported and exported via express delivery.
In addition, according to the amendments at Clause 8 Article 8, re-processing facilities are also considered to be customs areas designated.
This Decree takes effect from March 10th, 2018.
ND12_23012018CP[ENGLISH].pdf (English translation)
Regulations on management and use of industrial encouragement funding
Circular No. 28/2018/TT-BTC dated March 28th, 2018 of the Ministry of Finance on guiding establishment, management and use of industrial encouragement funding
This Circular provides guidelines for establishment, management and use of industrial encouragement funding, applicable to small and medium-scale enterprises, cooperatives, cooperative groups, business households, industrial production facilities adopting cleaner production methods.
Accordingly, in order to be eligible to receive industrial encouragement funding, the aforesaid organizations have to meet these conditions:
- Industrial encouragement activities stated in the scheme and sectors and professions must be consistent with Article 4 and the list of sectors and professions eligible for industrial encouragement policies prescribed in Article 5 of Decree No. 45/2012/ND-CP, respectively.
- Assignments and schemes must be approved by competent authorities, to be specific, the Ministry of Industry and Trade for national industrial encouragement programs and People's Committees of provinces, districts or communes for local industrial encouragement programs.
- The organization or individual has invested in or committed to provide funding for the scheme approved by competent authorities (exclusive funding from state budget).
- The organization or individual running the industrial encouragement scheme or beneficiary of such scheme is not funded by any state authority
Specific expenditure rates are provided in Articles 7, 8, 9 of this Circular.
This Circular takes effect from May 11th, 2018 and replaces Joint Circular No. 26/2014/TTLT-BTC-BCT dated February 18th, 2014.
TT28_28032018BTC[ENGLISH].pdf (English translation)
National strategy for general management of solid waste to 2025
Decision No. 491/QD-TTg dated May 7th, 2018 of the Prime Minister on approving adjustments to national strategy for general management of solid waste to 2025 with vision towards 2050
This Decision comes into force from the day on which it is signed and replaces Decision No. 2149/QD-TTg dated December 17th, 2009.
QD491_07052018TTg[ENGLISH].pdf (English translation)
Export processing enterprises
Regarding tax policy applicable to goods imported for EPEs
Official letter No. 845/TXNK-CST dated February 6th, 2018 of the General Department of Vietnam Customs regarding tax policy applicable to goods imported for export processing enterprises (EPEs)
According to Clause 4 Article 2 of the Law on import and export duties No. 107/2016/QH13 and Clause 20 Article 5 of the Law on value added tax (VAT) No. 13/2008/QH12 , goods imported from abroad into an EPE and only used within such EPE shall be exempt from both import duty and VAT.
According to this Official letter, in case an EPE’s branch imports goods for construction of works and the import declaration form bears the branch’s name but the payment is made by the parent company (the EPE), if the this payment term is specified in the sale contract and the payment is made in accordance with Vietnam’s laws and international law, import duty and VAT shall be also exempt.
CV845_06022018TCHQ[VLO].pdf (English translation)
Micro food manufacturers are also exempt from certificate of food safety
Dispatch No. 3109/BCT-KHCN dated April 20th, 2018 of the Ministry of Industry and Trade guidance on food safety management
Because documents on amendments and supplements to regulations on food safety management according to Decree No. 15/2018/ND-CP have not been promulgated yet, this document is to provide guidelines on these issues:
1 Issuance of the certificate of food safety with regard to micro food manufacturers;
2. Effect of the Circular No. 57/2015/TT-BCT providing for food safety requirements to be satisfied by micro food manufacturers;
3. Issuance of the certificate of food safety to a seller that does not perform food manufacturing activities and whose products are under the management of more than one authority;
4. Application for license for small-scale manufacturing of alcohol for business purpose;
5. Issuance of the certificate of food safety to supermarkets that engage in both manufacturing and selling of foods;
Accordingly, micro food manufacturers shall be also exempt from the certificate of food safety under Decree No. 15/2018/ND-CP similar to micro food sellers. However, micro food manufacturers and micro food sellers must fulfill food safety requirements as specified in Clause 1 Article 22 of the Law on food safety.
Regarding Circular No. 57/2015/TT-BCT on food safety requirements with regard to micro food manufacturers, it has been abrogated by the Decree No. 08/2018/ND-CP thereby it is no longer applied.
With regard to a seller that does not perform food manufacturing activities and whose products are under the management of more than one authority, the issuance of certificate of food safety shall be carried out by competent food safety authorities affiliated to the Ministry of Industry and Trade.
With regard to any supermarket that engages in both manufacturing and selling of foods, it is required to obtain the only certificate of food safety for both such activities.
CV3109_20042018BCT[ENGLISH].pdf (English translation)
Regarding FDI enterprises’ import of goods as gifts for their employees
Official letter No. 1730/GSQL-GQ2 dated June 12th, 2018 of the General Department of Vietnam Customs regarding import of goods of foreign direct investment (FDI) enterprises
Relating to FDI enterprises’ import of goods to be used as gifts, rewards for their employees, workers (rather than giving to customers), according to the General Department of Vietnam Customs’ opinions, this is neither activity of import of goods for promotion nor activity of commercial enhancement under the Commercial Law on No. 36/2005/QH11 .
At the same time, this is not the activity to perform the import and export rights of FDI enterprises according to Clause 1 Article 3 of Decree No. 09/2018/ND-CP.
CV1730_12062018TCHQ[VLO].pdf (English translation)
New regulations on foreign cooperation and investment in education
Decree No. 86/2018/ND-CP dated June 6th, 2018 of the Government on foreign cooperation and investment in education
This Decree provides regulations on foreign cooperation and investment in education including: joint education and training with foreign partners, foreign-invested educational institutions; representative offices of foreign education institutions in Vietnam (except for the vocational education domain).
One of the new points of this Decree is that foreign investors are not allowed to cooperate and invest in training in national security and defense, politics and religions (Article 3).
However, under Article 5 of this Decree, foreign investors shall be permitted to contribute capital to and to purchase shares and stakes from a Vietnamese educational institution and a foreign-invested business entity in order to establish an educational institution in Vietnam.
In addition, regarding entities eligible for engaging in joint education, Article 6 of this Decree allows the joint education between private pre-school educational institutions, private compulsory educational institutions in Vietnam and legal educational institutions in foreign countries that are accredited by education quality assessment organizations or foreign competent agencies. The period of joint education shall not be longer than 05 years and it may be extended.
Regarding forms of joint training at bachelor’s, master’s and doctorate levels, apart from direct joint training program, it is allowable to perform online joint training program or combination of both direct and online joint training programs (Article 15).
Regarding requirements of invested capital under this Decree, a project of investment in establishing a higher educational institution shall reach an at least total minimum capital of 1.000 billion VND (exclusive of the expense incurred from land tenancy and during the time appraising the application for the university establishment, the investment value shall reach more than 500 billion VND (Article 35).
ND86_06062018CP[ENGLISH].pdf (English translation)
Labour - Employment
Regarding PIT rate applicable employees hired from outside
Official letter No. 26770/CT-TTHT dated May 4th, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) policy applicable to employees hired from outside
According to point i Clause 1 Article 25 of Circular No. 111/2013/TT-BTC , wages, remunerations paid to those who do not have labor contracts or have labor contracts for less than 3 months shall be subject to PIT at the tax rate of 10%.
Accordingly, in case a company hires workers from the outside to perform the processing, packaging, handling, etc. without labor contract or under labor contract for less than 3 months, upon making payments to such workers, the company shall withhold 10% PIT.
CV26770_04052018CTHN[VLO].pdf (English translation)
Oil and Gas
New regulations on requirements applied to gas trading
Decree No. 87/2018/ND-CP dated June 15th, 2018 of the Government on gas business
This Decree provides for gas business and requirements for gas trading in Vietnam, including liquefied petroleum gas (LPG), liquefied natural gas (LNG), compressed natural gas (CNG).
Accordingly, with regard to gas importers and exporters, this Decree removes the requirements of minimum capacity of gas storage tanker and quantity of LPG bottles with regard to LPG importers and exporters. However, this Decree adds the requirements applied to gas importers and exporters using gas pipelines according to which they must also own gas pipelines and gas distribution stations which satisfy all conditions for safety, fire preventing and fire extinguishing (Article 6).
With regard to gas-producing and gas-processing traders, this Decree also removes the requirements of minimum capacity of CNG storage tanks and minimum capacity of CNG compressor stations. However, this Decree adds the requirements according to which processing line, machines and equipments which are used for gas processing must be tested (Article 7).
Relating to requirements applied to gas sellers and purchasers, this Decree also remove the requirements of minimum capacity of gas storage tanks and requirements of quantity of LPG bottles, LPG bottling stations, distribution channel with regard to bottled LPG traders (Article 8).
However, every LPG bottle circulating on the market must be certified to be conformed to regulations and have its dossier and origin provided by the producer (Article 16).
All gas business facilities (gas producers, processors, importers, exporters, sellers or purchasers; traders producing and repairing LPG bottles or mini-sized LPG bottles; filling stations, distribution stations and compressing stations; traders leasing tanks, bottled LPG warehouse and means of transport) must develop a safe management program and send a report of risk assessment as well as plans for dealing with emergency events to competent authorities for approval (Article 47).
ND87_15062018CP[ENGLISH].pdf (English translation)
Regarding PIT accounting made by a foreign representative office
Official letter No. 41344/CT-TTHT dated June 18th, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) accounting and deactivation of tax identification number (TIN)
According to Article 19 of Circular No. 151/2014/TT-BTC, the obligation to make PIT accounting shall arise only when income is paid. If income is not paid, it is exempt from making PIT accounting.
Accordingly, in case the foreign representative office does not pay income, it shall be exempt from making PIT accounting.
An application for TIN deactivation made by the foreign representative office shall be carried out according to Articles 16 and 17 of Circular No. 95/2016/TT-BTC.
CV41344_18062018CTHN[VLO].pdf (English translation)
Regarding licensing fees paid by a foreign representative office
Official letter No. 82014/CT-TTHT dated December 22nd, 2017 of the Department of Taxation of Ha Noi city regarding tax policy
According to Article 2 of Decree No. 139/2016/ND-CP, if a representative office of a foreign company does not perform business and production activities other than being in charge of communication, market research, commercial enhancement, it must not pay licensing fees.
CV82014_22122017CTHN[VLO].pdf (English translation)
Science - Technology
Guidelines on selection and signing of contract with regard to assigned projects under the intellectual property development program 2016 - 2020
Circular No. 17/2017/TT-BKHCN dated December 29th, 2017 of the Ministry of Science and Technology on management of intellectual property development program during 2017 - 2020
This Circular provides for compilation and approval for the list of assigned projects; selection/direct assignment of an organization presiding over a project; signing project execution contract; project inspection and adjustment; assessment and commissioning of project results and organization of general activities included in the intellectual property development program 2016 - 2020 approved in the Prime Minister’s Decision No. 1062/QD-TTg dated June 14th, 2016.
This Circular takes effect from February 11th, 2018.
TT17_29122017BKHCN[ENGLISH].pdf (English translation)
Tax of Contractor
Regarding withholding tax on postal delivery service
Official letter No. 2157/TCT-CS dated June 4th, 2018 of the General Department of Taxation regarding withholding tax
According to Clause 4 Article 2 of Circular No. 103/2014/TT-BTC, for delivery service, it is only subject to withholding tax in the term of the route from Vietnam to foreign countries. The route from foreign countries to Vietnam shall be exempt from withholding tax.