Vietlaw Weekly Newsletter No. 368
Regarding SMEs’ submission of financial statements
Official letter No. 1980/TCT-KK dated May 23rd, 2018 of the General Department of Taxation regarding submission of financial statements of small and medium enterprises (SMEs) under Circular No. 133/2016/TT-BTC.
According to Article 80 of Circular No. 133/2016/TT-BTC, SMEs, including extra-small enterprises, have to prepare and send financial statements to managing authorities, including tax authorities, business registration authorities and statistics authorities.
Regarding financial statement form, to comply with the new form issued together with Circular No. 133/2016/TT-BTC from the fiscal year beginning on or after January 1st, 2017.
If enterprises have submitted financial statements according to the old form issued together with Decision No. 48/2006/QD-BTC, they have to re-send financial statements made according to the new form as mentioned above.
CV1980_23052018TCT[VLO].pdf (English translation)
Amendments to regulations on practicing in construction sector
Circular No. 100/2018/ND-CP dated July 16th, 2018 of the Government on amending and annuling some regulations on necessary business conditions in fields under the management of the Ministry of Construction
According to the new regulations of this Decree, any individual that has not yet to obtain a practicing certificate is entitled to participate in the construction sector where appropriate for his/her major, and is not authorized to run his/her own construction business as well as hold any title that requires the practicing certificate (Clause 2 Article 1).
Conditions, procedures for and competence to issue, revoke a construction practicing certificate; construction design, supervision, inspection and evaluation are also amended, supplemented in comparison with the earlier regulations (Clauses 3, 4, 5, 6, 7, 8 and 9 Article 1 of this Decree).
With regard to the certificate of eligibility for construction activities, this Decree increases its valid duration from 5 years to 10 years (Clause 20 Article 1).
Relating to foreign contractors, under this Decree, a foreign contractor has to establish an executive office in the area where the project is executed. Regarding the contract on planning formulation, construction project formulation, construction survey or construction design, the foreign contractor may establish an executive office in the area where the investor’s head office is located (Clause 40 Article 1)
In addition, according to the new regulations, a foreign contractor shall have its construction license revoked in one of the following cases: fails to take remedial actions against violations after the regulatory authority requests it in writing to take remedial actions more than once; It has incurred administrative penalties for the tasks covered by the granted construction license for the second time (Clause 39 Article 1).
This Decree takes effect from September 15th, 2018.
To abolish Article 22 of Decree No. 79/2009/ND-CP dated September 28th, 2009; Article 19 of Decree No. 64/2010/ND-CP dated June 11th, 2010; Article 27, Article 34 of Decree No. 24a/2016/ND-CP dated April 5th, 2016 and Article 16 of Decree No. 11/2013/ND-CP dated January 14th, 2013.
ND100_16072018CP[ENGLISH].pdf (English translation)
New process for inspection, consultation and customs valuation
Decision No. 1810/QD-TCHQ dated June 15th, 2018 of the General Department of Customs on promulgation of procedures for inspection, consultation and customs valuation applied to exported and imported goods during customs procedures
This process only applies to consignments subject to documentary inspection, physical inspection.
One of the new points of this process is the separation between order of, procedures for, inspection, consultation and customs valuation with regard to goods without and without sales contracts.
According to Article 4 of this Process, in order to have grounds to be accepted the value declared on declaration forms, enterprises need to declare adequate names of goods, detailed symbol, marks and brands/makes of consignments. In which, with regard to some specific goods items, it is required to declare names according to the Standards regulated in Annex I of this Process.
This Decision takes effect from July 1st, 2018 and replaces the provisions in terms of customs value in Articles 55, 56, 57, 58 of Decision No. 1966/QD-TCHQ dated July 10th, 2015.
QD1810_15062018TCHQ[ENGLISH].pdf (English translation)
E-Customs - VNACCS
Table of 36 responses to enquiries about customs declaration procedures under new regulations
Dispatch No. 3899/TCHQ-GSQL dated July 4th, 2018 of the General Department of Vietnam Customs regarding responses to enquiries arising from Decree No. 59/2018/ND-CP and its instructional documents
The document is to attach the table of 36 responses of the General Department of Vietnam Customs to enquiries about procedures for declaration of imports and exports as regulated in Decree No. 59/2018/ND-CP, Circular No. 39/2018/TT-BTC and Circular No. 38/2018/TT-BTC.
Accordingly, the consolidation and deconsolidation of shipments in the same container of multiple goods owners shall be carried out in CFS rather than being carried out at checkpoints (point 3 Article 18 of Circular No. 39/2018/TT-BTC).
Currently, the VNACCS has not supported a function that separates a bill of lading in a case where an importer has a bill of lading for multiple declarations, therefore, declarants shall insert the following in the note box: “Vận đơn… chung với các tờ khai …” (Declarations….share a bill of lading…) (point 6 Article 18 of Circular No. 39/2018/TT-BTC).
The additional declaration of quantity of goods actually exported or imported must be carried out within 5 working days from the day on which the goods enter the customs controlled area. If the declarant fails to make an additional declaration after above-mentioned period, the customs authority shall apply tax imposition (point 9 Article 20 of Circular No. 39/2018/TT-BTC).
Enterprises may cancel the declaration of in-country import which has the same information with another declaration and is 15 days overdue from its registration date (point 12 Article 22 of Circular No. 39/2018/TT-BTC).
With regard to the activity of taking goods to storage places, there is no limit on storing goods in different places, however, enterprises must make a duly completed declaration of storage places (point 16 Article 32 of Circular No. 39/2018/TT-BTC).
The regulations on notification of manufacturing facility before carrying out procedures for import of the initial shipment of materials, supplies for processing or manufacturing exported goods are also applied to export processing enterprises (Point 22 Article 56 of Circular No. 39/2018/TT-BTC).
CV3899_04072018TCHQ[ENGLISH].pdf (English translation)
New regulations on social insurance contributions and calculation of late payment interests
Decision No. 888/QD-BHXH dated July 16th, 2018 of the Social Security of Vietnam on amending and supplementing certain articles of the Decision No. 595/QD-BHXH dated April 14, 2017 of the Director General on procedures for collection of social insurance, health insurance, unemployment insurance, occupational accident and disease insurance; management of social security booklets and health insurance cards
One of the important amendments of this Decision is that enterprises’ branches are allowed to pay social insurance contributions in the area where they operate or at their parent companies. Under the earlier regulations, braches have to pay social insurance contributions in the area where they operate (Clause 1 Article 1).
In addition, according to the supplemented regulations in this Decision, with regard to the evasion of payment of social insurance contributions takes place from January 1st, 2016 onwards, rate of accrued interest (%) shall be the month-based late payment interest rate applicable in each respective year.
In case of collection of the accrued amount of compulsory social insurance contributions with regard to persons work outside Vietnam and collection of the accrued amount of social insurance contributions thanks to salary increase, the rate of accrued interest shall be equal to the average rate of interest on investments of the social security trust fund determined in the year preceding the computation year.
Documents submitted as the basis for issue and modification of social security booklets and health insurance cards are also amended, supplemented. The details are provided in the attached Appendixes.
This Decision takes effect from July 1st, 2018.
QD888_16072018BHXH[ENGLISH].pdf (English translation)
Cars - Motorcycles
Regarding transfer of diplomatic vehicles of which the manufacture year is earlier than 5 years
Official letter No. 1481/GSQL-GQ3 dated May 21st, 2018 of the General Department of Vietnam Customs regarding issue relating to transfer of automobiles of entities eligible for preferences, diplomatic privileges
According to Clause 2 Article 1 of Decision No. 10/2018/QD-TTg, in case a vehicle of which the manufacture year is earlier than 5 years is transferred between entities that are given diplomatic immunity and privileges or an entity that is given diplomatic immunity and privileges wishes to transfer such vehicle to other entity in Vietnam, the vehicle must be certified by the competent registry that it still meets roadworthiness standards.
CV1481_21052018TCHQ[VLO].pdf (English translation)
Culture - Sports
Copyright certificate is not required upon import of film
Circular No. 22/2018/TT-BVHTTDL dated June 29th, 2018 of the Ministry of Culture, Sports and Tourism on amending and supplementing certain articles of the Circular No. 07/2012/TT-BVHTTDL dated July 16, 2012 by the Minister of Culture, Sports and Tourism providing guidance on the Government’s Decree No. 32/2012/ND-CP dated April 12, 2012 on import and export of cultural products for non-commercial purposes
One of the noticeable points of this Circular is the removal of the regulations on application for the import of cultural products regulated in Article 6 of Circular No. 07/2012/TT-BVHTTDL
Accordingly, when organizations, individuals import films for popularizing, they shall no longer present the copyright certificates.
In addition, this Circular also amends, supplements to regulations on power to appraise cultural products and power to license for import of cultural products in the manner of basing on each type of cultural products (films, audio and visual recordings, relics or antiques, etc.)
This Circular takes effect from August 15th, 2018.
TT22_29062018BVHTTDL[ENGLISH].pdf (English translation)
Design - Architecture
New regulations on contest and selection of architectural designs
Circular No. 13/2016/TT-BXD dated June 29th, 2016 of the Ministry of Construction on guidelines for organization of contest and selection of architectural designs
This Circular regulates entities, forms and requirements of contest and selection of architectural designs.
Accordingly, in comparison with the earlier regulations, this Circular adds more construction works requiring a contest and selection of architectural design plans. In particular, apart from construction works with large scale or particular architecture requirements, mandatory construction works in cities, construction works on main roads in cities now also requiring a contest and selection of architectural design plans.
This Circular takes effect from August 15th, 2016 and replaces Circular No. 23/2009/TT-BXD dated July 16th, 2009.
TT13_29062016BXD[ENGLISH].pdf (English translation)
Regarding EIT incentives given to science and technology enterprises
Official letter No. 43766/CT-TTHT dated June 26th, 2018 of the Department of Taxation of Ha Noi city regarding preferential policies on enterprise income tax (EIT) exemption and reduction in 2017
According to Clause 8 Article 1 of Joint Circular No. 17/2012/TTLT-BKHCN-BTC-BNV, a science and technology enterprise shall be entitled to EIT incentives only if it satisfies the conditions on the ratio of its turnover from the production and sale of science and technology products to its total turnover as follows:
- At least 30% in the first year;
- At least 30% in the second year;
- At least 70% in the third year onwards.
In addition, in the duration of enjoying EIT incentives, the enterprises shall be only entitled to enjoy EIT incentives in years in which it satisfies the above turnover ratio condition. For years in which it fails to reach the above turnover ratio, the enterprise shall not be entitled to enjoy EIT incentives and shall pay the EIT at normal tax rates.
Currently, science and technology enterprises are entitled to enjoy EIT incentives as follows: the EIT rate of 10% for 15 years, EIT exemption for 4 years and a 50% reduction of payable tax for 9 subsequent years (Clause 9 Article 1 of Joint Circular No. 17/2012/TTLT-BKHCN-BTC-BNV).
Notably, in case an enterprise that enjoyed or is enjoying incentives under preferential conditions other than the preferential conditions on science and technology enterprises (if any), the duration of EIT incentives under the conditions on science and technology enterprises must be subtracted from the duration in which the Company enjoyed or is enjoying incentives under other preferential conditions.
CV43766_26062018CTHN[VLO].pdf (English translation)
Permits for entrusted import of scraps shall be no longer issued
Announcement No. 281/TB-VPCP dated August 7th, 2018 of the Government Office of the work of environment management in terms of import and use of scraps as production materials
Relating to imported scraps, the document requests the Ministry of Natural Resources and Environment to conduct the comprehensive inspection into the issuance of permits for import of scraps in the past time and it is required to revoke permits of enterprises if their violations are detected.
In addition, the Government also requests to review all permits for import of scraps which are still within quota. In the future, do not issue new permits for import of scraps with regard to the entrusted import and only consider issuing new permits for import of scraps to enterprises when they can prove their demand and capacity of use of scraps as production materials.
Particularly, with regard to stagnant scrap containers at ports without receiver, it is required to conduct the destruction or move them to other places.
TB281_07082018VPCP[VLO].pdf (English translation)
Spot exchange rate must not exceed 3% of the average exchange rate in the inter-bank foreign currency market
Circular No. 1636/QD-NHNN dated August 18th, 2015 of the State Bank on promulgating the spot exchange rate between Vietnam dong and foreign currency by permitted credit institutions
Under this Decision, the spot exchange rate between Vietnam dong and US Dollars must not exceed +3% of the average exchange rate in the inter-bank foreign currency market, announced by the State Bank on the same date.
With regard to spot exchange rate between Vietnamese dong and other currencies and difference between the buying rate and selling rate, credit institutions are allowed to determine themselves.
This Decision comes into force from August 19th, 2015 and replaces Decision No. 1595/QD-NHNN dated August 11th, 2015.
QD1636_18082015NHNN[ENGLISH].pdf (English translation)
Regarding declaration and payment of withholding tax with regard to foreign traders without presence in Vietnam
Official letter No. 3065/TCT-KK dated August 9th, 2018 of the General Department of Taxation regarding issuance of tax identification number (TINs) for declaration and payment of withholding tax by using the combined method
According to the regulations at Decree No. 90/2007/ND-CP, foreign traders that have no presence in Vietnam are still allowed to participate in trading goods under the right to import/export provided that they have to register to be issued with the Certificate of registration of right to export/import.
At the same time, if such foreign traders wish to pay withholding tax directly at tax authorities in Vietnam after they are issued with the Certificate of registration of right to export/import, they have to apply for 10-digit TINs in accordance with Clause 3 Article 7 of Circular No. 95/2016/TT-BTC.
The declaration and payment of withholding tax by using the combined method shall be carried out according to the guidelines in Official letter No. 4431/TCT-KK dated September 23rd, 2016.
CV3065_09082018TCT[VLO].pdf (English translation)
Microsilica (Silica fume) shall be classified into HS code 2811.22.10
Official letter No. 4539/TCHQ-TXNK dated August 1st, 2018 of the General Department of Vietnam Customs regarding classification of Microsilica (Silica fume)
Relating to Microsilica or Silica fume, the General Department of Vietnam Customs has these opinions:
1. Microsilica or Silica fume, formed as a subsidiary product in the production process of silicon or ferrosilicon alloy, which includes at least 80% of weight being morphous ultrafine silicon dioxide particles and not exceeding 20% of weight being impurities (main impurities include carbonate, silicon, silicon carbide and base anhydride) is classified into heading 28.11, HS code 2811.22.10.
2. The aforesaid guidelines on classification shall be applied from June 6th, 2018 (the date on which the classification result is published by the World Customs Organization to update the Summary of 2017 classification opinions).
CV4539_01082018TCHQ[VLO].pdf (English translation)
Planning on exploration, extraction, processing of ores up to 2025
Decision No. 910/QD-TTg dated July 25th, 2018 of the Prime Minister on approving planning ọn exploration, extraction, processing and use of Vietnam’s gold, copper, nickel and molybdenum ores up to 2025, with visions towards 2035
This Planning aims to ensure sustainable development, efficiency in resources use, fully satisfy mineral materials demand of the economy and not to export crude ores, gold and copper concentrates.
This Planning also promulgates these lists: List of projects on exploration of gold, copper, nickel and molybdenum ores up to 2025 and List of investment projects on exploitation of gold, copper, nickel and molybdenum ores up to 2025.
This Decision takes effect from the date of its signing and replaces Decision No. 11/2008/QD-BCT dated June 5th, 2008.
QD910_25072018TTg[ENGLISH].pdf (English translation)
Regulations on on-lending ODA loans
Decree No. 97/2018/ND-CP dated June 30th, 2018 of the Government on on-lending of the Government's ODA loans and foreign concessional loans
This Decree provides regulations on managing, on-lending and recovering loans borrowed from the Government's ODA loans and foreign concessional loans.
One of the new points of this Decree is the limit on on-lending ODA loan. In which, the on-lent proportion for the enterprises shall not exceed 70% of the total investment capital.
In addition, this Decree also specifies rate of management fees of on-lent loans which shall be 0.25% per year, to be calculated based on the loan balance and loan loss provision applied to enterprises shall be equal to 1.5% per year per loan balance.
ND97_30062018CP[ENGLISH].pdf (English translation)
Stop licensing for import of trees with nursery containers from January 1st, 2018
Official letter No. 4019/BNN-BVTV dated May 28th, 2018 of the Ministry of Agriculture and Rural Development regarding import of trees with nursery containers into Vietnam
According to the Ministry of Agriculture and Rural Development’s opinions, currently, the number of trees imported into Vietnam is basically enough to meet the demand of study, nursery for testing, planting of ornamental trees, shade trees at ecological tourist zones, etc.
In addition, the import of trees with nursery containers may contain harmful organisms with high risks to plants' safety and affecting the country's agricultural production.
As the result, the Ministry of Agriculture and Rural Development has announced that (at Official letter No. 10411/TB-BNN-BVTV dated December 14th, 2017), from January 1st, 2018, to suspend the consideration for settlement of request for import, transit of trees with nursery containers into Vietnam.
With regard to cases in which the Ministry of Agriculture and Rural Development allowed the import before January 1st, 2018 shall be further allowable to carry out procedures for quarantine of imported plants.
CV4019_28052018BNN[VLO].pdf (English translation)
Regarding conditions for deduction of discounts for imported goods
Official letter No. 4829/TCHQ-TXNK dated August 16th, 2018 of the General Department of Vietnam Customs regarding consideration for deduction of discounts for imports
According to point d clause 2 Article 15 of Circular No. 39/2015/TT- BTC, discounts for imported goods shall be subtracted from taxable value only when the sale contract specifies discount conditions.
At the same time, the application for consideration for deduction of discounts must have the seller’s announcement of discounts.
Accordingly, in case a company applies for subtraction of discounts for imported goods from taxable value but in the sale contract having no specific discount conditions and the application having no the seller’s announcement of discounts, the subtraction shall not be considered.
CV4829_16082018TCHQ[VLO].pdf (English translation)
Regulations on getting loans by provincial governments
Decree No. 93/2018/ND-CP dated June 30th, 2018 of the Government on providing for provincial-government debt management
This Decree deals with provincial-government debt management, including debt management rules, types of borrowing and eligibility requirements to be satisfied by provincial governments to get loans, formulation of 5-year borrowing and repayment plan, 03-year debt management program, annual borrowing and repayment plan, getting loans and repayment, accounting, auditing, reporting and debt-related information publishing.
Accordingly, People’s Councils and People’s Committees of provinces and central-affiliated cities are allowed to get loans in the forms of: issuing municipal bonds; borrowing funds on-lent from the ODA loans; getting loans directly from domestic financial institutions or credit institutions; borrowing money from state funds; getting loans from financial reserve fund.
However, the People’s Councils and People’s Committees of provinces and central-affiliated cities are not allowed to directly ask for foreign loans and are not allowed to act as a guarantor for any organizations or individuals for their domestic or foreign loans or bond issues.
This Decree takes effect from July 1st, 2018.
ND93_30062018CP[ENGLISH].pdf (English translation)
Tax of Contractor
Regarding taxable revenue of foreign sub-contractors when they transfer part of their work to Vietnamese sub-contractors
Official letter No. 2044/TCT-CS dated May 28th, 2018 of the General Department of Taxation regarding withholding tax
According to Clause 1 Article 13 of Circular No. 103/2014/TT-BTC, in case foreign sub-contractors transfer part of their work to Vietnamese sub-contractors but these Vietnamese sub-contractors are not named in the list of contractors enumerated under the contractor contract, the foreign sub-contractors shall not be eligible to deduct taxable revenue corresponding to the work already transferred.
CV2044_28052018TCT[VLO].pdf (English translation)
Regarding refund of VAT on exported goods
Official letter No. 3081/TCT-CS dated August 9th, 2018 of the General Department of Taxation regarding refund of value added tax (VAT)
In case a company signs a financial leasing contract, the making out of invoice for financial leasing assets shall be carried out according to the guidelines in Point 2.12 Annex 4 issued together with Circular No. 39/2014/TT-BTC and Point 4 of Official letter No. 18734/BTC-CST dated December 23rd, 2014.
If in a month/quarter, the Company both exports goods, services and sells assets domestically, it is required to record input VAT on business and production of exported goods and services in separate accounting entries in order to be eligible for consideration of tax refund (Clause 4 Article 1 of Circular No. 130/2016/TT-BTC ).
In addition, it should note that the maximum refundable VAT on exported goods, services must not exceed 10% of revenue from the export.
CV3081_09082018TCT[VLO].pdf (English translation)
Regarding refund of duties on goods imported/exported on the spot
Official letter No. 3158/TXNK-CST dated June 15th, 2018 of the General Department of Vietnam Customs regarding refund of import duty
According to Clause 1 Article 36 of Decree No. 134/2016/ND-CP, duties on goods which are initially imported for manufacture or business operation but eventually used for manufacture of goods for export shall be refunded only when the products have been exported abroad or exported to a non-tariff zone.
Accordingly, with regard to products exported on the spot (delivered in Vietnam) under designation of foreigner traders, import duty on materials shall not be refunded.
CV3158_15062018TCHQ[VLO].pdf (English translation)
Textile - Garment - Footwear
Textile products made of carbon yarn are classified into HS code 6815.10.99
Official letter No. 4114/TCHQ-TXNK dated July 13th, 2018 of the General Department of Vietnam Customs regarding classification of textile products made of carbon yarn
According to this Official letter, woven products primarily made of carbon yarn belong to heading 68.15, sub-heading 6815.10 “- Non-electrical articles of graphite or other carbon", sub-heading "- - Other", HS code 6815.10.99 "- - - Other".
CV4114_13072018TCHQ[VLO].pdf (English translation)
New regulations on rescue operations of firefighting forces
Circular No. 08/2018/TT-BCA dated March 5th, 2018 of the Ministry of Public Security on elaboration of Decree No. 83/2017/ND-CP dated July 18th, 2017 which provides for rescue operations of firefighting forces
This Circular takes effect from April 25th, 2018 and replaces Circular No. 65/2013/TT-BCA dated November 26th, 2013.
TT08_05032018BCA[EN].pdf (English translation)
Amendments to the regulations on minimum safety limits and ratios in banking operations
Circular No. 16/2018/TT-NHNN dated July 31st, 2018 of the State Bank of Vietnam on amending, supplementing to a number of articles of Circular No. 36/2014/TT-NHNN dated November 20th, 2014 stipulating minimum safety limits and ratios for transactions performed by credit institutions and branches of foreign banks
This Circular is to supplement to the regulations on exchange rates used for calculation of minimum safety limits and ratios in banking operations, including exchange rates used for converting foreign currencies into Vietnamese dong and exchange rates used for converting foreign currencies into USD.
In addition, this Circular also amends the formula for calculation of liquid reserve ratio and the maximum ratio of short-term capital sources used as the medium and long term loans in Vietnamese dong.
Accordingly, banks and branches of foreign banks have to comply with maximum ratio when they use short-term capital sources for provision of medium and long term loans as follows: not exceeding 45% in 2018 and not exceeding 40% in 2019. For non-bank credit institutions, such ratio must not exceeding 90%.
This Circular takes effect from July 31st, 2018.
To abolish Clauses 15, 16, 17 and 22 Article 1 of Circular No. 19/2017/TT-NHNN dated December 28th, 2017.