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Vietlaw Weekly Newsletter No. 371

fa-folder-open Business registration

Regarding update of business lines according to the new business line system

fa-check-circle Official letter No. 234/DKKD-NV dated August 20th, 2018 of the Ministry of Planning and Investment regarding guidelines on some contents relating to the implementation of Decision No. 27/2018/QD-TTg.

Relating to the change of Vietnam’s standard industrial classification system from August 20th, 2018 under Decision No. 27/2018/QD-TTg, the Ministry of Planning and Investment has these opinions:

1. With regard to enterprises and their affiliates that have been granted the Certificates before August 20th, 2018, they are not required to carry out procedures for update of their business lines according to the new business line system.

The update of business lines according to the new business line system is only encouraged and shall be made when enterprises have the demand or when they announce to add, change of business lines or apply for change into the enterprise registration Certificate.

2. With regard to enterprises and their affiliates whose applications for establishment or change of business lines have been received before August 20th, 2018 but the applications have not yet approved on the business registration system, if the already – declared names and business line codes are changed in comparison with those in the new business line system, it is required to modify, supplement to the applications for registration.

3. With regard to applications for establishment of enterprises, announcements of change of business lines which are submitted online and the Announcements of valid applications have been given before August 20th, 2018 but the paper - based applications are submitted after August 20th 2018 and the already – declared names and business codes are changed in comparison with those in the new business line system, it is required to carry out procedures for update, supplement of information.

The announcement of update of business lines according to the new business lines system shall be carried according to the form provided in Annex II-5 issued together with Circular No. 20/2015/TT-BKHDT.

File attachment:

English file-pdf CV234_20082018BKHDT[VLO].pdf (English translation)

Vietnamese file-word CV234_20082018BKH.doc (Vietnamese)

fa-folder-open Customs policies

Requirements of an application for tax reduction for burnt goods

fa-check-circle Official letter No. 4363/TXNK-CST dated August 6th, 2018 o the General Department of Vietnam Customs regarding settlement of tax on burnt goods

Duties on exports and imports under customs supervision shall be reduced under Article 32 of Decree No. 134/2016/ND-CP if the goods are burnt.

However, enterprises must fully provide these documents, otherwise duty shall not be reduced

+ A written request for duty reduction according to Form No. 08 (Appendix VII);

+ Confirmation of scope insurance compensation without tax indemnification;

+ A confirmation of damage issued by a local authority issued within 30 days from the occurrence of damage;

+ An original assessment certificate of the lost quantity or actual damage rate of exports or imports.

File attachment:

English file-pdf CV4363_06082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV4363_06082018TCHQ.doc (Vietnamese)

fa-folder-open Labour - Employment

Announcement of schedule of holidays in 2019

fa-check-circle Announcement No. 3238/TB-LDTBXH dated August 6th, 2018 of the Ministry of Labor, Invalids and Social Affairs regarding national and new year holidays 2019 applicable to cadres, public employees, civil servants and those working for administrative and non-business agencies, political organizations, socio-political organizations

In 2019, public employees, civil servants shall be entitled to take national and new year holidays as follows:

- Calendar New Year: They shall be entitled to take 4 consecutive days off, from Saturday, December 29th, 2018 to the end of Tuesday January 1st, 2019 and take Saturday, January 5th, 2019 as a compensatory workday.

- Lunar New Year: they shall be entitled to take 9 consecutive days off, from Saturday, February 2nd, 2019 to the end of Sunday, February 10th, 2019 without any compensatory workday.

- Victory Day (April 30th) and International Workers’ Day (May 1st): they shall be entitled to take 5 consecutive days off, from Saturday, April 27th, 2019 to the end of Wednesday, May 1st, 2019 and take Saturday, May 4th, 2019 as a compensatory workday.

This schedule of holidays has been approved by the Prime Minister at Official letter No. 6519/VPCP-KGVX dated July 11th, 2018.

File attachment:

English file-pdf TB3238_06082018BLDTBXH[VLO].pdf (English translation)

Vietnamese file-word TB3238_06082018BLDTBXH.doc (Vietnamese)

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

Regarding 30-day time limit for additional submission of C/O

fa-check-circle Official letter No. 4943/TCHQ-GSQL dated August 23rd, 2018 of the General Department of Vietnam Customs regarding additional submission of certificate of origin (C/O)

According to the guidelines in Official letter No. 13959/BTC-TCHQ dated October 4th, 2016, the time limit for additional submission of C/O is within “30 days” as from the date on which the customs declaration is registered.

The General Department of Vietnam Customs assumes that the aforesaid Official letter has specified the “30-day time limit” for additional submission of C/O which is consecutively calculated according to calendar (inclusive of holiday(s)) rather than 30 working days.

However, if the 30th day within such “30-day time limit” as mentioned above coincides with a holiday, it is required to carry out according to Clause 1 Article 4 of Circular No. 38/2015/TT-BTCfa-exclamation-circle .

File attachment:

English file-pdf CV4943_23082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV4943_23082018TCHQ.doc (Vietnamese)

Regarding time limit for additional submission of C/O

fa-check-circle Official letter No. 4944/TCHQ-GSQL dated August 23rd, 2018 of the General Department of Vietnam Customs regarding additional submission of certificate of origin (C/O)

According to the guidelines in Official letter No. 13959/BTC-TCHQ dated October 4th, 2016, the time limit for additional submission of C/O is within “30 days” counted from the date on which the customs declaration is registered.

Accordingly, the “30 - day time limit” for additionally submitting C/O is consultatively calculated rather than working days.

The General Department of Vietnam Customs assumes that the guidelines in Official letter No. 13959/BTC-TCHQ are thoroughly clear; it is not required to provide additional guidelines.

However, if the 30th day within the aforesaid “30 -day time limit” coincides with a holiday in the course of carrying out customs procedure, it is allowable to extend such time limit to the following working day according to the regulations at Clause 1 Article 4 of Circular No. 38/2015/TT-BTCfa-exclamation-circle .

File attachment:

English file-pdf CV4944_23082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV4944_23082018TCHQ.doc (Vietnamese)

fa-folder-open Construction

Regarding costs included in total construction investment

fa-check-circle Official letter No. 1936/BXD-KTXD dated August 6th, 2018 of the Ministry of Construction regarding costs of scientific and technological research paid for remuneration to author of the invention

According to the regulations at Decree No. 32/2015/ND-CP and Circular No. 06/2016/TT-BXD, content of total construction investment includes: Compensation, support, and relocation costs (if any); construction costs; equipment costs; project management costs; construction consultancy costs; other costs and contingency costs for additional quantity of works and for cost escalation.

Accordingly, in the cost structure of total construction investment, there is no content about costs of value of invention (costs of scientific and technological research). As the result, the costs of scientific and technological research relating to the project (if any) belong to other costs in the total construction investment as prescribed in Article 3 of Circular No. 06/2016/TT-BXD.

File attachment:

English file-pdf CV1936_06082018BXD[VLO].pdf (English translation)

Vietnamese file-word CV1936_06082018BXD.doc (Vietnamese)

fa-folder-open Customs policies

Whether copyright fee is added to value of imports after customs clearance

fa-check-circle Official letter No. 4883/TXNK-TGHQ dated August 27th, 2018 of the General Department of Vietnam Customs regarding copyright fee

According to opinions of the General Department of Vietnam Customs, in case copyright fee is calculated according to the proportion of revenue from goods sale generated from goods purchased domestically or goods sale services after the import, it fails to meet the conditions regulated in Article 14 of Circular No. 39/2015/TT-BTCfa-exclamation-circle , and therefore the copyright fee must not be added to value of the imports for calculation of tax.

File attachment:

English file-pdf CV4883_27082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV4883_27082018TCHQ.doc (Vietnamese)

Regarding transportation costs to be added to taxable value of imports

fa-check-circle Official letter No. 4762/TXNK-TGHQ dated August 21st, 2018 of the General Department of Vietnam Customs regarding declaration of additions.

Freight for transport of imported goods to the first importing checkpoint shall be added to customs value of the imported goods in accordance with Clause 8 Article 1 of Decree No. 59/2018/ND-CP.

However, such freight shall be added to value of the imported goods only when all conditions specified in Article 13 of Circular No. 39/2015/TT-BTCfa-exclamation-circle are met. In particular:

(1) It is paid by the buyer and has not been included in the actual or future payment;

(2) It must be related to the imported goods;

(3) There is objective and quantifiable data conformable with the relevant documents.

File attachment:

English file-pdf CV4762_21082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV4762_21082018TCHQ.doc (Vietnamese)

Raw materials imported for manufacture of exports shall not be exempt from import duty if they are outsourced

fa-check-circle Official letter No. 3264/TXNK-CST dated June 20th, 2018 of the General Department of Vietnam Customs regarding settlement of duty on goods imported for manufacture of exports

According to Article 16 of the Law on import and export duties No. 107/2016/QH13 and Article 12 of Decree No. 134/2016/ND-CP, import duty exemption is not given to the case in which raw materials are imported for manufacture of exports by outsourcing of one or some phases.

Accordingly, in case an enterprise does not directly manufacture exports but it transfers part or whole of the raw materials which are imported for manufacture of exports (including both processed and unprocessed raw materials) to another unit for outsourcing of one or some phases, then the enterprise gets the outsourced products back in order to further manufacture and/or export them abroad, the enterprise is not eligible for exemption from import duty on the raw materials which have been outsourced.

File attachment:

English file-pdf CV3264_20062018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV3264_20062018TCHQ.doc (Vietnamese)

fa-folder-open Electronic Transactions

Deadline for implementation of new regulations on interbank electronic payment shall be further delayed

fa-check-circle Circular No. 21/2018/TT-NHNN dated August 31st, 2018 of the Governor of the State Bank of Vietnam on amending, supplementing to a number of articles of Circular No. 37/2016/TT-NHNN dated December 30th, 2016 on management, operation and use of the national interbank electronic payment system

This Circular is to further delay the deadline for implementation of the new regulations on interbank electronic payment in Circular No. 37/2016/TT-NHNNfa-exclamation-circle to November 1st, 2019 instead of from September 1st, 2018.

Previously, the effect of Circular No. 37/2016/TT-NHNNfa-exclamation-circle has been delayed to September 1st, 2018 instead of January 15th, 2018.

This Circular takes effect from August 31st, 2018 and replaces Circular No. 23/2017/TT-NHNNfa-minus-circle dated December 29th, 2017.

File attachment:

English file-pdf TT21_31082018NHNN[VLO].pdf (English translation)

Vietnamese file-word TT21_31082018NHNN.doc (Vietnamese)

Vietnamese file-pdf TT21_31082018NHNN.pdf (Vietnamese)

fa-folder-open Fixed assets

Fixed assets of projects of expansion investment shall be exempt from import duty

fa-check-circle Official letter No. 3501/TXNK-CST dated June 28th, 2018 of the General Department of Vietnam Customs regarding import duty policy.

According to Clause 11 Article 16 of the Law on import and export duties No. 107/2016/QH13, goods imported to form fixed assets for a project eligible for investment incentives shall be considered for import duty exemption. This Clause applies to projects regardless of projects of new investment or projects of expansion investment.

Accordingly, project of expansion investment shall be also entitled to exemption from import duty on goods imported to form fixed assets.

However, the current Law on import and export duties does not regulate duty exemption policy applicable to goods imported for replacement, renewal of technologies of projects eligible for investment incentives.

File attachment:

English file-pdf CV3501_28062018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV3501_28062018TCHQ.doc (Vietnamese)

fa-folder-open Intellectual Property

Regarding customs procedure for protection of imports and exports

fa-check-circle Official letter No. 2464/GSQL-GQ4 dated August 9th, 2018 of the General Department of Vietnam Customs regarding protection of business right towards trademarks

Under this Official letter, in case an enterprise wishes customs authority to apply measures of inspection, supervision, suspension of carrying out of customs procedure with regard to imports, exports that are required the protection of intellectual property right, it shall carry out according to Section 8 of the Customs Law 2014 and Circular No. 13/2015/TT-BTC.

File attachment:

English file-pdf CV2464_09082018TCHQ[VLO].pdf (English translation)

Vietnamese file-word CV2464_09082018TCHQ.doc (Vietnamese)

fa-folder-open Pharmaceutical - Cosmetics

From September 1st, 2018: Applications for approval for contents of advertisements for drugs must be submitted online

fa-check-circle Official letter No. 16223/QLD-TT dated August 20th, 2018 of the Ministry of Health regarding online approval for drug information and contents of advertisements for drugs

According to this Official letter, from September 1st, 2018, the Drug Administration of Vietnam only receives the applications for approval for drug information and contents of advertisements for drugs in the online form.

Address to receive the online applications: http://125.212.203.66/thongtinthuoc/ or access to "Hệ thống xác nhận nội dung thông tin, quảng cáo thuốc" (the system for granting approval for drug information and contents of advertisements for drugs) at the Drug Administration of Vietnam’s website (http://dav.gov.vn). If there are any changes, they will be informed.

How to carry out:

- To register an account at "Hệ thống xác thực tập trung" (the concentrated approval system) (address: http://125.212.203.66:8082/sso/homepage.zul?action=new), if an account has not been granted by the Drug Administration of Vietnam.

- After obtaining an account, the applicant shall log in its own account according to the instructions at the Document guiding the use of the system for approval for drug information and contents of advertisements for drugs.

Charges for appraisal of the applications shall be transferred to the Drug Administration of Vietnam’s account, account No. 84668688 at Vietnam Prosperity Joint Stock Commercial Bank - Head office.

File attachment:

English file-pdf CV16223_20082018BYT[VLO].pdf (English translation)

Vietnamese file-word CV16223_20082018BYT.doc (Vietnamese)

Vietnamese file-pdf CV16223_20082018BYT.pdf (Vietnamese)

fa-folder-open Reasonable expenses

Regarding loan interest costs in terms of related-party transactions

fa-check-circle Official letter No. 43767/CT-TTHT dated June 26th, 2018 of the Department of Taxation of Ha Noi city regarding tax policies

According to Clause 3 Article 8 of Decree No. 20/2017/ND-CPfa-exclamation-circle , with regard to an enterprise that carries out related-party transactions, it is only allowed to make cost accounting for loan interest costs if they do not exceed 20% of total net profit plus loan interest costs and depreciated costs arising within that period.

According to the Department of Taxation of Ha Noi city’s opinions, the limit for making cost accounting for loan interest costs of 20% as mentioned above is applied to total loan interest costs arising within a specific tax period, regardless of the loan interest costs arisen from related parties or independent parties.

File attachment:

English file-pdf CV43767_26062018CTHN[VLO].pdf (English translation)

Vietnamese file-word CV43767_26062018CTHN.doc (Vietnamese)

Vietnamese file-pdf CV43767_26062018CTHN.pdf (Vietnamese)

fa-folder-open Tax of Contractor

Regarding withholding tax on insurance compensation

fa-check-circle Official letter No. 42300/CT-TTHT dated June 20th, 2018 of the Department of Taxation of Ha Noi city regarding insurance compensation

According to opinions of the Department of Ha Noi city, in case a foreign construction contractor (who pays tax according to the combined method) buys insurance for works in Vietnam and receives compensation upon occurring works – related incident, the amount of insurance compensation shall be subject to withholding tax, regardless of such amount is lower or greater than expense of overcoming the incident.

However, it is only required to pay withholding tax in the term of enterprise income tax at the tax rate of 2% while value added tax is exempt (Article 5 of Circular No. 219/2013/TT-BTC).

File attachment:

English file-pdf CV42300_20062018CTHN[VLO].pdf (English translation)

Vietnamese file-word CV42300_20062018CTHN.doc (Vietnamese)

Vietnamese file-pdf CV42300_20062018CTHN.pdf (Vietnamese)

fa-folder-open Tax of Personal Income

Regarding PIT on incomes from capital investment outside Vietnam

fa-check-circle Official letter No. 41324/CT-TTHT dated June 18th, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) on incomes from capital investment outside Vietnam

According to Clause 7 Article 16 of Circular No. 156/2013/TT-BTCfa-exclamation-circle , individuals have to themselves declare and pay tax on income from capital investment generated outside Vietnam. This income shall be subject to PIT at the tax rate of 5% (Article 10 of Circular No. 111/2013/TT-BTC).

PIT on income from capital investment shall be declared and paid whenever it is incurred, using form No. 04/NNG-TNCN issued together with Circular No. 92/2015/TT-BTCfa-exclamation-circle .

File attachment:

English file-pdf CV41324_18062018CTHN[VLO].pdf (English translation)

Vietnamese file-word CV41324_18062018CTHN.doc (Vietnamese)

Vietnamese file-pdf CV41324_18062018CTHN.pdf (Vietnamese)

fa-folder-open Traffic Management

New lists of products and goods likely to be unsafe subject to the state management by the Ministry of Transport

fa-check-circle Circular No. 41/2018/TT-BGTVT dated July 30th, 2018 of the Ministry of Transport on promulgating Lists of products and goods likely to be unsafe subject to the state management by the Ministry of Transport

This Circular provides for 2 lists below:

1. List of means of transport subject to the regulation conformity certification before the customs clearance (with regard to imports) or before they are sold in the market with regard to domestically - manufactured or - assembled goods, products) (Annex I).

2. List of means of transport, accessories, equipment, parts for which the regulation conformity certification or regulation conformity announcement may be optional to be done before they are sold in the market (Annex II).

One of the new noticeable points of this Circular is the removal of the regulations on compulsory regulation conformity certification and regulation conformity announcement at the same time with regard to means of transports. Accordingly, under this Circular, it is only required to conduct the regulation conformity certification (with regard to the goods item mentioned in Annex I) or regulation conformity announcement (with regard to the goods item mentioned in Annex II).

With regard to motor vehicle parts and accessories, they all must not be undergone the regulation conformity certification as prescribed under the earlier regulations; instead it is optional to conduct the regulation conformity announcement.

In addition, technical standards/regulations to be used as the basis for regulation conformity certification or announcement of means of transport, motor vehicle parts and accessories are also replaced by the new ones.

This Circular takes effect from September 15th. 2018 and replaces Circular No. 39/2016/TT-BGTVTfa-minus-circle dated December 6th, 2016.

File attachment:

English file-pdf TT41_30072018BGTVT[VLO].pdf (English translation)

Vietnamese file-word TT41_30072018BGTVT.doc (Vietnamese)

Vietnamese file-pdf TT41_30072018BGTVT.pdf (Vietnamese)

fa-folder-open Salary

Amendments to the regulations on determination of salary budgets of VAMC

fa-check-circle Circular No. 04/2018/TT-BLDTBXH dated June 22nd, 2018 of the Ministry of Labour, Invalids and Social Affairs on amendments to Circular No. 37/2016/TT-BLDTBXH dated October 25, 2016 providing guidelines for management of employees, wages, remunerations and bonuses paid to employees working in Vietnam Asset Management Company

This Circular amends the regulations on determination of salary budgets of Vietnam Asset Management Company (VAMC).

This Decree comes into force as from August 15th, 2018. Regulations specified in this Circular shall be applied as from January 1st, 2018.

File attachment:

English file-pdf TT04_22062018BLDTBXH[EN].pdf (English translation)

Vietnamese file-word TT04_22062018BLDTBXH.doc (Vietnamese)

Vietnamese file-pdf TT04_22062018BLDTBXH.pdf (Vietnamese)