Vietlaw Weekly Newsletter No. 373
Some conditions for licensing in the banking sector shall be abolished
Circular No. 17/2018/TT-NHNN dated August14th, 2018 of the State Bank on amending and supplementing a number of Articles of Circulars prescribing licensing, business network and foreign exchange operations of credit institutions and foreign bank branches
This Circular is to amend or abolish regulations at some Circulars, including:
1. Circular No. 40/2011/TT-NHNN (Clause 2 Article 9 and Clause 3 Article 10) regulating conditions for establishment of a joint-stock commercial bank, accordingly, the condition “having at least 2 founding shareholders as organizations” is abolished.
2. Circular No. 21/2013/TT-NHNN (point i Clause 1 Article 6 is abolished) regulating conditions for establishment of branches in country of commercial bank, accordingly, the condition “have full and valid dossier” is abolished.
3. Circular No. 21/2014/TT-NHNN (point a Clause 2 Article 10 is abolished) regulating conditions for allowing banks, branches of foreign banks to extend other foreign exchange transactions. Accordingly, the condition “the permit with limited duration is issued by the State Bank” is abolished.
4. Circular No. 30/2015/TT-NHNN (Article 11) regulating requirements for licensing joint stock non-bank credit institutions. Accordingly, the condition “having at least two founding shareholders as organizations” is abolished.
5. Circular No. 31/2012/TT-NHNN (Clause 6 Article 8,Clause 1 Article 25) regulating conditions for licensing to establish cooperative banks.
6. Circular No. 04/2015/TT-NHNN (point d Clause 1 Article 31) regulating conditions for licensing to establish the people’s credit funds.
This Circular takes effect from October 1st, 2018.
TT17_14082018NHNN[ENGLISH].pdf (English translation)
Regarding PIT on incomes earned by non-residents
Official letter No. 2465/TCT-TNCN dated June 20th, 2018 of the General Department of Taxation regarding personal income tax (PIT) on incomes earned by non-residents
According to this Official letter, in case a foreign representative office signs contracts with individuals that are not present in Vietnam but these individuals perform work generated in Vietnam, incomes received by such individuals are determined incomes generated in Vietnam. As the result, such incomes shall be subject to PIT in Vietnam according to Article 1 of Circular No. 111/2013/TT-BTC .
CV2465_20062018TCT[VLO].pdf (English translation)
Formula for calculation of pensions and social insurance allowances from July 1st, 2018
Circular No. 05/2018/TT-BLDTBXH dated June 29th, 2018 of the Ministry of Labor, Invalid and Social Affairs on guidelines on adjustments to pensions, social insurance allowances and monthly allowances for entities regulated in clauses 1, 2, 3 and 8 article 1 of the Government's Decree No. 88/2018/ND-CP dated June 15th, 2018
This Circular is to provide guidelines on the formula for increasing pensions, social insurance allowances and monthly allowances by 6.92% from July 1st, 2018 in accordance with the regulation in Decree No. 88/2018/ND-CP.
Accordingly, pensions, social insurance allowances and monthly allowances from July 1st, 2018 shall be equal those given in June multiplied by (x) 1.0692.
This Circular takes effect from August 15th, 2018. The regimes regulated in this Circular shall be carried out from July 1st, 2018.
TT05_29062018BLDTBXH[VLO].pdf (English translation)
Analysis - Classification
Goods classification result shall be only used within 3 years
Official letter No. 3996/TCHQ-TXNK dated July 9th, 2018 of the General Department of Vietnam Customs regarding issues relating the sending and receipt of analysis samples
Relating to the classification and goods sampling for analysis, the General Department of Vietnam Customs informs that it has given guidelines on settling related issues in the new Procedure issued together with Decision No. 1921/QD-TCHQ dated June 28th, 2018.
Accordingly, the use of information in the Announcement of classification result upon conducting the classification work, determination of goods codes is guided at point d Clause 1 Article 3 of the Procedure.
The use of the Announcement of classification result of the General Department of Vietnam Customs upon carrying out customs procedure is guided at point b Clause 2 Article 3 of the Procedure.
Cases exempt from sampling for analysis, for the purpose of classification, are guided in Clause 4 Article 5 of the Procedure.
Cases in which the applications for analysis are returned are guided in Clause 3 Article 6 of the Procedure.
With regard to the reuse of classification result of a previous shipment for the next shipments which have the same names of goods, composition, physical and chemical properties, functions, usage and are imported from the same manufacturer according to point g Clause 1 Article 18 of Circular No. 38/2015/TT-BTC , such result shall be only used within 3 years.
CV3996_09072018TCHQ[VLO].pdf (English translation)
Enterprises engaged in transfer pricing have to prepare and submit master global file
Official letter No. 3170/TCT-TTr dated August 16th, 2018 of the General Department of Taxation regarding problems in the course of implementation of the Government’s Decree No. 20/2017/ND-CP dated February 24th, 2017
According to Clause 4, Clause 5 Article 10 of Decree No. 20/2017/ND-CP , any enterprise that engages in transfer pricing has to prepare, retain transfer pricing documentation, including: Local file, Master global file and country-by-country report.
In which, the “master global file” shall be prepared according to Form No. 03/ND-GDLK, including information about business operations of the multinational group, its transfer pricing policies and methods applied all over the world and its policies on allocation of incomes, activities and functions in the intra-group value chain (point b Clause 2 Article 4 of Circular No. 41/2017/TT-BTC).
The transfer pricing documentation, including the master global file, must be prepared before making tax accounting and must be provided for tax authorities upon the request.
CV3170_16082018TCT[VLO].pdf (English translation)
Cars - Motorcycles
From November 5th, 2018: import of motorbikes of high cylinder capacity shall be exempt from permit
Circular No. 27/2018/TT-BCT dated September 19th, 2018 of the Ministry of Industry and Trade on abolishing the regulations on granting automatic import permit for motorbikes of high cylinder capacity from 175 cm3 or more
Accordingly, from November 5th, 2018, upon import of motorbikes of high cylinder capacity (from 175 cm3 or more), enterprises shall no longer apply for a permit as previously. Instead, they shall carry out procedures for import at Customs authorities.
This Circular takes effect from November 5th, 2018.
TT27_19092018BCT[VLO].pdf (English translation)
Certificate of Origin (C/O)
Announcement of C/O not eligible for incentives issued by China
Official letter No. 3777/TCHQ-GSQL dated June 28th, 2018 of the General Department of Vietnam Customs regarding announcement of signature and seal samples on preferential certificate of origin (C/O)
According to this Official letter, 42 Customs Departments affiliated to the General Department of China Customs will officially issue the certificate of origin not eligible for tariff incentives from August 20th, 2018.
Before such time point, certificates of origin not eligible for tariff incentives already issued by agencies affiliated to the General Administration of Quality Supervision, Inspection and Quarantine of the People’s Republic of China (AQSIQ) are still effective.
Certificates of origin not eligible for tariff incentives which had been issued by China External Trade Development Council and local Sub-departments of China shall be further applied and effective as previously because there is no change.
CV3777_28062018TCHQ[VLO].pdf (English translation)
Regarding validity duration of the construction operating permit
Official letter No. 88/BXD-HDXD dated June 27th, 2018 of the Ministry of Construction regarding the grant of construction operating license to foreign contractors performing construction activities in Vietnam
The current Construction Law and Decree No. 59/2015/ND-CP do not regulate validity duration of the construction operating license granted to foreign contractors performing construction activities in Vietnam.
One of the conditions for obtaining the construction operating license is the report on bid results or the decision on lawful contract award or the lawful contract agreement. As the result, validity duration of the construction operating license is the duration for performance of tasks based on report on bid results or the decision on lawful contract award or the lawful contract agreement.
In addition, according to Point a Clause 3 Article 73 of Decree No. 59/2015/ND-CP , the construction operating license shall be invalid when the contract agreement is completed and terminated.
Notably, duration for performance of construction tasks to be used as the basis for determination of validity duration of the construction operating license shall comprise both construction duration and duration for maintenance of construction works.
CV88_27062018BXD[VLO].pdf (English translation)
Regarding import duty exemption for expansion projects
Official letter No. 3732/TXNK-CST dated July 9th, 2018 of the General Department of Vietnam Customs regarding import duty policy
According to opinions of the General Department of Vietnam Customs, the regulation on exemption from import duty on goods imported to form fixed assets for projects eligible for investment incentives as regulated at Clause 11 Article 16 of the Law on import and export duties No. 107/2016/QH13 is uniformly applied to both new project and expansion project.
Accordingly, expansion projects shall be also exempt from import duty on goods imported to form fixed assets (if the conditions on import duty exemption are met).
CV3732_09072018TCHQ[VLO].pdf (English translation)
Exchange rate used for conversion of salary applicable in the last 6 months of 2018: VND 22,635/USD
Official letter No. 1321/BHXH-QLT dated July 2nd, 2018 of Ho Chi Minh city Social Insurance Agency regarding foreign exchange rate applicable in the first 6 months of 2018
According to this Official letter, the exchange rate used for conversion of salary in a foreign currency applicable in the last 6 months of 2018 (applicable from July 2nd, 2018) is VND 22,635/USD, increased by VND 220 in comparison with the exchange rate applicable in the first 6 months of 2018 (USD 22,415/USD (Official letter No. 07/BHXH-QLT dated January 3rd, 2017).
CV1321_02072018BHXHHCM[VLO].pdf (English translation)
Export processing enterprises
Regarding withholding tax with regard to imports delivered at bonded warehouses
Official letter No. 6562/CT-TTHT dated July 5th, 2018 of the Department of Taxation of Ho Chi Minh city regarding tax policy
According to the regulations of Circular No. 103/2014/TT-BTC, there is no policy on exemption from withholding tax with regard to imports of export processing enterprises (EPEs) delivered at bonded warehouses.
Accordingly, in case an EPE signs a contract to import goods and designates the goods delivery at a bonded warehouse, this case is still subject to withholding tax.
The EPE (importer) shall withhold and pay withholding tax (enterprise income tax) on behalf of the foreign contractor at the rate of 1% upon revenue.
With regard to value added tax, it shall be exempt because goods imported into EPEs are not subject to VAT.
CV6562_05072018CTHCM[VLO].pdf (English translation)
Regarding PIT incurred by a representative office’s Head
Official letter No. 47490/CT-TTHT dated July 9th, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) policy applicable to non-residents
According to the regulations of Circular No. 111/2013/TT-BTC (which has been amended at Circular No. 119/2014/TT-BTC ) if a foreign representative office’s Head is a foreigner and is not a resident in Vietnam, he/she shall be exempt from making PIT accounting.
However, such foreign representative office’s Head has to declare and pay PIT on incomes earned in Vietnam every quarter by using form No. 07/KK-TNCN at the tax authority of the location where his/her job is taken place (Clause 8 Article 16 of Circular No. 156/2013/TT-BTC).
Payable PIT shall be determined according to the tax rate of 20% (Article 18 of Circular No. 111/2013/TT-BTC ).
CV47490_09072018CTHN[VLO].pdf (English translation)
Regarding PIT incurred by non-residents who work outside Vietnam
Official letter No. 45742/CT-TTHT dated July 2nd, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) on incomes earned by non-residents
According to the guidelines in Official letter No. 2465/TCT-TNCN dated June 20th, 2018, in case a foreign representative office signs contracts with individuals that are not present in Vietnam but these individuals perform work generated in Vietnam, incomes received by such individuals from such work are determined incomes generated in Vietnam. As the result, such incomes shall be subject to PIT in Vietnam according to Article 1 of Circular No. 111/2013/TT-BTC .
CV45742_02072018CTHN[VLO].pdf (English translation)
Regarding PIT in incomes earned from various places
Official letter No. 6344/CT-TTHT dated June 29th, 2018 of the Department of Taxation of Ho Chi Minh city regarding personal income tax (PIT)
A foreigner that works in Vietnam earns incomes from various places is not allowed to authorize the income payer to make tax accounting.
At the end of each year such foreigner shall consolidate incomes from various places in order to directly declare tax accounting at tax authority according to form No. 02/QTT-TNCN issued together with Circular No. 92/2015/TT-BTC .
CV6344_29062018CTHCM[VLO].pdf (English translation)
Regarding PIT on incomes earned by a long-distance Director General
Official letter No. 4871/CT-TTHT dated May 30th, 2018 of the Department of Taxation of Ho Chi Minh city regarding personal income tax (PIT)
According to Article 18 of Circular No. 111/2013/TT-BTC , a non-resident individual that earns income in Vietnam has to pay PIT at the tax rate of 20%.
Accordingly, in case a foreigner is appointed to become a Director General in Vietnam but he is not a resident in Vietnam, the Director General shall be still subject to 20% PIT upon the whole income earned in Vietnam.
However, such non-resident Director General shall be exempt from making tax accounting.
CV4871_30052018CTHCM[VLO].pdf (English translation)
How to declare withholding tax on offshore transport freight collected on behalf of foreign shipping firms
Official letter No. 6322/CT-TTHT dated June 29th, 2018 of the Department of Taxation of Ho Chi Minh city regarding withholding tax
In case a company is a foreign shipping firm’s agent which collects freight and other surcharges on behalf of the former, it has to declare and pay withholding tax on behalf of the foreign shipping firm as follows:
- With regard to the offshore transport freight collected on behalf of the foreign shipping firm, the company shall temporarily pay quarterly (without submission of the declaration) and make tax accounting on the yearly basis.
- With regard to other charges, the company shall declare whenever they are incurred or declare monthly according to the guidelines in Circular No. 156/2013/TT-BTC).
CV6322_29062018CTHCM[VLO].pdf (English translation)
Regarding PIT on salary paid for probation period
Official letter No. 47484/CT-TTHT dated July 9th, 2018 of the Department of Taxation of Ha Noi city regarding personal income tax (PIT) withholding during probation period.
According to this Official letter, whether salary paid for probation period is subject to PIT according to the progressive tax table or the rate of 10% depending on whether or not a labor contract is signed after the probation period.
If after the probation contract expires, the company decides to sign a labor contract for at least 3 months with the probationer, it shall withhold PIT on the probationer’s income, including income paid for the probation period, according to the progressive tax table.
In contrast, if after the probation contract expires, the company does not sign a labor contract, probation salary shall be withheld PIT at the rate of 10% (except for the case in which the probationer has commitment of low income).
CV47484_09072018CTHN[VLO].pdf (English translation)
Tax of Land
Regarding refund of overpaid land rents
Official letter No. 2699/TCT-KK dated July 6th, 2018 of the General Department of Taxation regarding refund of overpaid tax
According to Clause 2 Article 33 of Circular No. 156/2013/TT-BTC , overpaid tax shall be given priority to be automatically offset against tax amount payable in the next period and shall be refund if it not offset completely.
Accordingly, in case a company has overpaid land rent but at that time the company receives an announcement of payment of land rent for the next year, it shall take priority to offset the overpaid land rent against the land rent payable for the next year. If such overpaid land rent is not offset completely, it shall be refund.
CV2699_06072018TCT[VLO].pdf (English translation)
FDI enterprises are not allowed to distribute pharmaceutical products
Official letter No. 4889/BCT-KH dated June 19th, 2018 of the Ministry of Industry and Trade regarding guidelines on performance of distribution activity
According to this Official letter, when a foreign direct investment enterprise (FDI enterprise) retails its own goods in the Vietnam market, it is not required to apply for a business license or a license for establishment of retail facilities in accordance with the regulations of Decree No. 09/2018/ND-CP.
However, with regard to goods subject to business and production conditions, the FDI enterprise has to meet the business and production conditions in accordance with related specialized laws.
Currently, Decree No. 09/2018/ND -CP does not regulate the issuance of business license to FDI enterprises in order to exercise the rights to import, distribute pharmaceutical products. In addition, according to the regulations of Circular No. 34/2013/TT-BCT, pharmaceutical products are banned from the performance of distribution right by FDI enterprises.
CV4889_19062018BCT[VLO].pdf (English translation)
National guidelines for HIV testing
Decision No. 2674/QD-BYT dated April 27th, 2018 of the Ministry of Health on issuing the National guidelines for HIV testing
This Decision provides guidelines on HIV testing techniques, including
HIV serological and molecular biological testing techniques.
This Decision takes effect from the date of signing for promulgation. To replace Decision No. 1098/QD-BYT dated April 4th, 2013, Decision No. 1053/QD-BYT and Decision No. 868/2005/QD-BYT dated March 29th, 2005.
QD2674_27042018BYT[EN].pdf (English translation)
Sea and Aquatic food
Powers and organizational structure of the Department of Animal Health
Decision No. 1399/QD-BNN-TCCB dated April 13th, 2017 of the Ministry of Agriculture and Rural Development on defining functions, tasks, powers and organizational structure of the department of animal health
This Decision takes effect from the date of its signing and replaces Decision No. 666/QD-BNN-TCCB dated April 4th, 2014.
QD1399_13042017BNN[ENGLISH].pdf (English translation)
Amendments to conditions for licensing to import scrap
Circular No. 03/2018/TT-BTNMT dated August 14th, 2018 of the Ministry of Natural Resources and Environment on amending, supplementing to a number of articles of regulations on administrative procedures relating to specialized inspection under the scope of state management functions of the Ministry of Natural Resources and Environment
This Circular is to amend, supplement to a number of articles of Circular No. 41/2015/TT-BTNMT on import of scrap; Joint Circular No. 47/2011/TTLT-BCT-BTNMT on import, export of ozone layer-depleting substances; Joint Circular No. 178/2015/TTLT-BTC-BNNPTNT-BTNMT-BYT on the National single-window system.
Under this Circular, some components of the application of issuance, re-issuance of the Certification of eligibility for import of scrap are reduced (Clauses 1, 2, 5 and 6 Article 1).
In addition, the validity duration of the Certification of eligibility for import of scrap is increased from 2 years to 3 years (Clause 4 Article 1).
Regarding time for sending the announcement of imported batch of scrap, it must be sent before following procedures for loading, unloading scrap at ports instead of before carrying out procedures for the import under the earlier regulations (Clause 9 Article 1).
In addition, imported scrap shall be only loaded, unloaded at ports after the importers fully provide these documents: The valid Certification; the valid written notice of imported batch of scrap (Clause 9 Article 1).
Relating to ozone layer-depleting substances, this Circular removes procedures for registration of volumes of import, export with the Ministry of Natural Resources and Environment (Article 2).
This Circular takes effect from October 1st, 2018.