Vietlaw Weekly Newsletter No. 376
Amendment to many important regulations on enterprise registration
Decree No. 108/2018/ND-CP dated August 23rd, 2018 of the Government on amendments to some articles of the Government’s Decree No. 78/2015/ND-CP dated September 14, 2015 on enterprise registration
One of the noticeable new points of this Decree is that an enterprise is not required to append a seal on the application form for enterprise registration, notification of changes of enterprise registration, resolutions, decisions and minutes of meeting in the application for enterprise registration (Clause 1 Article 1).
The letter of attorney upon authorizing an individual to carry out procedures for enterprise registration is also not required to be notarized or certified (Clause 2 Article 1).
In addition, according to Clause 5 Article 1, an enterprise may register conversion of the enterprise and register changes of enterprise registration information, except registration of change of the legal representative.
With regard to business location, this Decree removes the regulation according to which an enterprise may only establish its business locations within the province in which its headquarters or branches are located (Clause 9 Article 1).
Procedures for notification of seal design of an enterprise may be carried out online without the requirement of additional submission of paper – based dossier to Business Registration Office (Clause 10 Article 1).
Other important procedures such as online enterprise registration; registration of change of charter capital or capital contribution (stake) ratio; change of information about founding shareholders; publishing of enterprise registration information, etc. are also amended.
This Decree takes effect from October 10th, 2018.
ND108_23082018CP[ENGLISH].pdf (English translation)
New Vietnam standard industrial classification
Decision No. 27/2018/QD-TTg dated July 6th, 2018 of the Prime Minister on promulgating Vietnam standard industrial classification
This Decision is to promulgate Vietnam standard industrial classification in order to replace the old one promulgated together with Decision No. 10/2007/QD-TTg .
Accordingly, the new standard industrial classification promulgated together with this Decision also comprises of 5 levels similar to the earlier one.
However, the number of classes of level 4 and sub-classes of level 5 are added more. In particular, classes of level 4 are increased from 437 classes to 486; sub-classes of level 5 are increased from 642 sub-classes to 734 sub-classes. The details are provided in Appendix I of this Decision.
In addition, the new standard industrial classification also supplements contents guiding and clearly explaining economic activities arranged into specific sections. The details are provided in Appendix II of this Decision.
This Decision takes effect from August 20th, 2018 and replaces Decision No. 10/2007/QD-TTg dated January 23rd, 2007.
QD27_06072018TTg[ENGLISH].pdf (English translation)
Fines imposed on food safety violations shall be increased
Decree No. 115/2018/ND-CP dated September 4th, 2018 of the Government on penalties for administrative violations against regulations on food safety
In comparison with the earlier regulations, the maximum fine levels imposed on administrative violations in the domain of food safety regulated in this Decree are still VND 100 million and VND 200 million with regard to individuals and enterprises respectively.
However, this Decree adjusts specific fine levels imposed on many violations in food production and trading, in particular:
- Using expired ingredients or ingredients that have unknown origins for processing of foods, a fine equal to 01 – 02 times (with regard to individuals) and equal to 02 – 04 times (with regard to enterprises) the value of products shall be imposed.
- Using an amount of food additives/ food processing aids in excess of the maximum allowable level, the fine level is highly increased from VND 4,000,000 to VND 25,000,000 (with regard to individuals) and from VND 8,000,000 to VND 50,000,000 (with regard to enterprises).
- Using an amount of substances or chemicals in excess of the permissible level or using the ones that fail to meet technical regulations, the minimum fine level is increased from VND 20,000,000 to VND 30,000,000 (with regard to individuals) and from VND 40,000,000 to VND 60,000,000 (with regard to enterprises).
- Using food containers and primary packages which fail to satisfy technical regulations, the fine is increased from VND 7,500,000 to VND 15,000,000 (with regard to individuals) and from VND 15,000,000 to VND 30,000,000 (with regard to enterprises).
This Decree takes effect from October 20th, 2018 and replaced Decree No. 178/2013/ND-CP dated November 14th, 2013.
ND115_04092018CP[ENGLISH].pdf (English translation)
Value Added Tax (VAT)
VAT tariff applicable to imports is no longer applied
Official letter No. 11889/BTC-CST dated October 1st, 2018 of the Ministry of Finance regarding value added tax (VAT) policies applicable to imports
According the Ministry of Finance’s opinions, HS codes at the VAT tariff promulgated at Circular No. 83/2014/TT-BTC were formed based on the List of imports and exports promulgated together with Circular No. 156/2011/TT-BTC .
However, such List of imports and exports has been changed by the new one promulgated together with Circular No. 65/2017/TT-BTC and therefore the determination of VAT on imports is no longer carried out according to the VAT tariff promulgated at Circular No. 83/2014/TT-BTC but it shall be carried out based on these currently – applied documents:
- Circular No. 219/2013/TT-BTC dated December 31st, 2013
- Circular No. 26/2015/TT-BTC dated February 27th, 2015
- Circular No. 130/2016/TT-BTC dated August 12th, 2016
- Circular No. 25/2018/TT-BTC dated March 16th, 2018.
CV11889_01102018BTC[VLO].pdf (English translation)
Regulations on supervision of important payment systems
Circular No. 20/2018/TT-NHNN dated August 30th, 2018 of the State Bank on prescribing oversight and supervision of payment systems
This Circular regulates the oversight and supervision of the State Bank of Vietnam towards important payment systems which include:
+ The National Interbank Payment System;
+ The Foreign Exchange Settlement System (controlled by the Joint Stock Commercial Bank for Foreign Trade of Vietnam);
+ The securities payment system;
+ The clearing and switching system for financial transactions
These are the payment systems playing key roles in serving payment needs of the subjects in the economy, is likely to cause systematic risks.
If through the inspection of reports, information sources and results of the inspection conducted at head office of the a payment system operator detecting potential risks posing danger to safety and stability of important payment systems, the State Bank of Vietnam shall issue warnings and recommendations.
This Circular takes effect from January 1st, 2019.
TT20_30082018NHNN[ENGLISH].pdf (English translation)
Regarding evaluation of validity of the bid security
Official letter No. 6398/BKHDT-QLDT dated September 12th, 2018 of the Ministry of Planning and Investment regarding evaluation of validity of bid security
According to the guidelines in Clause 17.2 Section 17 Chapter I of the online model bidding dossier for installment (Form No. 01) issued together with Circular No. 04/2017/TT-BKHDT, bid security is considered to be invalid in these cases:
(i) value is lower, effective term is shorter than the requirements specified in Section 17.1 E-CDNT;
(ii) it is not correct name of the bidder (beneficiary);
(iii) there is no valid signature;
(iv)containing conditions placing the bidder at a disadvantage
Accordingly, in case bidding guarantee dossier of a contractor is not written correct name of the bidder (the beneficiary) as written in the online bidding dossier (E-HSMT), it is evaluated to be invalid.
CV6398_12092018BKHDT[VLO].pdf (English translation)
Requirements for provision of loans for SMEs shall be loosen
Official letter No. 6627/NHNN-TD dated September 4th, 2018 of the State Bank of Vietnam (SBV) regarding deployment of the Law on provision of assistance for small and medium-sized enterprises (SMEs) and Directive No. 15/CT-TTg
Aiming to provide assistance for SMEs, the SBV requests banks to deploy these measures:
1. Expand credit, focus capital to grant loans to production sector, prioritized sectors, in which including SMEs.
2. Actively participate in Banks - Enterprises Connection Programs in order to facilitate SMEs to access banks' credit.
3. Renew the lending procedure, simplify procedures for borrowing loans to facilitate SMEs to access loans serving business and production operation provided that loans are ensured to be safe.
4. Actively study to develop baking products, services appropriate to scale and operation of SMEs. Elaborate credit programs, packages with reasonable interest rates for SMEs.
CV6627_04092018NHNN[VLO].pdf (English translation)
Certificate of Origin (C/O)
Issues relating to Malaysia’s issuance of paper C/O form D
Official letter No. 3115/GSQL-GQ4 dated October 3rd, 2018 of the General Department of Vietnam Customs regarding issues relating to certificate or origin form D (C/O form D)
According to announcement, Malaysia's competent agencies still issue paper C/O to enterprises.
However, because the system issuing paper C/O appears an error in calculation unit upon printing the C/O (all are declared "H87" instead of calculation unit "Pieces"), Malaysia's agencies competent to issue C/O suggest that during correcting the system, enterprises should not apply for issuance of C/O because of such error.
With regard to mistakenly - issued C/O is rejected, enterprise shall base on Article 9 Appendix VII issued together with Circular No. 22/2016/TT-BCT to carry out.
CV3115_03102018TCHQ[VLO].pdf (English translation)
C/O form D shall be rejected if RVC is not declared
Official letter No. 2914/GSQL-GQ4 dated September 18th, 2018 of the General Department of Vietnam Customs regarding issues relating to certificate of origin (C/O)
According to the regulations at Circular No. 22/2016/TT-BCT, if C/O Form D is not declared in details percentage (%) of regional value content (RVC), it shall be considered to be invalid, regardless of electronic C/O or paper – based C/O.
Relating to the declaration of commercial invoices on C/O form AANZ, it is temporarily carried out according to the guidelines provided in Circular No. 31/2015/TT-BCT and Official letter No. 8382/TCHQ-GSQL dated December 25th, 2017 under new guidelines are given.
With regard to quantity, weight of goods eligible to apply special preferential tax rates (FTA), it shall be complied with Clause 4 Article 15 of Circular No. 38/2018/TT-BTC.
CV2914_18092018TCHQ[VLO].pdf (English translation)
Regarding import duty on raw materials used for manufacture of goods for export on the spot
Official letter No. 5826/TCHQ-TXNK dated October 5th, 2018 of the General Department of Vietnam Customs regarding settlement of duties on goods imported/exported on the spot
According to the regulation of Decree No. 134/2016/ND-CP, goods manufactured for export shall be exempted from/refunded import duty on raw materials. Whether this regulation is also applied to the case of export on the spot or not?
According to this Official letter, if goods exported on the spot are the goods manufactured by a domestic enterprise then they are sold to an export processing enterprise (EPE) (the EPE is not located in an export processing zone but it meets the regulations provided for non-tariff zones according to Clause 1 Article 4 of the Law on import and export duties), such goods shall be still entitled to apply the policies on exemption or refund of import duty on raw materials.
However, with regard to goods exported on the spot which are goods manufactured by a Vietnamese enterprise for a foreign trader but they are designated to be delivered in Vietnam, import duty on raw materials shall not be exempted or refunded.
Cases in which import duty on raw materials used for export production has been exempted but then the products are exported in the form of export on the spot under designation of foreign trader shall be imposed duty, subject to late payment interest and handling of administrative violations.
CV5826_05102018TCHQ[VLO].pdf (English translation)
Regarding EIT incentives upon transformation of enterprise
Official letter No. 3773/TCT-CS dated October 4th, 2018 of the General Department of Taxation regarding enterprise income tax (EIT) incentives upon transformation of enterprise
According to point b Clause 3 Article 10 of Circular No. 96/2015/TT-BTC , an enterprise newly formed after transformation is entitled to inherit EIT incentives from the earlier enterprise for the remaining period.
However, the newly – formed enterprise shall be entitled to inherit EIT incentives only if it still satisfy the conditions for EIT incentives.
CV3773_04102018TCT[VLO].pdf (English translation)
Foreign Currencies - Gold
New regulations on payments for goods imported/exported through Vietnam and China borders
Circular No. 19/2018/TT-NHNN dated August 28th, 2018 of the State Bank on guiding foreign exchange management for border trade between Vietnam and China
This Circular provides for matters relating to foreign exchange management for border trade between Vietnam and China, including: payment in cross-border trade by traders; payment in trade activities by the borderers; payment in trade activities in bordering markets; and other activities related to foreign exchange.
One of the new points of this Circular is that it regulates in details Vietnamese traders may collect VND and CNY in cash from export through auxiliary border checkpoints and border crossings. However, then they have to deposit such money into a payment account opened at bordering branches.
At Article 5 of this Circular also regulates principles for depositing cash from export through border checkpoints to the account opened at bordering branches. Especially, revenues in cash from each contract of export shall be credited to a single payment account.
This Circular takes effect from October 12th, 2018.
This Circular replaces Decision No. 689/2004/QD-NHNN dated June 7th, 2004 and amends, supplements to Article 1 of Circular No. 33/2013/TT-NHNN dated December 26th, 2013.
TT19_28082018NHNN[ENGLISH].pdf (English translation)
Regarding FDI enterprises’ import of pharmaceutical products
Official letter No. 7948/BCT-PC dated October 1st, 2018 of the Ministry of Industry and Trade regarding scope of importation right under Decree No. 09/2018/ND-CP
According Clause 3 Article 3 of Decree No. 09/2018/ND-CP, in principle, if a foreign direct investment enterprise (FDI enterprise) has the right to import goods, it may import goods from foreign countries to Vietnam and sell them to traders that have the rights to distribute such goods.
However, according to Clause 2 Article 4 of Decree No. 09/2018/ND-CP, when the FDI enterprise performs the importation and export rights, apart from complying with this Decree, it also has to comply with relevant laws and regulations.
Accordingly, if the FDI enterprise wishes to perform the right to import pharmaceutical products, it has to comply with Decree No. 09/2018/ND-CP and regulations on specialized management regulated at the Law on Pharmacy and Decree No. 54/2017/ND-CP .
CV7948_01102018BCT[VLO].pdf (English translation)
FDI enterprises are not entitled to distribute books, newspapers
Official letter No. 4953/BKHĐT-DTNN dated July 19th, 2018 of the Ministry of Planning and Investment regarding purchase and sale of goods by mandated dealers
According to Appendix 3 of Circular No. 34/2014/TT-BCT, “books, newspapers and magazines" belong to the list of commodities banned from the implementation of distribution right by foreign direct investment enterprises (FDI enterprises).
As the result, the Ministry of Planning and Investment suggested that FDI enterprises directly contract with the Ministry of Industry and Trade for having guidelines on scope of activities of purchase and sale of goods being books, newspapers by mandated dealers.
CV4953_19072018BKHDT[VLO].pdf (English translation)
Regarding work permit of foreign workers
Official letter No. 1073/CVL-QLLD dated October 2nd, 2018 of the Ministry of Labor, Invalids and Social Affairs regarding regulations on the work permit of foreign workers
According to Clause 3 Article 12 and Clause 3 Article 15 of Decree No. 11/2016/ND-CP , the signing of labor contact with a foreign worker is carried out after the application for issuance, re- issuance of the work permit but must be before the date on which the foreign worker expects to work for the employer.
In addition, within 05 working days as from the day of signing the labor contract, the employer has to send the copy of the labor contract already signed to the agency that has granted, re-granted such work permit.
CV1073_02102018BLDTBXH[VLO].pdf (English translation)
Regarding PIT on incomes received outside Vietnam
Official letter No. 3613/TCT-TNCN dated September 24th, 2018 of the General Department of Taxation regarding declaration of personal income tax (PIT)
According to point a Clause 8 Article 26 of Circular No. 111/2013/TT-BTC , a foreigner that is a non-resident earns incomes in Vietnam but received the incomes outside Vietnam shall directly declare and pay PIT.
The tax return shall be submitted quarterly.
CV3613_24092018TCT[VLO].pdf (English translation)
State Capital Investment
Amendments to regulations on public investment projects
Decree No. 120/2018/ND-CP dated September 13th, 2018 of the Government on amendments to some Articles of the Government’s Decree No. 77/2015/ND-CP dated September 10, 2015, Decree No. 136/2015/ND-CP dated December 31, 2015 and Decree No. 161/2016/ND-CP dated December 02, 2016
This Decree is to amend, supplement to some regulations relating to capital sources and procedures for execution of public investment projects.
Accordingly, such capital sources as revenues of constructive lottery; fees and charges; and revenues from transformation of purpose and right of land use of the Ministries, central sectors and localities shall not be used for execution of public investment projects as previously (Clause 1 Article 1).
The capital advanced from next year’s budget estimate must not exceed 20% of the estimated capital expenditure (Clause 1 Article 1).
With regard to a project at the stage of investment preparation, it is required to obtain a decision on permission for investment preparation and investment preparation estimate decided by the competent authority by October 31 of the year preceding the plan year (Clause 3 Article 1).
This Decree takes effect from the date of its signing.
ND120_13092018CP[ENGLISH].pdf (English translation)
Tax of Contractor
Regarding withholding tax on charges for payment intermediary services
Official letter No. 3428/TCT-CS dated September 7th, 2018 of the Department of Taxation regarding declaration and payment of withholding tax with regard to payment intermediary services provided for foreign party
According to this Official letter, in case a foreign organization acts as the payment intermediary for transactions of goods sale and service provision between Vietnamese enterprises, the charges shall be subject to withholding tax. The sellers shall be responsible for deducting, paying withholding tax before making payment for service charges.
However, in case the foreign organization acts as payment intermediary for transactions of goods sale and service provision between overseas sellers and buyers in Vietnam, the service charges received from the sellers outside Vietnam shall not be subject to withholding tax.
CV3428_07092018TCT[VLO].pdf (English translation)
Agreements - Treaties
Procedures for signing international agreements
Decision No. 36/2018/QD-TTg dated August 24th, 2018 of the Prime Minister on procedures for signing and implementing agreements in the name of the Government and requesting the President of Vietnam to sign agreements in the name of the State that are not international treaties
This Decision regulates procedures for signing international agreements which have the following characteristics:
a) The contents show the intention, commitment, general awareness and agreement on cooperation and may refer to international treaties and other international instruments to which Vietnam is a signatory.
b) They do not create, change or terminate rights or obligations of the Socialist Republic of Vietnam governed by international laws, and comply with regulations of Vietnamese laws.
c) The name is agreement, announcement, statement, letter of intent, memorandum of understanding, program, plan or equivalent, except for the particular name of the international treaty (treaty, inter alia, protocol, agreement).
This Decision does not apply to agreements on foreign borrowing, non-refundable aid and foreign non-governmental aid with one party or multiple foreign parties.
This Decision takes effect from October 10th, 2018.
QD36_24082018TTg[ENGLISH].pdf (English translation)
New regulations on aviation staff training
Circular No. 10/2018/TT-BGTVT dated March 14th, 2018 of the Ministry of Transport on aviation staff; aviation staff training and assessment
This Circular takes effect from May 10th, 2018 and replaces Circular No. 61/2011/TT-BGTVT dated December 21st, 2011