Summary of Newly-issued Legal Documents (December 23 to 29, 2005)

Enterprises being exempt from corporate income tax because of having projects investing in investment privilege areas and expanding production in investment privilege areas or fields shall be enjoyed incentives under one of the following forms:

 

·  Enterprise shall add its income from expanded investment operation to that from exempted ones in order to enjoy exemption or reduction according to the preferential corporate income tax rates being applied for the remaining preferential duration.

 

·  Enterprises shall enter added income from expanded investment operation into a specific account in order to fix corporate income tax being exempted".

An enterprise shall be entitled to reimbursement of input value added tax related to its quantity of exported goods if such items as money remittance fees, commission for foreign customers, fine on unqualified product quality etc under the export contract or export contract’s appendix (if any) are deducted from its payment to foreign partner. In case the above deducted items are not prescribed in the export contract or export contract’s appendix (if any) and not included in vouchers as regulated, an enterprise must exclude input value added tax equivalent to the amount of money deducted by its foreign partner when receiving reimbursement of input value added tax.  

On December 13, 2005, Ministry of Finance issued the Circular No.111/2005/TT-BTC providing guidelines on value added tax and corporate income tax on insurance business. Accordingly, subjects liable to value added tax and corporate income tax under this Circular include insurance enterprises, insurance brokerage enterprises, re-insurance enterprises under the Insurance Business Law, organizational and individual insurance agents satisfying all requirements regulated in the Insurance Business Law. Specifically, subjects liable to value added tax is non-life insurance, adjustment agents, compensation agents, compensation claim agents and other taxable goods and services stipulated in Law on VAT. Regarding corporate income tax, Ministry of Finance will issue specific rates on each form including insurance enterprises, insurance brokerage enterprises and insurance agents.

 

Asset value used for registration fee calculation is the really transferred value of asset in domestic market at the time of registration fee calculation. In case the really transferred value of asset is not fixed or lower than market one, registration fee shall be calculated base on the registration fee tables issued by Provincial People’s Committees at the time of registration. If Provincial People’s Committees don’t have specific regulations, the asset registration fee shall be calculated according to the market price of the similar assets or according to import price at border gate plus import tax plus special consumption tax (if any) plus value added tax on similar assets (without the difference between taxable and non-taxable subjects).

(According to the Official Letter No.4550/TCT-TS by General Department of Taxation dated December 15, 2005)

On December 8^th, 2005, the Government issued Decree No.149/2005/NNÄ-CP providing detailed regulations on the implementation of the Law on Import and Export. Accordingly, subjects liable to import and export include:

·  Goods imported or exported through border gates, including goods imported or exported through road, river, seaport, airport or international railway border gates, international post offices and other places of completing customs procedures established by authorized customs offices.

·  Goods exported from domestic market to non-tariff area and vice versa

·  Other sold or exchanged goods being considered as imported or exported ones.

In case international treaty signed by Vietnamese government regulates import and export tax differently from this Decree, regulations of the above international treaty shall be applied.

 

In case a foreign contractor who doesn’t apply Vietnam’s accounting system signed contract on investment project implementation with Vietnamese party but then transferred a part of its project to Vietnamese sub-contractor, its turnover liable to value added tax should not include a part generated by Vietnamese sub-contractor’s work. Main contractor is not allowed to deduct input vale added tax of work transferred to Vietnamese sub-contractor. Vietnamese party is allowed to deduct input value added tax prescribed in VAT vouchers on goods and services bought for taxable production and trading or in vouchers on VAT contributed to the State budget on be half of foreign contractor.

 

FromOctober 18, 2005 to November 29, 2005, in the 8^th session of the eleventh National Assembly, all members negotiated and ratified 14 important laws including Unified Investment Law, Unified Enterprise law, Law of Intellectual Property, Housing Law, Amended and Supplemented Laws on Special Consumption Tax, Value Added Tax, Appeal and Denouncement and Bidding Law.The above laws will take affect in 2006, creating an important legal corridor for investors and citizens to favorably take part in legal relations.