Summary of Newly-issued Legal Documents (January 20-27, 2006)

On December 28, 2005, Minister of Finance issued the Decision No.100/2005/QQÄ-BTC on the issuance and announcement of four Vietnamese accounting standards (the fifth batch).Accordingly, the four Vietnamese accounting standards are named as follows:

-The standard No.11: "Business mergence"

-The standard No.18: "Provisions, assets and potential liabilities"

-The standard No.19: "Insurance contracts"

-The standard No.30: "Earnings per share"

The above accounting standards will take effect after 15 days since it is published in the Official Gazette and be applicable to all enterprises nationwide. All specific accounting systems must be amended and supplemented in accordance with the above accounting standards.

 

According to the Official Letter No.109/TCT-PCCS by the General Department of Taxation by January 11, 2006, foreign trade contracts must be put down in writing which states enough content including quantity, standards, quality, liquidation method, logistics location and time etc. Other forms similar to writing such as telegraphy, telex, fax, data message and others that contain all the above content are considered as forms of selling and buying contracts. English contracts must be translated into Vietnamese and signed by the representative of a business unit. A business unit has to be responsible for the exactness of Vietnamese translation before the law.

 

From February 01, 2006, the Vietnamese government issued the new minimum wage level applicable to FDI enterprises, foreign offices and individuals and international organizations in Vietnam. Accordingly, specific minimum wage levels will be applied as follows:

-870,000 dong per month applicable to enterprises operating in all urban district of Hanoi and Hochiminh City

-790,000 dong per month applicable to enterprises operating in suburban districts of Hanoi and Hochiminh City, all districts of Haiphong, Halong, Bien Hoa and Vung Tau cities.    

-710,000 dong per month applicable to enterprises operating in other locations.

The above minimum wage levels are applicable to all FDI enterprises nationwide. However, the Vietnamese government encourages enterprises apply the higher ones.

Imported goods under an ODA project of an enterprise shall be entitled to the exemption from import tax, VAT, special consumption tax (if any) if it files enough documents including: proposal letter for the import tax exemption for imported materials of Vietnamese enterprise, contract transfer agreement, import commitment agreement between the project's management board and Vietnamese enterprise.

An enterprise's machines and equipment which are temporarily imported for foreign contractors' use in the process of project implementation shall be entitled to the exemption from import tax and special consumption tax (if any). After the project commences, the above enterprise has to re-export machines and equipment that were temporarily imported. In case after the project commences, temporarily imported machines and equipment are sold to other organization with the permit of authorized offices, an enterprise has to pay all taxes that were exempted in the import period pursuant to the laws. 

 

In case a foreign contractor locates a management office in one locality but caries out building and assembling contracts in other ones, it has to make VAT declaration and temporary payment in the locality where its building project locates and make VAT and CIT payment and balance sheet in the locality where its management office locates. In case a foreign contractor or sub-contractor applies Vietnamese accounting system that clearly states goods and services’ selling turnover, goods and services’ buying value, output VAT, deducted input VAT and VAT payable, it has to pay VAT according to deductible method pursuant to the Vietnamese laws.