Summary of Newly-issued Legal Documents (February, 2006)

From February 17,2006, there are 11 more evaluation organizations eligible to provide corporate evaluation service in 2006 (the second batch). Of which, there are four securities and fund management companies, six auditing ones and one Center for Consultancy, Corporate Value Assessment and Property Auction under Hanoi Department of Finance.

 

The house rental charges are fixed in contracts based on the agreement between the lessor and renter. The lessor's amounts payable to the State budget must be calculated based on the charges stated in the contracts but not lower than those applied in localities according to the regulations of Chairmen of People's Committees of Provinces and Cities under the Central Committee. In case the local rental charges fluctuates (+-10%), Chairmen of People's Committees of Provinces and Cities under the Central Committee have right to decide the suitable ones.

 

The future contractual transactions including selling or buying are not subject to VAT because they are not made in Vietnam. Revenues from a future contractual transaction are the differences between selling and buying prices. For this reason, revenues and expenses from future contractual transactions must be recorded as corporate financial expenses. In case buying price is much than selling ones, the difference will be recorded as financial expenses. Transaction expenses and other related ones are also recorded as financial expenses.

 

Expenses of infrastructure using and land rental of Vietnamese party paid before the establishment day of a joint venture are recorded as reasonable expenses that could be subject to corporate income tax deduction. Other expenses paid by Vietnamese party will be recorded as reasonable expenses if they are stated in the agreement between Vietnamese party and the joint venture and in legal vouchers relating to the generation of revenues, taxable incomes in tax calculation period. When paying expenses, Vietnamese party has to issue VAT invoices following the information stated in input VAT invoices keep one copy of input VAT invoices. These invoices are the bases for the record of revenues, reasonable expenses, output and input VAT of each party.

 

Monthly, the employer and employee has to deduct 15% of enterprise's total wage fund and 5% of laborer's wage respectively to contribute to social insurance. For this reason, the enterprise's trade union has the right to require the employer to state the later amount in the labor contracts.

 

From March 6th, 2006, regional im-export management divisions will temporarily cease granting automatic visas to traders who export garments and textiles of Cat.341/641 to the US. Regional im-export management divisions will continue to grant automatic visas until March 10th, 2006 to all the batches of the above Cat that were exported before March 6th, 2006. All traders who want to export garments and textiles of Cat.341/641 to the US have to file their registration (following the samples attached to this Announcement) to the Ministry of Trade no later than March 2nd, 2006. All traders who filed their registration under the former samples have not to file again.

 

Vietnamese enterprises' provision of consultancy on markets, Vietnamese laws and other services to overseas individuals and organizations with fees remitted through banks is considered as exported service. The above service shall be entitled to the VAT rate of 0% and tax reimbursement.

According to the legal regulations on reimbursement for imports, if an enterprise declared a wrong form, it shall not be subject to tax reimbursement. However, enterprises that declared wrong forms but exported goods in reality and received the payment from their foreign partners with the approval of customs bodies shall be entitled to tax reimbursement.

 

Business organizations' revenues gained from capital contribution to domestic joint ventures are subject to corporate income tax. If the revenues that gained from capital contribution are divided ones after the capital receivers pay all corporate income tax, they shall not be entitled to corporate income tax. The capital contributors have to recorded these revenues into a specific account and present all invoices proving that they paid all corporate income tax on these revenues when the tax bodies examine.

The value of land use right contributed to shape a joint venture is fixed under the agreement of all parties and includes land rental charges, clearance expenses and others. Tax bodies are not permitted to require Vietnamese parties to divide the value of land use right into two parts including one equaling to the land rental rate regulated by the Provincial People's Committees and other containing compensation and clearance expenses. Vietnamese parties have not to present invoices stating the above expenses. For this reason, the original price of land use right must be fixed under the agreement approved by the joint venture's management board and the Ministry of Planning and Investment's affirmation of implemented capital amount.

(According to the Official Letter No.653/TCT-DNNN General Department of Taxation dated February 21, 2006)

 

On February 2nd, 2006, the Government issued two Decrees No.19/2006/ND-CP and No.20/2006/ND-CP providing guidelines on implementation of the origin of goods and commercial examination business regulated in the Commercial Law. Accordingly, the bases to define origin of goods include region, package, goods' manual, appliances. Other factors such as origins of tools, machines, workshops, energy used for producing the goods or materials that disappear in goods or are not parts of goods shall not be based on when defining origin of goods. Besides, only can people who are examiners approved by the authorities conduct examination under the assignment of commercial examination business units.

 

SaoViet Consultancy Joint Stock Company
10C Le Dai Hanh Street, Hanoi, Vietnam
Email: sao-viet@vnn.vn
Website: http://asa.com.vn

10C Le Dai Hanh Street, Hanoi, Vietnam