Asia Counsel Insights gives readers a concise insight into legal and business developments in Vietnam. This edition has news on measures the Government are adopting to approve its ranking on a number of international indicators; margin lending; consumer lending and e-gaming.

1. ASIA COUNSEL INSIGHTS
1 March 2017
Asia Counsel Insights provide an
overview of the key trending legal
and business issues in Vietnam and
how they may impact your
business. Please enjoy your read.
Key Dates:
 8 March is international
women’s day.
 31 March 2017 is the deadline
for filing annual CIT finalization
return for companies with 31
De 2016 as their fiscal year
end.
Transfer Pricing
New documentation requirements
The Government issued Decree No.
20/2017/ND-CP on 24 February 2017
regulating tax management of
enterprises’ related party
transactions.
Under Decree 20, besides the
declaration of affiliate relationships
and affiliated transactions which is
submitted together with the CIT
finalization return, tax payers are
required to keep and provide a so-
called “affiliated transaction pricing
file”. This includes the local file, the
master file and the country-by-
country report. The documentation
must be prepared before the date
of filing the annual CIT finalization
return. Upon inspection by the tax
authorities, tax payers must provide
the documentation within 15
working days of request.
Decree 20 also sets out cases in
which enterprises are exempted
from the documentation
requirements.
Government Agenda 2020
International Competitiveness
On 6 February 2017, the Government
issued Resolution No. 19/2017/NQ-CP
on measures to increase business
competitiveness in Vietnam by 2020.
Resolution 19 sets the basis for Vietnam
to improve its international ranking in a
number of global indicators including
increasing Vietnam’s ranking in the:
 World Bank’s Ease of Doing
Business survey from 82 out of 190
countries to 60th position in 2020;
 World Economic Forum’s Global
Competitiveness Report from 60
out of 138 countries to 36th position
by 2020;
 World Intellectual Property
Organisation’s Global Innovation
Index from 59 out of 128 countries
to 44th position by 2020; and
 United Nations E-Government
report from 89th position to 65-70th
position by 2020.
The good news is that these
international indicators and rankings
are taken seriously by the Government
and Resolution 19 confers responsibility
on all branches of government to
work together to improve Vietnam’s
international standing. The
Government aims to boost its
international ranking from 2017 and
the measures to do so include:
 in relation to import and export,
introduce online procedures for
customs inspection for specialised
inspection and to focus on post-
clearance audit;
 amend the bankruptcy decree to
make the bankruptcy process
more efficient;
 e-tax filing to be used in at least
95% of tax declarations;
 propose to the National Assembly
changes to the Law on
Competition by end of 2017 to
efficiently deal with competition
clearance;
 create online procedure for
issuance of land use rights
certificate and determination of
land related financial liabilities.
About Asia Counsel
Asia Counsel is a dynamic international corporate and commercial law firm dedicated to serving clients in Vietnam. Our partners have over nine years of
experience in working on complex and challenging matters in Vietnam. We are committed to helping clients achieve their business strategies and providing
outstanding legal services.
If you have any questions on any of the items discussed above, please do not hesitate to contact us.
Christian Schaefer
Managing Partner
E christian@asia-counsel.com
Minh Duong
Partner
E minh@asia-counsel.com
Asia Counsel Vietnam Law Company Limited, Level 5, 18 HBT Building, 16-18 Hai Ba Trung Street, Ben Nghe Ward, District 1, Ho Chi Minh City

2. ASIA COUNSEL INSIGHTS
1 March 2017
Vietnam Fact Box
According to the latest
survey of Nielsen Vietnam, a
market research firm, 45% of
the Vietnamese population
now has internet access. On
average, every Vietnamese
spends USD 160 per year on
e-commerce. This is a 22%
growth in e-commerce
market from last year. As of
2016, 11% of enterprises
participated in e-commerce
and internet trading
activities.
Within the next 5 years, it is
expected that the e-
commerce market size may
reach USD 10 billion.
Source: VnEconomy.vn
Banking
Capital Adequacy Ratio
On 30 December 2016, the State
Bank issued Circular No. 41/2016/TT-
NHNN on the capital adequacy
ratio (CAR) for banks and branches
of foreign banks (Banks). The key
points are below.
 Banks must maintain a CAR of
at least 8% based on the below
calculation:
CAR =
C
RWA+12,5(KOR+KMR)
x 100%
C: Total capital
RWA: Assets based on credit risks
KOR: Capital required for
operational risks
KMR: Capital required for market
risks
 The Bank must set up its own
organizational structure to have
the CAR individual/
department in charge and
internal audit to manage CAR.
 The Bank is also required to issue
the periodic public report on
the CAR every six months.
Circular 41 comes into effect from 1
January 2020.
Securities
Margin Lending
On 25 January 2017, the State
Securities Commission issued
Decision No. 87/QD-UBCK
regulating margin lending.
Decision 87 takes effect from 1
April 2017. Decision 87 sets the
criteria for shares and fund
certificates to be used in margin
lending and they include whether
the listed company or fund has
failed to comply with its tax or
disclosure obligations. Decision 87
provides that the initial margin for
margin lending is not less than 50%
and the maintenance margin is not
less than 30%. In addition, if a
client is issued with a margin call
from the securities broker, the client
has no more than three working
days to take action. The period
may be less depending on the
agreement between the broker
and the client. The term of the
margin lending program is three
months. The term may be
continuously extended for further
terms of three months each based
on the client’s written confirmation.
Interest rate on margin are agreed
between the broker and the client.
Finance
Consumer Lending Regulation
The State Bank of Vietnam issued
Circular No. 43/2016/TT-NHNN on 30
December 2016 regulating consumer
lending by finance companies.
Circular 43 will take effect on 15 March
2017. Key provisions of Circular 43 are:
 Introducing a credit limit of VND100
mil (c. USD4,400) for each customer
per finance company, except for
the financing of motor vehicles and
using that vehicle to mortgage
against the consumer loan.
 Circular 43 does not regulate
interest rates that are charged on a
consumer loan. However, each
consumer finance company must
report to the SBV on the interest
rate range offered to its clients and
notify the SBV if there are any
changes to this range.
 Prescribing the minimum subject
matter that must be included in a
consumer loan contract between
the finance company and the
client including assignments of the
outstanding loans. Consumer
finance companies will need to
review these provisions to ensure
that they are compliant.

Gaming
Electronic Prized Gaming
The Government issued Decree 175/2016/ND-CP dated 30 December 2016 on
electronic prized gaming. This Decree took effect on 15 February 2017. Decree 175
provides the following changes in relation to business providing electronic gaming:
 Electronic machines used at an e-gaming venues must be new and
manufactured in a G7 member country.
 The minimum payout rate in a slot machine is 90%.
 Any repairs done to a slot machine must then be certified by an independent
company to certify that there are no changes to the payout rate.
 The minimum charter capital for e-gaming operator is VND200 billion.
 There is a prohibition on advertising of e-gaming except within the five star hotel
but the advertisement must not be seen from outside the five star hotel.