Lawyer in Vietnam Oliver Massmann Legal Update August 2016

1. Lawyer in Vietnam Oliver Massmann Legal Update August 2016
1. Decree No. 100/2016/ND-CP issued by the Government detailing and guiding the
implementation of some articles of Law amending, supplementing a number of
articles of Law on Value Added Tax, Law on Excise Tax and Law on Tax administration
(“Decree 100”)
Issuance date: 1 July 2016
Effective date: 1 July 2016
Below are some notable new contents of Decree 100:
(i) Regarding Value Added Tax (VAT):
- Adding services not subject to VAT: Services of nursing the elderly and the disabled
including health care, nutrition and organization of cultural, sport, recreation, physical
therapy and rehabilitation activities for the elderly and the disabled.
- Detailing exported natural resources and minerals whose energy costs shall include fuel,
electrical energy and heat energy.
- Adding cigarettes, liquor, beer that are imported then exported as goods not subject to
0% VAT rate.
- Adding cases where business establishments are subject to VAT refund for investment
projects. In case investment projects are inspected, checked, or audited by competent
authorities, tax agencies can use the results thereof to decide VAT refund amount.
- Business establishments shall not be permitted to seek VAT refund but must forward
the tax amounts of the investment projects which are not credited yet to the next
period in the following cases:
(a) Investment projects of business establishments whose charter capital is not
contributed fully as registered; trading in conditional business sectors but not
fully meeting the relevant business conditions according to the Law on
Investment or not maintaining such business conditions during the operation.
(b) Investment projects on mineral resources, minerals exploitation licensed from 01
July 2016 or investment projects on goods production where total value of
natural resources, minerals and power costs are 51% of product price or more
under the investment projects.

2. (ii) Regarding Excise Tax:
Under Decree 100, taxable price for domestically produced goods, imported goods shall be the
sale price decided by the producers and / or importing establishments.
In case goods subject to Excise Tax are sold to business establishments which have parent-
subsidiary relationship or are subsidiaries of the same parent company with the producer,
importer or sold to commercial business establishments having association relationships, the
excise taxable price must be at maximum seven (7) per cent lower than the average selling
price set by the commercial business establishments that directly buy goods from the producer,
importer.
The producers, importer and commercial business establishments that have association
relationship under this Decree 100 are constituted when one enterprise directly or indirectly
owns at least twenty (20) per cent of investment capital of the other enterprise.
(iii) Regarding tax administration:
Under this Decree 100, interest due to late tax payment shall be reduced from 0.05%/day to
0.03%/day calculated based on the late tax payment amount. Tax debts arising before 01 July
2016 and not yet paid into State budget shall be applied an interest of 0.03%/day from 01 July
2016.
2. Decision No. 1563/QD-TTg issued by the Prime Minister on approving the Master Plan
on e-commerce development during 2016-2020 (“Decision 1563”)
Issuance date: 8 August 2016
Effective date: 8 August 2016
E-commerce is considered as one of the important infrastructure of the commercial sector and
information society. It also plays a role as a method to assist enterprises to strengthen the
development of domestic market and export, import, to join global supply chain, to raise
national competitiveness ability in international integration.
Under Decision 1563, the Prime Minister has just proposed the targets in 2020 on
infrastructure for e-commerce, scale of e-commercial market, application of e-commerce with
respect to enterprises and the State agencies.
As such, until 2020, the following targets must be reached:
- to build and develop the National e-commercial payment system, integrated facilities of
e-commercial payment such as Business to Consumer (B2C), Business to Business (B2B),
Government to Citizen (G2C), Government to Business (G2B);

3. - 30% of citizens participating in online purchase with average price of goods through
online purchase at USD 350/person/year;
- turnover of B2C e-commerce shall increase by 20% per year;
- 50% of enterprises shall have portals;
- 80% of enterprises shall receive and order goods via e-commercial applications;
- 70% of services providers of electricity, water, communication and telecommunication
shall accept non-cash payment.
Accordingly, the Prime Minister requests relevant authorities improve the policies, laws on e-
commerce, raise the management and operation organization capacity of e-commerce, develop
infrastructure, human resources for e-commerce; develop and apply new technologies in e-
commerce; develop e-commerce in some key areas and fields; international cooperation.
3. Decree No. 96/2016/ND-CP issued by the Government providing for security and order
conditions applicable to some conditional business sectors (“Decree 96”)
Issuance date: 1 July 2016
Effective date: 1 July 2016
A number of conditional investment, business sectors with respect to security and order are
further supplemented in Decree 96, including: trading in all kinds of guns, providing security
services, trading in gas; providing accommodation services; providing aesthetic services; trading
in industrial explosive materials; etc.
It is however noted that house leasing service for foreign organizations or individuals to use as
residences or offices does not fall under the scope of security and order management.
Certificate of satisfaction of security and order condition is a document granted by the
competent Public Security authorities to investment, business establishments.
Certificates of security and order condition eligibility are without time-limit, except for cases
where (i) the business organizations operate within time-limit; and (ii) organizations do
business by using industrial explosive materials to execute work, survey and explore mineral,
petroleum.
Strictly speaking, the person who bears the responsibility for security, order of business
establishment must reside in Vietnam. In case of irregular residence in Vietnam, he/she must
authorize in writing to another competent person of business establishment so that name of
the authorized person can be indicated in the Certificate of satisfaction of security and order
condition.

4. In addition, debt collection services shall be controlled more tightly under this new Decree 96
than the current regulations. Debt collection services shall be conducted under authorization
contracts of the debt owner. Within three (3) days after performance of the debt collection
contracts, the business establishment providing debt collection services must notify in writing
to the ward-level Public Security where the debt collection is implemented.
4. Official Letter No. 3273/TCT-TTr issued by the General Department of Taxation on tax
administration applicable to automobiles imported as gifts (“Official Letter 3273”)
Issuance date: 21 July 2016
Effective date: 21 July 2016
Since 26 October 2015, each Vietnamese organization, individual shall be permitted to import
only one (1) automobile and one (1) motorbike during one (1) year under the form of
present/gift from foreign organizations, individuals.
When receiving automobiles via importation under the form of present/gift, organizations
whose business line is automobile trading must include automobiles’ value into other types of
income to calculate corporate income tax. Meanwhile, individuals must declare personal
income tax for automobiles’ value by their cost prices according to the determination of
customs agencies.
In case organizations whose business line is automobile trading sell automobiles under the form
of present/gift at a lower price than the regular market transaction price, such products shall be
subject to fixed VAT, excise tax, corporate income tax in accordance with Article 37 of National
Assembly’s Law on Tax Administration No. 78/2006/QH11 and its implementation documents.
5. Draft Decree dated 19 August 2016 providing for regional minimum wage levels for
employees of enterprises, cooperatives, cooperative groups, farms, households,
individuals and agencies and organizations employing labor under labor contracts.
According to the Draft Decree, regional minimum wage levels in 2017 are proposed as follows:
- Region I: VND 3,750,000/month
- Region II: VND 3,320,000/month
- Region III: VND 2,900,000/month
- Region IV: VND 2,580,000/month
These rates are approximately seven (7) per cent increase in comparison with those in 2016. It is
also worth noting that skilled/trained workers shall be entitled to at least seven (7) per cent
higher than these statutory minimum rates.
***

5. Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have
any questions or want to know more details on the above. Oliver Massmann is the General Director of
Duane Morris Vietnam LLC.
THANK YOU !