GUIDANCE ON LAW ON INVESTMENT
Supplementing 84 business lines with restricted market access for foreign investors
- Foreign investors are not allowed to invest in 25 industries that have not yet had access to the market such as gold-bar trading, temporary import for re-export of goods, judicial administration, etc.;
- The list of industries with conditional market access for foreign investors includes 59 industrials including advertising, insurance, banking, securities, education, etc.
Supplementing subjects in the industries of investment incentives
The number of industries eligible for investment incentives under the new regulations are: Science and technology, electronics, mechanics, material production, information technology (20 industries); Agriculture (11 industries); Environmental protection, infrastructure construction (23 industries); Education, culture, society, sports, health (09 industries); Other professions and occupations (04 industries).
Supplementing and clarifying a number of beneficiaries of investment incentives
Incentive projects for investment in production: Biotechnology products used as food, furniture products, artificial boards, construction materials that recycle excess heat and exhaust gases, etc.;
- The project is located in the new area of Bac Kan, Ha Giang, Dien Bien, Vinh Long, etc.;
- Investment projects employing disabled workers accounting for at least 30% of the annual average number of employees to enjoy investment incentives;Product distribution chains of small and medium-sized enterprises are entitled to investment incentives when meeting the prescribed conditions.
Regulations on the list of areas eligible for investment incentives
Specifically List the areas eligible for investment incentives with difficult socio-economic conditions or areas with extremely difficult socio-economic conditions
Đăng ký mua bán sáp nhập doanh nghiệp (M&A)
Hạn chế tỷ lệ sở hữu của Nhà đầu tư nước ngoài trong công ty:
- Nhà đầu tư cần đáp ứng tỷ lệ cao nhất nếu có nhiều điều ước quốc tế cùng áp dụng;
- Phải đáp ứng tỷ lệ sở hữu thấp nhất nếu kinh doanh nhiều ngành nghề.
Registration for business mergers and acquisitions (M&A)
Limiting the percentage of foreign investors in the company:
- Investors need to meet the highest rate if there are many international treaties apply;
- Must meet the lowest ownership rate if doing business in many industries.
SUPPORTING POLICY RELATED TO COVID-19
The Resolution on support the employee and employer during the time off due to Covid-19
The Government has issued Resolution No. 68/NQ-CP dated 01 July 2021 (“Resolution 68”) on a number of policies to support Enterprises and Employers facing difficulties due to the Covid-19 pandemic.
Supports for Enterprises
üReduce by 0.5% the enterprises’ portion of social insurance (“SI”) contributions (apply the rate of 0% of the basic salary for SI contributions to the occupational accident and disease fund) for 12 months from 1 July 2021 to 30 June 2021;
üSuspend payment of the retirement and survivorship fund for 06 months from the time of submitting the suspension application of retirement payment and survivorship fund;
üFund support for training, retraining, improving vocational skills, maintaining jobs for employees, changing technology structure, etc. The maximum support level is VND1,500,000/person/month for maximum of 06 months.
Support for Employee
- The one-off allowance to support employees whose labour contracts are temporary suspended or on unpaid leave:
- From 15 consecutive days to less than 01 month: VND1,855,000/person;
- From 1 month or more: VND3,710,000/person;
- Support for employees under job retention due to Covid: VND1,000,000/person;
- Support the employees who terminate their employment contract, are contributed SI but are not eligible for unemployment benefits: VND3,710,000/person;
- Support pregnant female employees and female employees raising child less than 06 years old: VND1,000,000 VND/person;
- Support for children being Covid-19 patients: VND1,000,000 VND/children;
- Support for household business: VND3,000,000 VND/case; and
- Other support.
Guidance on paying severance allowance for employees during job retention
The Ministry of Labor, War Invalids and Social Affairs issued Official Letter No. 264/QHLDTL-TL dated 15 July 2021 guiding the payment of severance allowance for employees during job retention period related to the Covid-19 epidemic. In case an employee has to stop working due to the direct impact of the Covid-19 epidemic, the employee’s salary during the period of job retention will be paid by the employer as follows: :
- In case of stopping work for 14 working days or less, the agreed stoppage salary is not lower than the minimum wage;
- In case of having to stop working for more than 14 working days, the salary for termination of work shall be agreed upon by both parties but must ensure that the salary for stopping work in the first 14 days is not lower than the minimum wage.
Guidance on filing tax returns during the social distancing
According to the guidance in Official Letter No. 6770/CTTPHCM-KK dated 19 July 2021 of Ho Chi Minh Tax Department and Official Letter No. 29592/CTHN-KK dated 29 July 2021 of Hanoi Tax Department, in case the taxpayer is an organization or individual whose head office and address are located in an isolated area according to the Government’s regulations, if they could not submit the tax return in case they incur the obligation of submission, leading to late submission of tax declaration dossiers, they shall not be subject to tax administrative.
Guidance on reducing isolation time and piloting the home self-isolation for F1 case
According to Official Letter No. 5599/BYT-MT dated 14 July 2021 of Ministry of Health, the medical isolation of COVID cases will be regulated as follows :
- Reduce the medical isolation period from 21 days to 14 days for F1 case and entry-level people continue to monitor their health at home/accommodation for the next 14 days
- Pilot the home self-isolation for F1 case.
TAX POLICY FOR BUSINESS HOUSEHOLDS, BUSINESS INDIVIDUAL
The Ministry of Finance has issued Circular No. 40/2021/TT-BTC dated 1 June 2021 (“Cir 40”) providing guidance on Value Added Tax (“VAT”) and Personal Income Tax (“PIT”) ) and tax management for business households and individuals. Cir 40 takes effect from 01 August 2021.
Amendment and supplement the incomes subject to VAT and PIT :
- Income from Business cooperation contracts between organizations and individuals;
- Bonuses, sales support, promotions, trade discounts, payment discounts, cash or non-cash support for contracted households;
- Income from products and services of digital information content under agreements with foreign digital platform providers;
- Income from business on e-commerce exchanges;
- Compensation for breach of contract, other compensation; and
- Other incomes.
Important points for attention:
üIndividuals leasing properties with a turnover of over VND100 million/year must declare tax according to each time of payment or calendar year. In case of rental for less than 12 months in a calendar year, Cir 40 guides the use of revenue of 1 month multiplying (x) with 12 months to determine the rental revenue of the full 12 months in order to evaluate the PIT and VAT obligation. The tax declaration obligation of the lessor is belong to the lessee of the lessor upon agreement;
- The lottery, insurance and multi-level marketing enterprises shall declare and pay tax obligation on behalf of the individuals who directly sign contracts to act as agents of lottery, insurance or multi-level sales in case the commission paid to the individual is over VND100 million in the calendar year;
In case an individual generates a revenue of VND100 million/year or less from sources of income and expects/determines a total turnover of more than VND100 million/year, he/she can authorize an income-paying organization to withhold the tax obligation related to the received commission in the tax year; and
- Cir 40 specifies tax administration for individuals, business households, including declaration and determination of tax obligations in each case.
COMPULSORY SOCIAL INSURANCE POLICY
The Ministry of Labor, War Invalids and Social Affairs has issued Circular No. 06/2021/TT-BLDTBXH dated 7 July /2021 (“Cir 06”) amending and supplementing a number of articles of Circular No. 59/2015/TT- MOLISA guidance the implementation of a number of articles of the Law on Social Insurance on compulsory social insurance, effective from 01 September 2021.
The income subject to compulsory social insurance contribution
From 01 January 2021 onward, the monthly basic salary for SI contribution is the salary, allowance and other additional payments as follows:
- The salary according to the job or position according to the salary scale and payroll as prescribed in Article 93 of the Labor Code. For employees who receive salary by product or package salary, the timely salary is determined by the product unit price or package unit salary;
- Salary allowance according to the agreement between two parties to compensate for the factors of working conditions, the complexity of the work, and living conditions, etc.;
- Other agreed additional amounts between the two parties: The specific salary can be determined along with the agreed salary in the labor contract and paid regularly in each paying period.
The income subject to compulsory social insurance contribution
The monthly basic salary subject to compulsory SI does not include other benefits and regimes such as bonuses, mid-shift meals, petrol allowances, car, phone, travel, housing allowance, childcare and child rearing; special support, etc.
Sickness benefits when not taking a full month’s leave
The month of sick leave is counted from the starting date to take sick leave to the preceding day of the following month. In case there are odd days for less than a full month, the sickness benefit rate for that odd days is calculated according to the formula below but must be equal to the monthly sickness allowance:
| Sickness benefits for diseases requiring long-term treatment of odd days, not full months |
= |
Salary paid for social insurance of the month preceding the resignation |
x |
Rate of sickness benefits(%) |
x |
The number of day off to enjoy sickness benefit |
|
24 days |
GUIDANCE ON ADVANCE PRICING AGREEMENTS (APA) IN TRANSFER PRICING
The Ministry of Finance issued the Circular No. 45/2021/TT-BTC guidance on the application of the Advanced Pricing Agreement (“APA”) in tax administration for enterprises having related party transaction dated 18 June 2021, take effect from 3 August 2021.
The conditions for applying APA
Transactions to be suggested to apply APA are related party transactions according to the provision of Decree No. 132/2020/ND-CP. These transactions must simultaneously satisfy the following conditions:
- Already incurred in the business activities of the taxpayer and still incur during the APA’s covered period;
- The transaction has a basis to determine the nature of the transaction which determines the tax liability and has a basis for analysis, comparison and selection of independent comparable according to regulations, and base on information and data in compliance with the provisions of the Law on Tax Administration;
- Transactions that are not under the tax disputes; and
- Transactions are made transparently, not for the purpose of tax evasion, avoidance or abuse of the Tax treaty.
Principles for APA application
- APA is applied on the principle that Tax Authorities and taxpayers or Vietnamese tax authorities and partner tax authorities and taxpayers cooperate, exchange and negotiate on the application of legal provisions on implementing CIT obligations for related-party transactions within the scope of APA, in accordance with the principles of independent transactions and principles of the nature of operations, transactions determine tax obligations;
- Reduce tax compliance costs and improve tax administration efficiency.
APA effectiveness
- The signed APA will be enforceable mandatory for Tax Authorities and taxpayers.
- Effective period of a signed APA is maximum of 03 tax years but not exceeding the number of years that the taxpayer actually operates declaring and paying income tax in Vietnam.
MACT Vietnam Co., Ltd. is pleased to provide the following services:
- Consulting for Tax and Social insurance policies;
- Consulting on Tax policies applicable to enterprises with related transactions (consulting on transfer pricing);
- Legal advice for businesses, focusing on legal procedures for amending Business Licenses and Legal Due Diligence; and
- Consulting for Accounting and Auditing.
In case of specific problems, please contact us – MACT Vietnam Co., Ltd – for detailed advice:
Pham Quoc Viet, Chủ tịch, Email: Vietpq@mactvn.com, Mobile: 0984.998.265.
