Mazars Vietnam Newsletter - Issue March 2020

Operational Updates

Law on Securities No. 54/2019/QH14 promulgated by the National Assembly on 26 November 2019, taking effect as from 1st January 2021

Law on Securities No. 54/2019/QH14 was promulgated by the National Assembly on 26^th November 2019 and shall take effect as from 1^st January 2021, replacing Law on Securities No. 70/2006/QH11 and Law No. 62/2010/QH11 amending and supplementing a number of articles of Law on Securities. Below are some noteworthy points of the Law on Securities 2019:

• Broadening the covering scope of a number of definitions such as securities (specified to include depositary receipts), professional investors (specified to include individual investors having securities portfolio with minimum total value of VND 2 billion or individual investors whose taxable income from the latest year of at least VND 1 billion, corporate investors having minimum charter capital of VND 100 billion), etc.
• Raising the charter capital conditioned for the initial public offering of a company to VND 30 billion (formerly conditioned at 10 billion), major shareholders must undertake to hold more than 20% of the charter capital of the issuing organization for a duration of at least 1 year after the offering.
• The minimum charter capital of a public company must be VND 30 billion (which is set at VND 10 billion for the time being) with at least 100 shareholders (excluding major shareholders) holding at least 10% of the total number of shares.
• Private placement of securities refers to an offering of securities not conducted via the mass media and which is by ways of: offering to under 100 investors, excluding professional investors, or offering extended to professional stock investors only.
• The transfer of shares, convertible bonds and warrant-linked bonds from private offering is restricted within at least 03 years in the case of strategic investors and at least 01 year in the case of professional stock investors as from the date of completion of the offering, saving for special circumstances.
• A public company that repurchases its own shares must implement procedures for reducing its charter capital by the corresponding par value of total repurchased shares within 10 days as from the date of full payment for the share repurchase.

Decree 22/2020/NĐ-CP dated 24 February 2020 amending and supplementing rules on business license fees

The Government released Decree 22/2020/NĐ-CP amending the rules on business license fees, especially concerning newly-established enterprises with the following noteworthy points:

• Business license fee is exempted in the first year of establishment, including branches, business locations, representative offices established by the above during their period of business license fee exemption;

• Small and medium-sized enterprises (SMEs) converted from business households shall be exempt from business license fees for the first three years;

• Taxpayers which have just been established/started doing business have to file the business license fee return by 30th January of the year subsequent to the year of establishment or the first year of operations;

• SMEs converted from business households have to file the business license fee return by 30th July, if the period of business license fee exemption ends in the first half of that year. The deadline shall be by 30th  January of the subsequent year if the exemption period ends in the second half.

Official letter 288/BHXH-QLT on Health insurance contribution applied in internal transfers

According to Official letter 288/BHXH-QLT issued by Ho Chi Minh City ("HCMC") Social Security on 18^th February 2020, expatriates working in Vietnam under internal transfers as specified in Point 1, Article 3, Decree 11/2016/ND-CP shall not be subject to Health insurance (“HI”) contribution. This change shall take effective date from 01st February 2020 onwards.

Official letter 405/TCT-KK on the submission of tax declaration documents and notification of publishing invoice for a business location located outside the province or city where an enterprise registered its head office and branch.

On 04^th February 2020, General Department of Taxation ("GDT") issued Official letter 405/TCT-KK guiding the submission of tax declaration documents and notification of invoice issuance for a business location located outside the province or city where an enterprise registered its head office and branch. More specifically:

• On the submission of tax declaration documents: While waiting for the upgrade of the online platform, the company shall submit its tax declaration documents sealed by the Company’s stamp and submit directly to the tax authority governing the business location.

• On the notification of publishing invoice: The notification shall be submitted to the governing tax authority in Form TB01/AC. Information to be declared in Point 1, 2, 3 and 4 shall be detail of the business location, while information about the Company shall be provided in Point 6 and the name of the tax authority governing the business location shall be provided in Point 7. The company shall use its business location's information and the company's e-signature to issue invoices.

Official letter 774/TCT-KK on input Value Added Tax ("VAT") refund for investment projects

On 21^st February 2020, GDT issued Official letter 774/TCT-KK guiding VAT refund for investment projects. More specifically:

• If the Company is an Export Processing Enterprises ("EPE"), the VAT input of the investment project shall not be eligible for VAT refund process;

• If the Company is not an EPEs, the VAT input of the investment project shall be eligible for VAT refund. Of note, only the incurred amount incurred before the completion date of the project shall be eligible for VAT refund if they are qualified the other conditions.

Payroll Updates

Official letter 13329/CT-TTHT on the deductibility of salary expenses for employees on a secondment in Vietnam

According to Official letter 591/CT-TTHT issued by Bac Ninh Tax Department on 12th February 2020, tax payers without a tax code at the date of tax finalization will not be eligible for the dependent relief and authorization of tax finalization. In such case, they will also not be allowed to make commitments of having income lower than the taxable level. The income paying entity has to withhold 10% on each payment from VND2,000,000, and the individual shall make their PIT finalization directly with the tax authority.

Official letter 591/CT-TTHT on Personal Income Tax ("PIT") finalization of tax payers without a tax code

According to Official letter 13329/CT-TTHT issued by HCMC Tax Department on 11th November 2019, provided that the assignment letter fully covers all information as in a labour contract, employee remunerations and other employment-related income paid by the company in Vietnam shall be allowed for deduction for CIT purposes.

Our support

We do trust the above points are notable and sufficient, but should you have any question or need a deeper discussion on this issue, please do not hesitate to contact us.

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