Vietnam Regulatory Brief: Tax, Customs, and Bankruptcy

 By Charles Small

Of the many laws and regulations which came into effect at the beginning of 2015, Vietnam Briefing has selected three with significant relevance to foreign investors in the country or who are interested in entering. Wide-scale tax reforms have been implemented, along with changes to customs and bankruptcy procedures.

RELATED: Dezan Shira & Associates’ International Tax Planning Services

Tax Changes

The revised Tax Law of November 2014 altered the Corporate Income Tax (CIT), Personal Income Tax (PIT), Value-added Tax (VAT) and Tax Administration, and the Sales Tax. The revised law came into effect on January 1, 2015, and affirmed many reforms proposed in Resolution 63 of August 25, 2014.

Among the key changes the new law has brought about are the following:

• Removes the CIT cap on tax deductions for costs related to advertising and promotion
• Grants CIT incentives to projects engaged in agricultural, manufacturing, and other activities

Regarding PIT, the following incomes are no longer subject to PIT:

• Winnings in casinos
• Vietnamese crewmen working for foreign and Vietnamese shipping companies providing international transport services
• Owners, or crewmen, of vessels providing services to offshore fisheries.

Flat PIT rates now apply to income from securities and real property transfers by residents, and business income.

Guidance has also been issued on applicable VAT for:

• Sale of assets attached to land
• Application of deductible VAT to bank payment vouchers
• VAT refund procedures
• Settling payments via overseas current accounts
• VAT on transfer of land use rights to a domestic company

In a positive development, filing procedures have been simplified, as a list of input and output invoices is no longer required for monthly and quarterly tax filing reports. Procedures have also been altered to prevent multiple submissions of the same documents.

Finally, the overdue tax payment interest rate of 0.07 percent per day has been abolished, and replaced with a rate of 0.05 percent per day.

RELATED: Hanoi Reduces Application Time for Business Registration Certificates

Reformed Customs Procedures

Customs Law, No. 54 of 2014, has set out a one-stop shop (OSS) customs mechanism which allows the submission by customs declarers, to an electronic information system, of electronic documents for import or export procedures.

Responsibility for the installation of customs examination equipment lies with enterprises which provide services at ports and warehouses. Such enterprises are required to connect their internal clearance systems with the customs agencies’ electronic system, and to restrict transportation of goods without documentation from the relevant customs authorities. Any regulations which do not contradict the law remain valid.

Bankruptcy Law Amendment

Under the new Bankruptcy Law, No. 51 of 2014, bankruptcy has been defined as an enterprise which has become insolvent and has been declared by a court to be bankrupt. An enterprise will be deemed insolvent if it has failed to meet any payment obligations within three months of the due date.

Creditors, employees, and the enterprise itself, all have the right to file for bankruptcy. Creditors are granted three months from the due date of financial obligations to petition for bankruptcy proceedings against debtors. Enterprises will have the right to monitor assets during bankruptcy proceedings, including asset liquidation, business management, and management arbitration.

For more information on how your company can operate in Vietnam’s regulatory environment, please contact Dezan Shira Vietnam for specialist advisory services. For a tailored investment report, please contact Asia Briefing at: editor@asiabriefing.com

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