Tax obligations for foreign entity doing business in Vietnam

The applicable taxes including value added tax (VAT), corporate income tax (CIT) and personal income tax (PIT).

On August 6th 2014, the Ministry of Finance issued Circular No. 103/2014/TT-BTC guiding the implementation of tax obligations that are applicable to foreign organizations and individuals doing business in Vietnam or having incomes generated in Vietnam.

Taxpayers: foreign contractors, foreign subcontractors; organizations established and operated under the law of Vietnam, organizations register to operate under the law of Vietnam, other organizations, individuals producing and trading.

The applicable taxes including value added tax (VAT), corporate income tax (CIT) and personal income tax (PIT).

Taxable income of foreign contractors and foreign subcontractors is income derived from the provision and distribution of goods; provision of service, service in association with goods in Vietnam on the basis of the contractor contract and subcontractor contract.

CIT Payable

=

Revenue subject to CIT

x

CIT rate calculated on taxable turnover

Subjects liable for VAT: services or services associated with goods provided by foreign contractors, foreign subcontractors on the basis of the contractor contract, subcontractor contract to use for manufacturing, trading and consumption in Vietnam.

Incomes arising in Vietnam of foreign contractors and foreign subcontractors are earnings received in any forms on the basis of the contractor contract, subcontractor contract (except for cases specified in Article 2, Chapter I of this Circular), regardless of the place conducting business operations of foreign contractors and foreign subcontractors.

Circular specifically instruct the following cases:

1. Pay VAT by deduction method; pay CIT on the basis of cost and revenue declaration to determine taxable income.

2. Pay VAT and CIT by percentage on turnover.

3. Pay VAT by deduction method; pay VAT by percentage on turnover.

Issued together with Circular 103 is the tax declaration form for foreign contractor.

This Circular takes effect from October 1st 2014, replaces Circular No. 60/2012/TT-BTC dated April 12th2012 of Ministry of Finance guiding the implementation of tax obligation applicable to the foreign organizations and individuals doing business in Vietnam or having income in Vietnam.

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Business conditions for condominium management training service

On July 1st 2016, the Government issued Decree No. 79/2016/ND-CP guiding the business of training service, improving the professional knowledge, management profession and operation of condominium.

Accordingly, organizations and individuals providing the above services must fully satisfy the 05 following conditions:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has facility and classroom to ensure sufficient seat for students and location for student to practice on professional knowledge and practice.

– Third, has syllabus or teaching materials consistent with training framework program that promulgated by the Ministry of Construction.

– Fourth, has a minimum of 40% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

– Fifth, being recognized by the Ministry of Construction or the agency authorized by the Ministry of Construction as qualifying for business of condominium management training service.

In addition, this Decree also provides for conditions for business of real estate brokerage practice training service as follows:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has facility and classroom to ensure sufficient seat for students and location for student to practice on knowledge of real estate brokerage and administration of real estate trading floor.

– Third, has syllabus or teaching materials consistent with training framework program that promulgated by the Ministry of Construction.

– Fourth, has a minimum of 30% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

Decree No. 79/2016/ND-CP officially takes effect upon signing.

For advice or service request, please contact us via email ant@antlawyers.vn, or call +84 8 3520 2779.  To learn more about us, visit www.antlawyers.vn.

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CAPITAL CONDITIONS IN AIR TRANSPORTATION BUSINESS

Air transportation is the conditional business line and conducted by air transportation enterprises. Air transportation business includes air transportation activity, advertising, marketing and sale of air transportation products on the market for the purpose of making profit.

Therefore, trading in this business line is subject to strict rules of law. The conditional business lines in the field of civil aviation are detailed in Decree 92/2016/ND-CP dated July 1st 2016.

Accordingly, in the field of air transportation, business must meet capital requirements as follows:

The minimum capital requirement to establish and maintain air transportation business:

• Operating up to 10 aircrafts: 700 billion VND for enterprises engaging in international air transportation; 300 billion VND for enterprises only engaging in domestic air transportation;
• Operating between 11 and 30 aircrafts: 1,000 billion VND for enterprises engaging in international air transportation; 600 billion VND for enterprises only engaging in domestic air transportation;
• Operating more than 30 aircrafts: 1,300 billion VND for enterprises engaging in international air transportation; 700 billion VND for enterprises only engaging in domestic air transportation;

The minimum capital requirements to establish and maintain general air transportation business: 100 billion VND.

Air transportation business that has foreign investment must meet the following conditions:

• The foreign parties take up less than 30% of charter capital;
• Must have at least one Vietnam individual or legal entity hold the largest part of the charter capital. In case Vietnam legal entity has foreign investment capital, the foreign capital share should not exceed 49% of the charter capital of the legal entity.

The transfer of share and capital contribution of air transportation business without foreign investment to foreign investor shall be made only after 02 years from the date of issuance of the air transportation business license.

Enterprises have to send the share and capital transfer proposal to foreign investor to Civil Aviation Administration of Vietnam, which includes: The transferee, transfer condition, the number of transferring shares and capital contribution; Development plans for aircraft teams, business plan, development strategies referred to in Paragraph 1, Article 9 of the Decree 92/2016/ND-CP (if any).

Within 05 working days from the date of receiving the proposal from business, Civil Aviation Administration of Vietnam will report to the Ministry of Transportation the appraisal results.

Within 05 working days from the date of receiving the appraisal result report of the Civil Aviation Administration of Vietnam, the Ministry of Transportation will consider approval or disapproval and clearly state the reasons.

ANT Lawyers is a Vietnamese law firm in Vietnam with English speaking lawyers whom understand the laws of Vietnam within the business and the local culture context.

The firm has been advising and representing foreign companies and individual clients interested in either doing business, or needing legal services or representation in Vietnam who are seeking reasonable and competitive solutions without compromising on service quality.

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Decree 118/2015/ND-CP Guiding the Investment Law 2014

Decree 118/2015/ND-CP was issued on November 12th 2015 by the Government. It takes effect from December 27th 2015 clearly regulates some regulations of the Law on Investment on the application, control, publish investment business condition; measures to ensuring investment, investment incentives, investment procedures, operational implementation of investment projects and state management of investment projects.

Regarding investment conditions in Vietnam:

– In terms of the business investment sectors, investors may invest in conditional business lines when they meet the conditions of license, practicing certificate, certified professional liability insurance or other forms of required documents under the provisions of the covered agreements that Vietnam has signed or specific regulations of the law of Vietnam.

– In addition, investors also have to meet other conditions such as charter capital (for a certain number of business lines); forms of investment; scope of investment activities; Vietnam partners to join the investment execution.

– The form of investment for foreign investor:

+ Establish economic organization.

+ Capital contribution or share purchase.

+ Business cooperation contract.

+ Receive transfer of investment project.

– Foreign investors when investing in Vietnam in addition to meeting conditions like investor Vietnam, they will have to meet other specific conditions. Particularly for investors that have both Vietnam and foreign citizenships, they will be able to choose to apply the conditions for foreign investor or Vietnam investor.

On the issue of investment incentives, investors will receive incentives from the State in the following cases:

– Projects under the business lines of investment incentives.

– Investing in areas with difficult economic conditions.

– Project with capital from 6000 billion VND and will be disbursed within a period of 3 years.

– Investing in projects in rural areas and use more than 500 employees.

– Investment project in the fields of science and technology.

– For investment projects in Section 3 and 4 above will be entitled to preferential investment projects in areas with difficult economic conditions. The cases that projects simultaneously under both Section 1 and 2 above shall also enjoy incentives according to investment project in areas with difficult economic conditions.

Distinguishes 3 types of projects:

– The investment project that is not subject to the investment policy decision.

– The investment project under the jurisdiction on investment policy decision of the provincial People’s Committee.

– The project that is not subject to the granting of investment certificate.

In particular, for the project’s land that is granted, lease or allow the transfer of land use purposes by the State, it is necessary to deposit to ensure the investment. The deposit rate will be 3%, 2% or 1% depending on the scale of capital is 300 billion VND or above. Depends on the enjoyed incentives that the amount of deposit will be reduced according to different rate (the typical reduction rate is 25% or 50%).

Regarding the transfer of investment project:

Investor is allowed to transfer part or the whole of their investment project to other investor under the provisions of the law on investment (paragraph 1, article 45). In case when the transfer of projects generates income, investors must comply with the relevant tax obligations.

In addition, the Decree 118/2015 also provides details about:

– The procedures for the adjustment of investment projects in the case of division, separation, merger and transformation of economic organization (Article 38);

– The procedures for the termination of investment projects (Articles 41, 42);

– The investment procedures in the form of capital contribution, share purchase and capital contribution of foreign investors.

Decree 118/2015/ND-CP takes effect from December 27th 2015.

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ANT Lawyers is a Vietnamese law firm in Vietnam with English speaking lawyers whom understand the laws of Vietnam within the business and the local culture context.

The firm has been advising and representing foreign companies and individual clients interested in either doing business, or needing legal services or representation in Vietnam who are seeking reasonable and competitive solutions without compromising on service quality.

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Musician Ed Sheeran faces copyright lawsuit over 'Thinking Out Loud'

Heirs of the composer for Marvin Gaye's "Let's Get It On" sued British musician Ed Sheeran on Tuesday.

Heirs of the composer for Marvin Gaye's "Let's Get It On" sued British musician Ed Sheeran on Tuesday, claiming his hit song "Thinking Out Loud" copies core elements of the late soul singer's 1973 track.

The copyright infringement lawsuit was filed by the heirs of Ed Townsend, who co-wrote the lyrics to "Let's Get It On" in 1973 and created its musical composition, according to the complaint filed in federal court in the Southern District of New York.

Representatives for defendants Sheeran, Sony/ATV Music Publishing, and Atlantic Records did not immediately respond to requests for comment.

The lawsuit, which asks for damages to be assessed at a jury trial, argues that the harmonic progressions, melodic and rhythmic elements central to "Let's Get It On" formed the structure of Sheeran's "Thinking Out Loud."

"The Defendants copied the 'heart' of 'Let's' and repeated it continuously throughout 'Thinking,'" the lawsuit said. "The melodic, harmonic, and rhythmic compositions of 'Thinking' are substantially and/or strikingly similar to the drum composition of 'Let's.'"

Grammy Award-winning Sheeran has become one of Britain's top-selling artists in the past two years, and has written and co-written tracks for artists such as One Direction, Taylor Swift and Justin Bieber.

The lawsuit came two months after California-based musicians sued Sheeran for $20 million over his hit song "Photograph" in an unrelated case.

Gaye's family last year successfully sued R&B recording artists Robin Thicke and Pharrell Williams for copyright infringement in another unrelated case over their hit single "Blurred Lines," winning a $7.4 million judgment.

copyright lawyers in Vietnam| Foods lawyers in Vietnam| Product Registration in Vietnam

Intellectual Property Lawyers in Vietnam

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Musician Ed Sheeran faces copyright lawsuit over 'Thinking Out Loud'

Heirs of the composer for Marvin Gaye's "Let's Get It On" sued British musician Ed Sheeran on Tuesday.

Heirs of the composer for Marvin Gaye's "Let's Get It On" sued British musician Ed Sheeran on Tuesday, claiming his hit song "Thinking Out Loud" copies core elements of the late soul singer's 1973 track.

The copyright infringement lawsuit was filed by the heirs of Ed Townsend, who co-wrote the lyrics to "Let's Get It On" in 1973 and created its musical composition, according to the complaint filed in federal court in the Southern District of New York.

Representatives for defendants Sheeran, Sony/ATV Music Publishing, and Atlantic Records did not immediately respond to requests for comment.

The lawsuit, which asks for damages to be assessed at a jury trial, argues that the harmonic progressions, melodic and rhythmic elements central to "Let's Get It On" formed the structure of Sheeran's "Thinking Out Loud."

"The Defendants copied the 'heart' of 'Let's' and repeated it continuously throughout 'Thinking,'" the lawsuit said. "The melodic, harmonic, and rhythmic compositions of 'Thinking' are substantially and/or strikingly similar to the drum composition of 'Let's.'"

Grammy Award-winning Sheeran has become one of Britain's top-selling artists in the past two years, and has written and co-written tracks for artists such as One Direction, Taylor Swift and Justin Bieber.

The lawsuit came two months after California-based musicians sued Sheeran for $20 million over his hit song "Photograph" in an unrelated case.

Gaye's family last year successfully sued R&B recording artists Robin Thicke and Pharrell Williams for copyright infringement in another unrelated case over their hit single "Blurred Lines," winning a $7.4 million judgment.

copyright lawyers in Vietnam| Foods lawyers in Vietnam| Product Registration in Vietnam

Intellectual Property Lawyers in Vietnam

Read More