RUSSELL BEDFORD KTC

NEWSLETTER

RUSSELL BEDFORD

Member of Russell Bedford International with affiliated offices worldwide

NEWSLETTER

Issue 3, April 2014

RUSSELL BEDFORD KTC

Member of Russell Bedford International - with affiliated offices worldwide

© 2013 KTC Assurance and Business Advisors. All rights reserved.

IN THIS ISSUE Page

Use of old invoice when changing company’s address

Guidance on using old invoice when changing company’s address

1

Tax for upgrading or improving expenses for leased/ borrowed house

VAT, CIT for upgrading or improving expenses for leases/ borrowed house

1

Notice on method of VAT calculation for enterprises newly established from 1 January 2014

Submission of notice on method of VAT calculation for newly established enterprises

1

Supplementary condition for newly established enterprises to apply VAT deduction method

Guidance on method of VAT calculation for newly established enterprises

1

Payment of trade union fee

Regulation on rate and method of paying trade union fee

2

Management of internal movement of foreign labour

Management of foreign labour in Vietnam

2

Requirement for foreign loan

Term, procedure for foreign loan without Government guarantee

2

(Draft) Amendment of Law on enterprise

New regulation on Business registration

2

(Draft) Amendment Law on Accounting

Changes on accounting file, administration

3

(Draft) Amendment of Law on Social Insurance

Amending, supplementary Law on Social insurance

4

Use of export invoice from 1 March 2014

Guidance on using of export invoice after 1 March 2014

4

TAX TAX

1

© 2014 Russell Bedford KTC Audit Company Limited. All rights reserved.

Use of old invoice when changing company’s address On 17 April 2014, the General Department of

Taxation (GDT) issued Official Letter No. 1259/TCT-

CS to the Department of Taxation of Hanoi on value

added tax (VAT).

Individuals, entities who have addresses changed

but still have old invoices can still use them in the

period of processing new business registration, tax

code registration and stamp. However, enterprises

have to stamp the new name, address next to the

name, address printed on invoice and send the note

of information adjustment in the notice of invoice

issuance to the tax authority.

Similarly, on 6 March 2014, the GDT issued Official

Letter No. 6767/TCT-CS to the Department of

Taxation of Ho Chi Minh city on the case of using

red pen to cross out the old address on invoices

when changing business address. Pursuant to

Circular No. 64/2013/ TT-BTC, it is not permitted to

use red pen to cross out or write on invoice.

However, as the company has sent the note of

information adjustment in the notice of invoice

issuance to the tax authority, declared and paid the

output VAT, the invoices crossed out by red pen are

considered valid.

Tax for upgrading or improving expenses for leased/ borrowed house On 6 March 2014, the GDT issued Official Letter No.

677/TCT-CS on the tax for upgrading, improving

expenses for leased/ borrowed house.

According to the Letter, the input VAT for such

expenses is not deductible. The expenses for

investing, upgrading, completion of fixed assets are

not recognised in business expense.

Notice on method of VAT calculation for enterprises newly established from 1 January 12014

On 17 March 2014, the GDT issued Official Letter

No. 858/TCT-KK on receiving the notice on

method of VAT calculation for enterprises newly

established from 1 January 2014.

It is mandatory for enterprises newly established

from 1 January 2014 to submit the notice on

method of VAT calculation (form 06/GTGT) to

the tax authority.

For newly established enterprises voluntarily

applying deduction method:

If enterprises have not lodged the form

06/GTGT and the notice of invoice

issuance, the enterprises should submit the

form 06/GTGT for voluntary application of

the deduction method;

If enterprises have not submitted the form

06/GTGT but already purchased sale

invoices from tax authorities, the

enterprises will continue to apply the

direct method for 2014. The method for

the next years will be determined based on

the revenue of 2014.

Supplementary condition for newly established enterprises to apply VAT deduction method On 26 April 2014, the Ministry of Finance (MOF)

issued Official letter No. 5485/BTC-TCT on

supplementary condition for voluntary VAT

deduction method.

Newly established enterprises, cooperatives

which have investment plan of VND 1 billion or

more being approved by their authorised people,

can voluntarily apply the VAT deduction method.

LABOR

ENTERPRISES

© 2013 KTC Assurance and Business Advisors. All rights reserved. 2

Payment of trade union fee On 7 March 2014, the Vietnam General

Confederation of Labour issued Guidance No.

258/HD-TLD on payment of trade union fee.

Members of trade union, regardless of state-owned

enterprises or private enterprises have to pay

monthly trade union fee. The rate of contribution for

each type of enterprises is as follow:

State-owned enterprises: 1% of trade union fee

is based on net salary paid (salary after

deduction of social insurance, medical

insurance, unemployment insurance, personal

income tax);

Private enterprises: 1 % of trade union fee is

based on salary for social insurance

calculation purpose.

The monthly trade union fee can be paid directly for

entity trade union by union members or deducted

from salary upon agreeing with members.

This Guidance is effective from the signature date.

The contribution rate under this Guidance is

effective from 1 January 2014, replaces Guidance

No. 1803/HD-TLD dated 29 November 2013.

Management of internal movement of foreign labour On 24 March 2014, the GDT issued Official letter No.

953/TCT-CS on management of foreign labour in

Vietnam.

Before the effective date of Decree No.

102/2013/ND-CP (i.e. 1 November 2013), foreign

labour who were internally assigned to work in

Vietnam had to register to get the work permit.

However, from 1 November 2013, this procedure was

no longer effective.

Requirement for foreign loan On 24 April 2014, the State bank of Vietnam

issued Circular No. 12/2014/TT-NHNN on

supplementary requirement for foreign loan

without government guarantee.

For investment projects with investment

certificate, the foreign loan must not exceed the

difference between the total investment capital

and charter capital registered in the Investment

certificate.

For investment projects without certificate, the

total medium and long-term loan, including

domestic loan, must not exceed the loan demand

of the investment, business plan.

The Circular is effective from 15 May 2014.

(Draft) Amendment of Law on enterprise The Ministry of Planning and Investment has

recently issued the second draft of the amended

Law on enterprise with following notable

changes:

The period to process and issue the

Business registration certificate is reduced

from 10 days to 5 days from the date of

receiving the registration dossier;

After issuing the Business registration

certificate, the Business registration office

shall send a copy of Business registration

certificate to Department of Labour -

Invalids and Social Affairs and Social

Insurance office on behalf of the

enterprise. (At present, enterprises have to

perform this task);

There is a separation between business

establishment and business registration

certificate for restricted businesses. It is

not required to imply the business

registration information in the Business

Registration Certificate, except for

businesses with restricted conditions.

We will update the issues related to this Law in

our next Newsletters.

ACCOUNTING

3


(Draft) Amendment of Law on Accounting

The MOF has issued the first draft of the amended

Law on Accounting. Some changes of this draft are

as below.

Supplementary method of determining assets value

besides the historical cost method: for assets having

highly-fluctuated price on market, the historical cost

or fair value method can be chosen to apply in

accordance with the MOF’s regulations.

Supplementary prohibition acts:

Maintaining of two or more accounting books;

Lease, lend of accounting practicing certificate

in any form.

Supplementary method of filing accounting

documents besides printed hard copies: accounting

documents, records can be filed in electronic form,

but must be safe, secure and convenient to access.

Supplementary definition of sales invoice (used for

entities applying VAT deduction method): sale

invoice is a special accounting document prepared

by the seller, is used for accounting purpose of the

entity, for tax declaration and finalisation with the

State.

Supplementary of accounting inspection authority:

The MOF has the right to inspect all

accounting units in Vietnam;

The Government inspectorate, financial

inspectorate, State audit, Tax office have

accounting inspection right when on duty;

Owners of 50% or more ownership of an

equity have inspection right to the entity;

Superior accounting units have right to make

accounting inspection at subordinate units.

Supplementary conditions for accounting service

business:

Limited companies with 2 or more members have to

meet following conditions to be qualified for

certificate of accounting services:

Having Business registration certificate,

Enterprises registration certificate or

Investment certificate;

Having at least two certified practising

accountants, of which two of them are

partners;

The legal representatives, director or

general director of a limited company must

be a certified practising accountant;

Having sufficient legal capital;

The capital contribution of practising

accountants should account for more than

50% of the charter capital.



INSURANCE

OTHERS

4


(Draft) Amendment of Law on Social Insurance

The Ministry of Labour Invalids and social affairs

issued the draft amendment of Law on Social

insurance (SI) with some notable changes as follow.

The current retirement age for man and woman is

60 and 55 respectively. From 2020 onward, the

retirement age will be increased by 4 months each

year until the retirement age for man and woman is

62 and 60 respectively.

Changes in maternity leave policy:

Adoption of children of under 6 month-old

(currently: under 4 month-old);

Paternity leave of 5 days for male labour if his

wife gives natural birth and 7 days if she has

cesarean section (currently no paternity leave

policy is available).

Pension calculation method: to receive the pension

rate of 45% average monthly salary, the years of

paying SI in 2016 is 16 years, 17 years in 2017, 18

years on 2018, 19 years in 2019 and 20 years from

2020 onward (currently the time is 15 years). The

monthly pension shall be reduced by 2% (currently

1%) for each year of early retirement.

The lump-sum SI benefit: Before 2014, the lump-

sum SI benefit shall be the number of years of paying

SI premiums multiplied by 1.5 average monthly

salary. From 2014 onward, the lump-sum SI benefit

shall be the number of years of paying social

insurance premiums multiplied by 2 average

monthly salary.

Supplementary regulation on the time to receive

Labour accident and occupational disease

allowances:

The time to allowances is from the month of

completion of treatment or discharged from

hospital; or from the month when Medical

Assessment Council conclusions are available

in case of no hospital treatment (Currently,

the time is from the date of completion of

treatment or discharged from hospital).

In case of not determining the time of

completely treated or discharged from

hospital, the time to enjoy the monthly

allowance is from the month when Medical

Assessment Council conclusions are

available.



Use of export invoice from 1 March 2014

Pursuant to Circular No. 04/2014/ND-CD

effective from 1 March 2014, the export invoice is

no longer in use and the VAT invoice will be used

instead (for company applying VAT deduction

method) or sale invoice (for company applying

VAT direct method). However, there are still

enterprises not completely following this new

regulation.

On 25 April 2014, the GDT issued Official letter

No. 1412/TCT-CS to all provincial/city

Department of Taxation to guide this issue.

From 1 March to 1 June 2014, enterprises,

business entities can still use export invoice.

From 1 June 2014, export invoices are not

accepted by tax offices.


Disclaimer

This Newsletter contains information in summary form and is therefore intended for general

guidance only. It is not intended to be a substitute for detailed research or the exercise of

professional judgment. Reference should be made to the appropriate advisors and Russell

Bedford KTC will not accept any responsibility for loss occasioned to any person acting or

refraining in this publication.

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represented by some 460 partners, 5,000 staff and 200 offices in more than 90 countries in

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which bring to our client practical and cost-effective solutions to their business issues. Quality

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Accountants (local and international), Ph.D., Masters in Accounting and Finance and Masters in

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people are our assets and critical factor to our success.

Contact us

Hanoi Office

Pham Duy Hung

[email protected]

Do Thuy Linh

[email protected]

Nguyen Khanh Ly

[email protected]

Level 2-6, 140 Lang Street,

Dong Da District, Hanoi, Vietnam

Tel: +84-4-3562 5633

Fax: +84-4-3562 5634

Ho Chi Minh City Office

Thai Van Anh

[email protected]

Le Quang Hai

[email protected]

Level 4, 162B Dien Bien Phu, Ward 6,

District 3, Ho Chi Minh City, Vietnam

Tel: +84-8-6290 9980

Fax: +84-8-6290 9981

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