THE WEEK IN BRIEF VIETNAM: 22 NOV 2020

APFL & Partners > News > THE WEEK IN BRIEF VIETNAM: 22 NOV 2020

Welcome to the latest edition of our regular legal update from the A&P Vietnam office.

This week, we discuss new transfer pricing regulations, more support for domestic car manufacturers, changes to the Law on Vietnamese Guest Workers, and new rules for telecommunications enterprises.

To learn more about one of these changes, just contact our office for more information.

New Transfer Pricing Regulations

On 5 November, the Government issued Decree No. 132/2020/ND-CP on the tax management of enterprises with related transactions (“Decree 132”). Decree 132 introduces some important changes to transfer pricing regulations and, after coming into force on 20 December, will be applied for the 2020 tax period.

First, Decree 132 adds two more cases to the definition of parties with related transactions:

  • Where one party directly or indirectly participates in the management, control, capital contribution or investment of another party, and;
  • Where a party is directly or indirectly under the management, control, capital contribution or investment of another party.

Second, a related transaction is considered to have taken place if either:

  • One of the parties transfers or receives a transfer of at least 25 per cent of the capital contribution of the owner during the relevant tax period, or;
  • One of the parties borrows or lends at least 10 per cent of the equity capital of the owner.

Decree 132 also introduces three cases in which enterprises will not be required to prepare and submit a declaration:

  • Where none of the parties benefits from tax incentives;
  • Where all parties have the same rate of tax, and;
  • Where the related-party transactions are domestic, not international.

More Support for Vietnamese Car Manufacturers

Vietnamese car manufacturers are set to get a boost, after the Government Office issued Notification No. 377/TB-VPCP (“Notification 377”) on 11 November. Notification 377 outlines the conclusions of the Vice Prime Minister following a recent meeting to discuss proposals to support the domestic automotive sector.

Vietnamese media has reported that the sales of cars made in Vietnam slumped over the summer as COVID-19 hit consumer spending, though the reduction in registration fees of up to 300 million VND helped to off-set this. Even so, sales fell 14 per cent in August according to the Vietnam Automobile Manufacturers Association (“VAMA”).

Following Notification 377, the Prime Minister has suggested several solutions to support the development of the domestic automotive sector. These include tax changes, such as not including the value of spare parts made in Vietnam in the dutiable value of cars, alongside a preferential credit package for the automobile sector and related industries.

Changes to the Law on Vietnamese Guest Workers

On 13 November, Vietnam’s National Assembly adopted the revised Law on Vietnamese Guest Workers, which increases the number of articles in the law to 74 – a rise of 31 compared to the previous text.

The Law on Guest Workers covers Vietnamese sent overseas – more than 150,000 in 2019 alone – to undertake jobs. Most of these were sent to Japan (83,000) with Taiwan (54,000) and South Korea (7,500) also being big beneficiaries of Vietnamese workers. This took the total number to over half a million, according to Vietnamese media.

Under this law, organisations with capital of more than 5 billion VND and deposits of 1 billion VND can send their workers abroad, providing that these organisations also provide training before departure and have a track record of international cooperation.

Effective from 1 January 2022, the revised law covers the rights and obligations of Vietnamese guest workers as well as related individuals, organisations and state agencies. Audier & Partners will monitor this law and keep our clients updated as it develops.

New Rules for Telecommunications Enterprises

From 15 December, new requirements on telecommunications enterprises will come into force after the Ministry of Communications (“MIC”) issued Circular No. 33/2020/TT-BTTTT (“Circular 33”) on 4 November.

Following Circular 33, a ‘Reception of Telecommunications Service Quality Announcement’ must be issued within three days of an application being received, down from five days in previous regulations.

Telecommunications companies must also conduct an annual measurement and assessment of the quality of their services. This provision applies to services outlined on the List of Telecommunications Services Subject to Quality Control. The annual audit must be performed in at least three provinces or cities where those services are provided, or in all areas of individual provinces/cities.

Circular 33 amends and supplements a number of articles of Circular No. 8/2013/TT-BTTTT dated 26 March 2013 on telecommunication quality services management.

For more information about investing or doing business in Vietnam, contact our office on contact@apflpartners.com. And don’t forget to sign up for our newsletter to receive the latest insights on Vietnam’s legal news.

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