NEWSLETTER JANUARY 2018
New Law on export/import management
On 12th June 2017, the National Assembly approved Foreign Trade Management Law No. 05/2017/QH14, which gives some new guidance on the management of foreign trade via import and export licenses (license-based management) and via conditions for import/export (condition-based management).
The Law comes into force from 1st January 2018.
Decree No. 09/2018/ND-CP (Decree 09): change of licensing requirements for trading activities conducted by foreign investors and foreign invested enterprises
The government issued Decree 09, replacing Decree No. 23/2007/ND- CP (Decree 23) dated 12th February 2009, which came into force from 15th January 2018, with following main points:
| Main points | Decree 09 | Decree 23 | |
| Eligible party for business license
|
– A foreign investor from a country or territory which has acceded to a treaty to which Vietnam is a signatory and under which Vietnam has committed to open its market for sale of goods and other related activities | A foreign investor from a country or territory which has acceded to a treaty to which Vietnam is a signatory and under which Vietnam has committed to open its market for sale of goods and other related activities | |
| – A foreign investor from a country or territory which has not acceded to a treaty to which Vietnam is a signatory. | |||
| Sections:
|
Import/export/ distribution/ wholesaler | Business License is no longer required except for the products described in Point b, Clause 1, Article 9. | A foreign investor must obtain Business License and get approval from the Ministry of Industry and Trade. |
| Retail | -A foreign investor must get approval from the Ministry of Industry and Trade/ or Department of Industry and Trade, depending on products sold. | A foreign investor must get approval from the Ministry of Industry and Trade | |
| Licensing authority | Department of Industry and Trade | Provincial People Committee
|
|
| Time to get the license | 10 days to 28 days | 45 days | |
Official Letter No. 1990/ CT-TTHT (OL 1990): limitation of interest expense deduction for corporate income tax purpose
On 15th January 2018, Hanoi Department of Taxation issued OL1990 with following content:
According to Clause 3 Article 8 of Decree No. 20/2017/ND-CP that guides determination of deductible expenses for enterprises engaged in related-party transactions, deductible interest expense amount in a tax period shall not exceed 20% of net profit generated from business activities of the Company plus interest expenses and depreciation costs (EBITDA) arising within the period. This OL clarifies that interest expenses mentioned above is total interest expense arising in the period, regardless of expense incurred from related parties or from third parties.
In case that EBITDA is negative, total interest expense in period is considered as non-deductible expense for tax purpose.
Official Letter No. 4996/ CT-TTHT (OL 4996): CIT treatment of 13th salary at change of fiscal year-end
Hanoi Department of Taxation issued OL 4996 on 30th January 2018, answering a specific question asas follows:
This OL handles a case where a Company changed its fiscal year-end from 31st December to 30th September in 2017 and accrued 13th salary in 2017. The tax period of this transition year was from 1st January 2017 to 30th September 2017. Prior to the change, the company’s tax period was from 1st January to 31st December.
This OL states that when the company accrued 13th salary for the year 2017 but has not yet paid to its employees by the deadline of submitting CIT finalization (in this case,. 30 December 2017), this expense is non-deductible for the tax year 2017.
In January 2018, when the Company pays the 13th salary to its employees, this expense becomes deductible expense for tax year 2018 (from 1st October 2017 to 30th September 2018), under the condition that the company has adequate evidences as described by law.