Viet Nam is the member of a number of FTAs having a remarkable effect

In the context of international trade as current, Viet Nam has been trying to access, negotiate and sign Free Trade Agreements with the states all over the world.

Vietnam’s effort must be mentioned from 1992 when Viet Nam joined in Treaty of Amity and Cooperation in Southeast Asia (TAC) and became Observer. After that, Viet Nam attended to annual ASEAN Foreign Minister’s Meeting. And in 1995, Viet Nam officially acceded to ASEAN and became the 7^th member of the organization.

Continue with the objective to strengthen the cooperation with other countries, in 1995, Viet Nam applied to join World Trade Organization (WTO). After 11 years of conducting the bilateral, multilateral negotiations and consultations, in 2006, WTO officially admitted Viet Nam to the organization. In 2007, National Assembly of Social Republic of Viet Nam ratified the participation of Viet Nam to WTO. Viet Nam became an official member of WTO from January 1^st 2007 and started to embark on the intensification, further promoting of international economic integration.

Beside Regional Trade Agreements, Free trade agreements (FTAs) are also becoming the trend  in globle in the future.Throughout the world, many governments have signed, are negotiating, or contemplating new bilateral, multilateral free trade agreements and investment agreements. And Viet Nam is not the exception of this trend. As of 2018, Vietnam has signed, implemented, and is negotiating total of 16 Free Trade Agreements (FTAs) both as ASEAN member and as independent party. 

Up to now, Viet Nam signed and implemented 10 FTAs, signed and now is waiting for ratification of 2 FTA, has just finished negotiating 1 FTA and is negotiating 3 other FTAs.

- Of the 10 FTAs that have been signed and implemented, 6 FTAs have been signed as ASEAN members (including AFTA, 5 FTAs between ASEAN and its partners China, South Korea, India, Japan, Australia and New Zealand), 4 FTAs signed as an independent party (Chile, Japan, Korea, Eurasia Economic Coalition).

- The two FTAs that have finished the negotiations are the FTA ASEAN with Hong Kong, and theComprehensive and progressive agreement for Trans- Pacific Partnership(CPTPP).

- Three FTAs being negotiated include the Comprehensive Economic Partnership Agreement (RCEP), the FTA with Israel and the FTA with the European Free Trade Association (EFTA including 4 states: Iceland, Liechtenstein, Norway and Switzerland).

- With respect to EU-Vietnam Free trade agreement (EVFTA), on December 1^st, 2015, the negotiation of the agreement has been concluded. On February, 1^st, 2016 the Parties released a written agreement. A new move of EVFTA has been unanimous. Accordingly EVFTA is separated into two agreements, one on trade and the other on investment. In the same day, the two Parties announced that the legal review of Trade Agreement finished. Although, with the Investment Protection agreement, both parties have just concluded the initial discussion.  

The most notable among FTAs in Viet Nam has to be mentioned are the Comprehensive and progressive agreement for Trans- Pacific Partnership(CPTPP) and EU-Vietnam Free trade agreement (EVFTA) because of the wide scope of commitment and the high preferential treatment. These two Agreements taking effect in the coming time are forecasted to strongly promote the economic development of Viet Nam especially in the field of import and export of goods and trade with foreign countries.

• Comprehensive and progressive agreement for Trans-Pacific Partnership (CPTPP)

CPTPP was officially signed in March, 2018 by 11 states including: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Viet Nam.

The CPTPP is seen as a strong message against the current protectionist trend in the world. This agreement will create one of the world’s largest free trade association with a market of 499 million people and the gross domestic product (GDP) of $ 10,100 billion, accounting for 13.5% of world’s GDP.

Under the CPTPP, Viet Nam committed to eliminate almost 100% of tariff lines, accordingly:

- 65.8% of tariff lines will have the tax rate of 0% right after the agreement comes into force.

- 86.5% of tariff lines will have the tax rate of 0% in the fourth year from the year that the agreement comes into force.

- 97.8% of tariff lines will have the tax rate of 0% in the eleventh year from the year that the agreement comes into force.

- The remained goods were committed to eliminating import duties with the schedule of maximum elimination of tariff duties in the sixteenth year or following the tariff rate quotas.

The CPTPP will come into force if at least 6 member states or half of CPTPP’s members have approved the Agreement. As of August 2018, 3 member states have approved CPTPP being Japan, Mexico and Singapore. Viet Nam is scheduled to approve CPTPP in October 2018.

• EU-Viet Nam Free Trade Agreement

The main field of commitment under EVFTA includes: Trade of goods, Rules of Origin, Customs administration and trade facilitation; Sanitary and phytosanitary measures (SPS); Technical barriers to trade (TBT); Trade remedies (TR); Cross-border trade in services; Investment; Competition; State-owned enterprises; Government procurement; Intellectual Property; Sustainable development (comprising environment and labor); Legal issues; Cooperation and capacity building.

Under EU-Viet Nam Free Trade agreement, EU committed to giving preferential treatment on the tariff for goods from Viet Nam following the schedule as below:

- Eliminate the tariff right after the Agreement comes into force with 85.6% of tariff lines equivalent to about 70.3% of Vietnam’s current export turnover to EU;

- After 07 year, EU will eliminate tariff with total 99.2% of the tariff lines, equivalent to 99.7% Vietnam’s current export turnover to EU;

- For about 0.8% remained tariff lines, EU will give Viet Nam with the import duties in tariff rate quotas of 0%

Recently, Prime Minister Nguyen Xuan Phuc has had a meeting with Bernd Lange, Chairman of Committee of International Trade of European Parliament (INTA) visiting Viet Nam. The two Parties said the documents of the Trade agreement are being completed by the authorities of Vietnam and the EU in order to soon sign the agreement by the end of this year.

The impact of Free Trade Agreements to Viet Nam

The Free Trade Agreements that Viet Nam has joined and implemented helped raise import, export turn over, attracting more foreign direct investment (FDI). Lots of foreign investors have had the plan to invest in Vietnam’s market with the total value of registered FDI capital is $307.86 billion with 23,737 projects (Statistical data as of July - 2017 published by the Ministry of Planning and Investment).

By the end of 2017, the implemented capital of foreign direct investment is estimated $17.5 billion, increasing by 10% over the same period of 2016 and hitting the record in the past 10 years. In 2017, there had 05 projects granted for investment certificate with the worth of billion dollars.

After joining ASEAN and WTO and after signing and implementing the FTAs with other countries, Vietnam's export and import activities have seen a lot of changes in the structure of commodities and in particular the trade balance has shifted from a heavy deficit to a relatively small deficit and surplus in recent years. The economic growth of Viet Nam in 2017 is remarkable with the total turnover of export and import goods exceeded 400 billion USD.

Chart: Exports, imports, trade balance of goods in Vietnam period 2005-2017

Source: General Department of Customs

Foreign transactions of Viet Nam are also recognized through the ranking of trade in goods of Viet Nam over the year. If export and import of goods of Viet Nam respectively ranked 50^th and 44^th in 2006 all over the world, in 2015, export increased by 23 levels, ranking at 27^th while import also increased by 16 levels in the total number of countries and territories around the world.

Moreover, with the great growth of Viet Nam’s economy in 2017, World Trade Forum ranked competing capability of Viet Nam at 55/137 increasing by 5 levels; World Bank ranked the business environment of Viet Nam at 68/190 countries and territories, increasing by 14 levels. 

cd

The information about FTAs that Viet Nam signed and has come into force, signed but hasn’t come into force and the unsignedare presented in the following boards.

1. FTAs were signed and came into effect

No	Agreement	Date of signing	Place of signing	Country members	Effective date
1	ASEAN Free Trade Area (AFTA)	January 28th, 1992	Singapore	10 members of ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, The Philippines, Singapore, Thailand, Vietnam.	January 1, 1993
2	ASEAN- China Free Trade Area (ACFTA)	Framework agreement on comprehensive economic co-operation was signed on November 4th, 2002	Phnom Penh, Cambodia	ACFTA includes 11 members: 10 members of ASEAN and China	January 1st, 2010
		Agreement on Trade in goods (29/11/2004)	Laos		July, 2005
		Agreement on Trade in services (12/01/2007)	Cebu, The Philippines		July 1st, 2007
		Agreement on Investment (15/08/2009)	Bangkok, Thailand		February, 2010
3	ASEAN - India Free Trade Area	Framework agreement was signed on October 8th, 2003	Bali, Indonesia	11 members: 10 members of ASEAN and India	January 1st, 2010
		Agreement on Trade in goods ( 13/08/2009 and 24/10/2009)	Bangkok, Thailand and Hanoi, Viet Nam		January 1st, 2010
		Agreement on Investment  (12/11/2014)	Nay Pyi Taw, Myanmar		July 1st. 2015
		Agreement on service (13/11/2014)	Nay Pyi Taw, Myanmar		July 1st. 2015
4	ASEAN- Japan Comprehensive Economic Partnership (AJCEP)	April, 2008	At all member states	AJCEP includes 11 members: 10 members of ASEAN and Japan	December 1st, 2008, particularly Malaysia on February 1st, 2009
5	ASEAN- Korea Free Trade Area (AKFTA)	Framework agreement on comprehensive economic co-operation was signed on December 13th, 2005	Kuala Lumpur, Malaysia	AKFTA includes 11 members: 10 members of ASEAN and Korea	July 1st 2006
		Agreement on Trade in goods between ASEAN and Korea (24/08/2006)	Kuala Lumpur, Malaysia		July 1st 2006
		Agreement on Trade in services between ASEAN and Korea (21/11/2007)	Singapore
		Agreement on Investment between ASEAN and Korea (02/06/2009)	Jeju island, Korea
6	Vietnam- Japan Economic Partnership Agreement (VJEPA)	December 25th, 2008		Vietnam, Japan	October 1st, 2009
7	ASEAN- Australia/ New Zealand Free Trade Area (AANZFTA)	February 27th, 2009	Thailand	AANZFTA includes 12 members: 10 members of ASEAN , Australia and  New Zealand	January 1st, 2010
8	Vietnam- Chile Free Trade Agreement	November 11th, 2011	Honolulu, Hawaii, The United States	Vietnam, Chile	January  01st, 2014
9	Vietnam- Korea Free Trade Area (VKFTA)	May 5th, 2015	Ha Noi, Viet Nam	Vietnam, Korea	December 20th, 2015
10	Vietnam- Eurasian Ecconomic Union	May 29th, 2015	Kazakhstan	6 members: Vietnam, Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan	October 5th, 2016

2. FTAs were signed but have not come into effect yet

No	Agreement	Date of signing		Place of signing	Country members	Status
11	Comprehensive and progressive agreement for Trans- Pacific Partnership (CPTPP)	March 8th, 2018		Santiago Chile	CPTPP includes11 members: Canada, Mexico, Peru, Chile, New Zealand, Australia, Japan, Singapore, Brunei, Malaysia and Vietnam	Each Party is following its appropriate domestic procedures to ratify the Agreement
12	ASEAN- Hong Kong  Free Trade Agreement (AHKIA)		November 12th, 2017	Manila Philippines	AHKIA includes 11 members: 10 members of ASEAN and Hong Kong	Expected to take effect from January 01st 2019

3. FTAs not signed:

No	Agreement	Date of signing	Place of signing	Country members	Status
13	- Vietnam- EU Free Trade Agreement (EVFTA) - Invesment Protection agreement	The negotiations  was finished on December 2nd, 2015	Brussels, Belgium	Vietnam and the EU	This FTA has concluded the negotiation but not signed.
14	Vietnam- EFTA Free Trade Agreement	The negotiations were launched from May 2012		5 members includes Vietnam, Switzerland, Norway, Iceland and Liechtenstein	still under negotiation
15	Regional Comprehensive Economic Partnership (RCEP)	The negotiations were launched from May 9th, 2013		RCEP includes 16 members: 10 members of  ASEAN  and China, Korean, Japan, India, Australia, New Zealand	still under negotiation
16	Vietnam- Israel Free Trade Agreement	The negotiations were launched from December 2nd, 2015		Vietnam , Israel	still under negotiation

 

*****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

According to the Viet Nam Clean Energy Association, Viet Nam is one of the countries with the greatest amount of sun in the world's solar radiation map. On average, total solar radiation in our country ranges from 4.3-5.7 million kWh/m2. In the Central Highland and Southern Central, the number of sunshine hours is quite high, reaching 2,000-2,600 hours per year. Average solar radiation of 150 kcal/m2 lasts about 2,000-5,000 hours per year, with estimated theoretical potential of about 43.9 billion TOE.

Apart from natural conditions, enterprises also enjoy other benefits from the Government's approved policy. According to deision No. 11/2017/QD-TTg on incentives for the development of solar power projects in Viet Nam, effective from June 1, 2017 to June 30, this is as follows:

Incentives on investment capital and taxes

Mobilization of investment capital: Organizations and individuals participating in the development of solar electricity projects are entitled to mobilize legal capital from domestic and foreign organizations and individuals for investment in the implementation of solar power projects under the current law.

Import tax: Solar power projects are exempted from import duties on goods imported to create fixed assets for the project; complying with the current provisions of law on import tax and export tax on goods for production of projects being raw materials, supplies and semi-finished products which can not be produced at home.

Enterprise income tax: The exemption and reduction of enterprise income tax for solar power projects shall be the same as for projects in the field of investment incentives under the current tax law.

Land incentives

Firstly, solar power projects, transmission lines and transformer stations for connection to power grids shall be exempted from or be entilted for reduction in land use levies, land rents and water surface rents in accordance with the current law for projects in the field of investment incentives.

Secondly, based on the planning approved by the competent authorities, provincial people's committees shall create conditions for arranging land funds for investors to carry out solar power projects. Compensation and support for ground clearance shall comply with the current land law.

 Electricity selling price

According to decision No. 11/2017/QD-TTg, EVN is required to purchase all electricity from grid connected solar projects, the price of solar electricity for EVN will be 9.35 Uscent / KWh, significanty higher than the average retail price of $USD7.3 per kWh. Electricity prices are adjusted by the exchange rate of USD / VND (this price applies only to grid connected projects with the efficiency of solar cell, which is greater than 16% or module is greater than 15% .)

After the Government promulgated preferential policy for solar power, solar power has become a “fever”in Viet Nam. Investment in a few provinces extremely bustling. Especially in the South of Central Coast region which has great sunshine potential. Hundreds of projects of domestic and foreign investors are registered, the energy investment market is “hotter” than ever. Below are tables describing the status of solar power development in each province and an detailed list of current solar power projects: 

Table . Status of solar power development of each province in Viet Nam

	province	Number of investor	Number of project	Installed capacity(MW)	Status
					In operation	Under construction	Investment project	Under consideration
1	An Giang	1	1	210			1
2	Ba Ria – Vung Tau	1	1	100			1
3	Bac Lieu	1	1	300			1
4	Binh Duong	1	1	0.5	1
5	Binh Dinh	1	7	621.63		1		6
6	Binh Phuoc	1	1	200			1
7	Binh Thuan	15	15	888.72			15
8	Dak Lak	1	5	3467			1	4
9	Dak Nong	1	5	324.4			1	4
10	Dong Nai	1	1	126			1
11	Gia Lai	2	2	98			2
12	Ha Tinh	2	2	80			2
13	Hau Giang	2	2	71			2
14	Hue	1	1	35		1
15	Kon Tum	1	1	49			1
16	Khanh Hoa	10	12	712.765			12
17	Long An	1	1	100			1
18	Ninh Thuan	15	16	1063		5	11
19	Phu Yen	4	5	449.104			5
20	Quang Binh	1	1	49.5			1
21	Quang Ngai	3	3	218.808		1	1	1
22	Quang Tri	2	2	79.5			2
23	Son La	1	1	30			1
24	Tay Ninh	5	9	774			9
25	Thanh Hoa	1	1	160			1
26	Vinh Long	1	1	49			1
	Total	76	98	8,937.57	1	8	74	15

Customers can contact us via company email for:

 Full report on solar power projects in Vietnam;

 Purchasing solar power projects in Vietnam;

 Investment on solar power projects in Vietnam

*****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

After 12 years of implementation, Competition Law 2004 reveals many limitations, no longer appropriate with the practical development of socioeconomic of the country. As the result, on June 12^th 2018, Competition Law 2018 was issued replacing Competition Law 2004.

Featured content of Competition Law 2018 is the separation of economic concentration from Anti-competitive practices. And the government now try to control the economic concentration. Economic concentration includes the following categories:

- Merger of enterprises;

- Consolidation of enterprises;

- Acquisition of enterprises;

- Joint venture between/among enterprises;

- Other categories of economic concentration as per the law.

Besides, if Competition Law 2004 just based on one and only factor being market share to determine prohibited economic concentration, the new Law regulates that the determination of economic concentration must base on the nature of the behavior which is substantial anti-competitive effects caused or probably caused by economic concentration. Assessment Factors includes: market share; competitive advantage brought about by economic concentration in the relevant market; the ability of enterprises after the economic concentration for removing or preventing other enterprises from market entry or expansion; etc

In addition, Competition Law 2018 regulates that the maximum fine for violation of economic concentration regulations shall be 05% of the total turnover of violating enterprises on the relevant market in the fiscal year preceding the year of violation. Reduce 5% compared to the last regulation.

For unfair competition practices (defined as practices of enterprises’ competition acts performed by enterprises against the principles of good faith, honesty, business norms and standards, which cause or may cause damage to the legitimate rights and interests of other enterprises), new Law provides that the maximum fine for the violation of regulations on unfair competition shall be 2.000.000.000 (2 billion VNĐ). Unlike before, Competition Law 2004 stipulated generally that unfair competition practices shall be handled in accordance with the law on handling administrative violation.  

For other violations, the maximum fine shall be 200.000.000 VNĐ (2 hundred million VNĐ). Competition law 2018 will take effect on July 1^st 2019, contribute to ensuring the freedom of doing business, fair competition of entities on the market and enhance the national competitiveness. 

*****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

Technology transfer refers to the transfer of the ownership or the right to use a given technology from the party that has the right to transfer such technology to the transferee. As such, transferee will have the right to use all the skills, pieces of knowledge, technologies, production methods and product samples ... of the transferor.

Technology transfer shall be executed through Technology transfer Agreement, and this agreement must be concluded in writing or in any other forms of equivalent value. The agreement must be signed and sealed (if any) by the parties; all pages of the agreement or its appendixes must be initialed and sealed (if any).

Article 31, Law on Technology transfer, issued on June 9^th, 2017 and taking effects on July 1^st ,2018 provided that there have 3 cases of technology transfer that must be registered with competent authority on science and technology, including:

“(a) Transfer of technology from a foreign country to Vietnam;

(b) Transfer of technology from Vietnam to a foreign country;

(c) Domestic technology transfer with use of state funding or state budget, excluding cases where Certificate of registration of science and technology task outcomes is available”.

In order to apply the regulations in practice, recently, Decree no 76/2018/NĐ-CP of the Government has been issued, detailing and guiding the implementation of a number of articles of Law on technology transfer. This Decree took effects on the same day as the Law on Technology transfer. Specifically, The Decree regulated the responsibility of registration of technology transfer belongs to transferee in the case of transfer of technology from a foreign country to Vietnam and Domestic technology transfer. In the event of transfer of technology from Vietnam to a foreign country, the transferor shall on behalf of the parties, submit the dossier for registration of technology transfer to the agency competent to grant the Certificate of registration of technology transfer.

Besides, Decree no 76/2018/NĐ-CP also provides guidance for payment method and for transferor and transferee to determine the price for technology transfer. Accordingly, parties of technology transfer transaction can choose 1 in 5 payment methods, such as:

- Payment based on net turnover (determined as the total turnover from the sale of product or service generated by transferred technology minus deduction from turnover, including discounts on trade, selling price discounts and goods returned); or

- Payment based on profit before tax (determined as the total turnover minus total reasonable cost to produce the product, service on sale in which technology transfer is applied. Parties can agree to use the method of payment based on profit after tax);

...

Moreover, Law on Technology transfer 2017 is more open than the Law on Technology transfer 2006, accordingly, the old one regulated that in case the technology transfer transaction is executed in Viet Nam, the parties must make a contract in Vietnamese. But now, the language used in the agreement shall be agreed upon by the parties according to Law on Technology 2017 and the Law don’t require agreement in Vietnamese anymore. 

 

*****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

One of the highlights of Decree no 81/2018/NĐ-CP issued on 22^th May 2018 is the regulation on removing the promotional ceiling for centralized promotions. Accordingly, Article 6 of this Decree stipulated that in case of organizing the centralized promotions (hour, day, week, month, promotion season), the maximum value of goods and service used for sales promotion can be 100%.

The centralized promotions according to this regulation include:

- Promotions presided over the organization by the state agencies (at central and province level) for a specified period of time, in the form of hour, day, week, month, promotion season with the aim to implementing targeted economic development policies of the country and locality. 

- Sales promotion campaigns on holiday, new year occasion in accordance with labor law including:

• Lunar New Year: 30 days right before the first day of lunar year;
• Other holidays. The promotion duration of each promotion on the occasion of holiday must not exceed the holiday time corresponding with the holiday in accordance with labor law.

Maximum limit of 100% of the value of goods and services used for sales promotion shall also be applied to the sales promotion activities within the framework of trade promotion activities, programs decided by the Prime Minister. 

For the promotions in form of price discount in case of centralized promotions mentioned above (hour, day, week, moth, promotion season), the maximum price discount for promoted goods or services is 100%. This maximum price discount shall be applied with the promotion activities within the framework of trade promotion activities, programs decided by the Prime Minister.

Other than the above mentioned cases, sales promotion limit and price discount limit must not exceed 50% of the price of one unit of promoted goods and services before sales promotion.

Nonetheless, there have 3 cases not applying the maximum discount limit being:

- Goods and services subject to the State’s price stabilization policy;

- Fresh food;

- Goods and services in the event of bankrupt, dissolution or change of business location or industry production, business.

Moreover, Decree no 81/2018/NĐ-CP regulated that “Money can be used as goods and services used for sales promotion” except for sales promotion cases in form of: Giving sample goods or providing sample services free of charge to customer for trial use; Sales promotion in form of price discount; Sale of goods or provision of services together with goods purchase or service use coupons. 

Starting from 15^th July 2018, when this Decree comes into effect, prohibiting organizations and individual from using alcohol in sales promotion, including those used for sales promotion and promoted goods. If the current regulation only restricted the use of alcohol or beer as gifts for under-18 persons; alcohol of an alcoholic volume of 30^o or higher, new regulation of Decree 81 enumerated alcohol into category not used for sales promotion nor promoted.

 

*****

Please contact us for any further concerns related to the topic of this article.

 About Us

 Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

In the near future, business enterprises and organizations would not be entitled to use self-printed invoices.

The above information is one of the content in the Draft Decree on invoices for sale of goods and provision of services recently announced by the Ministry of Finance which is likely to be enacted in 2019 in replacement of Decree no.51/2010/ND-CP and Decree no.04/2014/ND-CP. The key aim of this Draft Decree is to develop and expand the use of electronic invoices(e-invoices) by restricting companies from using self-printed paper bills.

Decree no 59/2018/ND-CP was issued on 20^th April 2018 amended and supplemented some regulation relating to the customs procedures, examination, supervision and control procedures. From the time Decree no 59/2018/NĐ-CP comes into effect on 5^th June 2018, enterprises will have to pay attention to some key changes about customs procedures as following:

Firstly, about examining and defining dutiable value

According to current regulation, when Customs have enough basis to reject the dutiable value reported by the importer, Customs will notice the importer for amending and supplementing in case of having the agreement of the importer. If importers do not agree, the value consultation will be closed at importation and transferred to customs audit. However, the authority of Customs will be strengthened by Decree no 59/2018/ND-CP. This new decree stipulated that “If there have enough basis to reject the reported dutiable value, Customs will notice, propose importer to amend within 5 business days maximum from the date of notification and release goods as regulated. If the importer made the supplement, Customs will release the goods as regulated. But if importers do not make the supplement at the end of the time-limit, Customs will start defining the dutiable value in accordance with Law on tax Administration to release the goods”. As the result, importers whether agree or not will have to make the supplement if Customs have enough basis to reject the reported dutiable value. Customs will define the dutiable value in case importers do not make the amendment.

Secondly, supplement the regulations about the method to define dutiable value

Decree no 59 provided that dutiable values will be determined in the order of 4 methods:

   (i) Selling price of goods to the export border gate

   (ii) Selling price of exactly the same or similar exports in the dutiable value data base after converting to selling price of goods to the export border gate at the latest time compared with the date of registration of export declarations of the goods being valued;

   (iii) Selling price of exactly the same or similar exports in Viet Nam market after converting to selling price of goods to the export border gate at the latest time compared with the date of registration of export declarations of the goods being valued;

   (iv) Selling price of exports collected, summarized and classified by Customs

Moreover, Decree no 59 also supplements the regulation on determining the export border gate. Specifically, for sea transport, air transport; rail transport; road transport, inland waterway, export border gate is loading port where goods are loaded onto means of transport stated in customs declaration; loading place at international rail border gate stated in customs declaration; border gate exporting goods out of Viet Nam territory stated in sale of goods contract or other relating receipt, respectively.

Thirdly, amending, supplementing cases needed to have the production plant, capacity checks of export production or processing manufacturers

Manufactures needed to be checked according to Decree no 59 are:

- Organizations, individuals importing goods to process, produce exports for the first time;

- Changes of business information on address, product, size, production capacity without notification to Customs;

- Organization, Individual importing goods for export processing with foreign party but sub-contracting the whole processing contract to other parties;

- Storage of materials, supplies, imported components and exported products at places other than those notified to Customs;

- Check based on Customs’ risk management.

*****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

From 1^st January, 2018, employees working under the employment contract from 1 month to less than 3 months will be included in the participants of compulsory social insurance. The supplement of this kind of participant aims to create the equality between short-term form and long-term form employment, contributes to raise awareness of the community about participating in the social insurance, creates the sense of self-security for all employees.

Previously, Decree no 141/2017/NĐ-CP substituting Decree no 153/2016/NĐ-CP stipulated the region-based minimum-wage applied to employee working under labor contract. Recently, on 15^th May, 2018, Government issued the Decree no 72/2018/NĐ-CP on the base salary applied to cadres, civil servants, officials and armed forces superseding Decree no 47/2017/NĐ-CP. Accordingly, the base salary will rise from 1.300.000 VNĐ to 1.390.000 VNĐ starting on 1^st July, 2018.

Base salary is used as the basis for salary levels calculation in the pay-sheet, allowance levels calculation and the implementation of other benefits in accordance with the law. Base salary is also used to calculate the operating cost level, living expenses, deductions and another benefits based on the base salary.

The employees applied the new base salary from 1^st July, 2018 includes:

-Cadres, civil servants from central to district level; Cadres, civil servants of commune level in accordance with Law on cadres and civil servants 2008;

-Public employees working in the public non-business units in accordance with Law on public employees 2010;

-Employees working under wage-rate labor contract according to Decree no 204/2004/NĐ-CP on salary regimes for cadres, civil servants, officials, and armed forces, including:

1. Employees working under labor contract in the agencies, units of Party, Government, social and political organization stipulated in Decree no 68/2000/NĐ-CP on the application of contractual regime to a number of jobs in the state administrative agencies and public service units;
2. Employees working under labor contract approved by the competent authority in the public non-business units in accordance with the regulation of the Government and The Prime Minister;

-Employees working as regular staff in the association funded by state budget regulated in the Decree no 45/2010/NĐ-CP on the organization, operation and management of associations;

-Officer, professional military personnel, non-commissioned officers, soldiers and workers, defense officials and contract laborers of the Vietnam People's Army;

-Officer, non-commissioned officers who earn wage, non-commissioned officers, duty combatants, police workers, contract employees of Public Security Force;

-Employees working in the cipher organization;

-Employees working as non-specialized workers in commune level, in hamlet, civil group.

Congress approved the adjustment of base salary at the Resolution of the draft state budget 2018 at meeting at the end of year 2017. According to the Statistic report about the non-official employments, Viet Nam now has over 18 billion employees working in the non-official sector – accounting for 57% of total nonagricultural employment across the country. These are the employees which are not included in the compulsory social insurance and it’s necessary to exploit and encourage them to participate in the voluntary social insurance. Participating in the social insurance system not only help employees have a better life when old, decreasing ability to work but also expand and enhance the work effectiveness of social insurance system. The monthly premium that the employees have to pay for retirement funds and death grant of voluntary social insurance is 22% of employee’s monthly chosen income. The minimum premium is equal to the level of poverty standard in rural area and the maximum is 20 times the base salary.

The adjustment of base salary is going to be affect not only the employees working in government sector, in the Party organizations,... but also affect the employees working in nonofficial sector and participating in voluntary social insurance. With the rise off base salary to 1.390.000 VND, the highest voluntary social insurance premium will rise accordingly. The higher premium that employees can pay, the higher pension they gain when retired.

 *****

Please contact us for any further concerns related to the topic of this article.

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam. For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure. You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.

 

The Government has just issued Decree No. 09/2018 / ND-CP detailing the Commercial Law and Foreign Trade Management Law regarding the purchase and sale of goods and activities directly related to the purchase and sale of goods of foreign investors, economic organizations with foreign owned capital in Vietnam in replacement of Decree 23/2007 / ND-CP. Particularly, this decree was issued on 15/01/2018 and came into effect on the same day.

Compared with Decree Decree 23/2007 / NĐ-CP, Decree 09/2018 / ND-CP contains many new advancements and also explains more clearly the trading activities and related activities. Direct purchase of goods by foreign investors, economic organizations with foreign owned capital in Vietnam. In addition, many new directions are more favorable for foreign investors and foreign invested enterprises to carry out business activities related to trading activities and activities which are directly related to the purchase of goods . In the following, the Asian Business Consulting Company would like to point out three main new points of Decree No. 09/2018 / ND-CP compared to Decree No. 23/2007 / ND-CP as follows:

Expanding the granting of business licenses to foreign investors

This is a new point in the Decree 09/2018 / ND-CP on trading activities and activities related directly to the purchase and sale of goods of foreign investors, economic organizations with foreign owned capital in Vietnam.

Accordingly, in addition to the investors belonging to the countries and territories participating in the treaties to which Vietnam is a member, which commit to open the market for trading activities, the following subjects, if satisfying the conditions, shall also be granted license:

- Foreign investors not belonging to countries or territories participating in treaties to which Vietnam is a contracting party;

- Foreign investors belonging to countries or territories participating in the treaties to which Vietnam is a contracting party but have no commitment to open with the goods or services they wish to trade.

The competence to grant business licenses and permits for setting up retail establishments

For business licenses, if Decree No. 23/2007 / ND-CP stipulates that provincial People's Committees are responsible for granting business licenses, Clause 1, Article 8 of Decree No. 09/2018 / ND-CP stipulates Ministry of Industry and Trade where the foreign-invested economic organizations are headquartered shall grant, re-grant, adjust, extend and withdraw their business licenses.

Consultation with the Ministry of Industry and Trade, if the Decree 23/2007 / ND-CP, the competent agencies are granted business licenses after obtaining the written approval of the Ministry of Trade (now the Ministry of Industry and Trade ), the Decree 09/2018 / ND-CP narrowed the scope of cases that need consultation with the Ministry of Industry and Trade. Accordingly, the consultation with the Ministry of Industry and Trade prior to the issuance of the amended business license shall be applied to rice products; sugar; photographic items, books and magazines, and consideration of licensing the implementation of the retail distribution right in the form of supermarkets, mini supermarkets and convenience stores and the Ministry of Industry and Trade shall receive comments before granting to amend business licenses with the activities including: Providing logistics services, except for the sub-sectors of logistics services which Vietnam has committed to open markets in treaties to which Vietnam is a contracting party; Leasing of goods, excluding financial leasing; except for the leasing of construction equipment with operators; Providing trade promotion services, not including advertising services; Providing commercial intermediary services; Providing e-commerce services; Providing services for organizing goods and services.

For licenses for setting up retail establishments, Decree 23/2007 / ND-CP stipulates that the establishment of additional retail outlets outside the first retail outlet shall be decided by the provincial People's Committee under the guidance of the Ministry of Trade. (now the Ministry of Industry and Trade). Collect comments from the Ministry of Industry and Trade prior to granting or adjusting the permit to set up a retail establishment.

The concept of wholesale and retail is clarified

Regarding the wholesale concept, Decree No. 23/2007 / ND-CP stipulating wholesale is the activity of selling goods to other traders or organizations; Does not include direct sales to end consumers.

The new Decree clarifies that "merchants and organizations" purchase goods in wholesale activities, which are wholesalers, retailers and other organizations; Excludes retail operation.

Regarding the retail concept Decree No. 23/2007 / ND-CP, retailing is the sale of goods directly to end consumers.

The new decree specifically explains end consumers as individuals, households and other organizations for use for consumption purposes.

Besides the 3 main new points, Decree 09/2018 / ND-CP also contains some new points as follows:

1. For the export, import or wholesale distribution domain, which had to have the business license in the past , now is not required except in cases where the product is lubricating oil according to the provisions of Point b, Clause 4, Article 9, previously prescribed. Decree No 23/2007 / NĐ-Cp requires license and approval of Ministry of Industry and Commerce;

2. According to Decree 23/2007 / ND-CP, retail activities previously must apply for a business license issued by the Ministry of Industry and Trade. However, according to Decree 09/2018/ ND- CP, recently they only need to apply for a business license at Department of Industry and Trade and mustseek the opinion of the Ministry of Industry and Trade if they are rice products; sugar; photographic items, books and magazines, and consideration of licensing the implementation of the retail distribution right in the form of supermarkets, mini supermarkets and convenience stores.

3. Time limit is reduced to 10 days in case it is not need consultation with the Ministry of Industry and Trade, in case of consulting the processing time is 28 days, according to the Decree No. 23/2007 / ND- CP, the total duration of such 45 days has been reduced by 17 days;

*****

Please contact us for any further concerns related to the topic of this article.       

About Us

Asia Business Consulting is a boutique consulting firm specializing in corporate establishment, legal and business advisory, tax and payroll compliance, HR administration, market research to multinationals investing in Vietnam.
For further information or to contact the firm, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or download the company brochure.
You can stay up to date with the latest business and investment news in Vietnam by subscribing for our newsletters.