Tax payment grace period for imported materials remains unchanged: Domestic export producers have slammed the proposal to remove the 275-day grace period for tax payments on their imported materials and supplies, arguing that such removal would take them much more time to follow the procedures for importing each consignment of goods and the delay in customs clearance for imports would badly affect their production plans and cause them fined for late deliveries.
According to experts, costs to be borne by businesses that are required to obtain bank guarantees for late tax payment for their imports would rise around 0.5 per cent, a considerable rate since the profit-on-turnover ratio of these businesses is just 1 per cent.
Earlier, the Ministry of Finance, the drafter of the amended Tax Administration Law, proposed to remove the grace period to limit tax arrears, frauds and evasion. It planned to amend Article 42 so the Law would require taxes to be paid before customs clearance or goods release.
In response to businesses’ feedback on its proposal, on November 8 the Ministry reversed its proposal, asking the Government to continue giving a 275-day or longer grace period, as an incentive to promote export production, to taxpayers that directly produce exports, have been engaged in importing and exporting activities for at least two years, and commit no trade frauds, tax evasion or delay their tax or fine payment during that period.
Other businesses that are outsourced for foreign partners but fail to meet the above conditions still have to pay taxes before customs clearance for their imported materials or bank guarantees.
The Ministry also asked the State Bank to consider extending the repayment term of foreign-currency loans for export producers and exporters eligible for the grace period.
Ministry defends 10-per cent value-added tax rate: The Ministry of Finance has recently rejected calls of some National Assembly deputies to lower the value-added tax (VAT) rate, saying that a VAT reduction would not help businesses cut costs as VAT is imposed on consumers, not producers.
Some NA deputies said a cut of VAT from the current 10 per cent to 5 per cent would boost consumption and facilitate economic revival.
However, the Ministry held that the current 10-per cent rate was already low compared to other countries (88 countries impose a VAT of 12-15 per cent) and pointed out that none of them had waived or reduced VAT as a response to the economic slowdown.
With VAT reduction, the state authorities can hardly control the decline of product prices, said the Ministry’s spokesman.
All employee expenses expected to be income tax-free: The European Chamber of Commerce and Industry (EuroCham) recently recommended further eased requirements on bonuses and life insurance premiums for employees of foreign-invested enterprises to be regarded as reasonable expenses deductible upon calculation of corporate income tax.
As currently provided in the Ministry of Finance’s newly issued Circular No. 123/2012/TT-BTC, bonuses and life insurance premiums may be regarded as reasonable expenses only when they are mentioned in labor contracts or collective labor agreements with specific conditions for enjoying them and their levels. As a result, the exclusion of these amounts from taxable expenses requires cumbersome procedures.
Foreign-invested enterprises’ managers also proposed personal income tax exemption for life insurance premiums paid by these enterprises for their employees.
Regarding expenses covered by reward and welfare funds for employees, Finance Deputy Minister Do Hoang Anh Tuan affirmed that all expenses for employee benefits will be considered reasonable regardless of whether they are paid in cash with invoices (issued for production- and business-related activities) by domestic businesses for their employees’ summer holidays or given in kind by foreign-invested enterprises for their employees’ sports, entertainment or team spirit-building activities.
More effective ways of running state businesses discussed: In the process of discussing the draft law on public investment and models of management of state investment in business sectors, legal experts recommended that the State, in the capacity as the investor or owner of capital invested in state enterprises, should study applying separately or rationally combined three models of management of state enterprises existing around the world.
The first model basically facilitates the task assignment and power decentralization as provided in Government Decree No. 132/2005/ND-CP to take advantage of professional capacity of specialized state agencies in implementing state policies and regulations toward state enterprises. However, this model is unable to separate the function of owning state capital and assets from the function of state management of business operations, leading to intervention by state authorities in daily operations of state enterprises.
The second model suggests the establishment of a company to make financial investment with and trade in state capital, like the existing State Capital Investment Corporation (SCIC) in
This model may be combined with the third model which requires the founding of an independent agency to represent the state owner in managing state enterprises as well as state capital invested in business operation together with some state groups or corporations directly investing state capital and conducting certain business lines.
Commercial banks seek legal supports in handling loan security: Cumbersome civil procedures for liquidating loan security assets (for example, through public sale), especially real estate and land use rights, at commercial banks have somewhat inhibited the offsetting of risks of non-performing loans and caused losses to these lenders.
Another way for the mortgagee to recover loans after failing to reach agreement with the mortgagor is to initiate a lawsuit at court (Article 721 of the Civil Code) which is a costly and time-consuming process, not to mention another complicated procedural process for the civil judgment enforcement agency to hold auctions of security assets for debt recovery.
To facilitate the handling of loan security assets, commercial banks have recently proposed the State Bank to request ministries and local administrations to provide legal supports for completing legal status documents of security assets for quick handling in case of non-performing loans.
The Ministry of Justice should simplify regulations on public sale of loan security assets, especially those on enforcement of civil judgments involving real estate and land use rights; develop a national database on secured transactions and asset ownership and facilitate access by businesses, banks and state agencies to information on credit relations; and devise a mechanism for fighting the crime of forging papers to get loans (for example, land use right, house and land-attached asset ownership certificates) and examining civil liability of non-performing borrowers.
Secured transaction problems to be addressed in new laws: The Prime Minister has issued Directive No. 28/CT-TTg to instruct the improvement of the legal framework on secured transactions, with a view to facilitating the observance of the law on secured transactions and secured transaction registration.
The Prime Minister requests the Ministry of Justice, the State Bank and relevant agencies to regularly revise regulations on secured transactions and draft a law on secured transaction registration and a law on real estate registration in order to make the legal status of secured transactions and security assets more transparent.
He assigns the Ministry of Justice to coordinate with the Ministry of Natural Resources and Environment and the Ministry of Construction in preparing a pilot scheme on centralized registration of secured transactions through the computer network; and organizing an e-portal to answer businesses’ inquiries about secured transactions.
The Ministry of Justice must also coordinate with the Supreme People’s Court and the Ministry of Natural Resources and Environment in early providing guidance on the mortgage of land use rights and land-attached assets to secure the loan guarantor’s obligations; and issuing a joint circular to guide the handling of security assets, especially in case the securing parties shirk their obligations.
Pickups to enjoy two-percent registration fee: The Ministry of Finance has recently guided provincial-level Tax Departments in applying the uniform registration fee to pickups, requiring registry offices to base themselves on technical safety and environmental protection certificates issued by the Vietnam Register to these vehicles in calculating the registration fee rate, which must not exceed two per cent of their invoiced prices.
Other vehicles which are identified as passenger cars are still subject to a fee rate of between 10-20 per cent, depending on localities where they are registered.
However, the Ministry has provided no guidance on registration fee refund for pickups for which the registration fee had been paid at the 10-20 percent rate.
Pyramid selling activities to face harsher legal rules: The Competition Management Department of the Ministry of Industry and Trade has recently announced its proposal on some amendments to Decree No. 110/2005/ND-CP on management of multi-level sale in order to limit its negative consequences.
It recommended bigger escrow accounts and compulsory regular reports on multi-level sale activities to functional agencies to be made by multi-level sale companies upon expanding their business operations to localities other than their head office locations, and a ban on multi-level sale in an e-commercial environment.
It also informed that the country would not allow multi-level sale of such services as virtual (online) goods stalls, tourist and resort booking, etc., and therefore all multi-level sale companies providing such services would be outlawed.-