News Bulletin 40 - Week 4 November, 2020

As Vietnam has effectively put the Covid-19 pandemic under control, the economy is adjusting to a new normal, in which enterprises are scambling to find a new direction to sustain growth and rationalize operating costs at the same time. Last week, it’s notable that The General Department of Taxation (GDT) has sent a document to local press agencies, explaining the reasons behind the amendments of the regulation on temporary CIT (corporate income tax) payment stipulated in Decree 126 which worries businesses.

The past week spotlight

New regulation on temporary tax payments worries businesses

Photo by Vietnamnet.

The decree, guiding the implementation of the Tax Administration Law, to take effect on December 5, stipulates that the total CIT amount that enterprises advance in the first three quarters of year must not be lower than 75 percent of the amount they have to pay for the whole year.

If taxpayers underpay the tax amounts, they will be fined.

According to GDT, many enterprises do not observe strictly the regulations on CIT payments. They do not make temporary CIT payments based on the estimates of profits of the whole year, but only make payments in the Q4 payment period (January 30th of the next year).

The slow tax payments affect state budget balancing, and creates an unfair business playing field, where some businesses strictly observe the laws and others don’t.

See full details here

Let’s look at some other related financial and business news during the past week:

1. Law on electronic transactions to be amended

The General Department of Taxation (GDT) has sent a document to local press agencies, explaining the reasons behind the amendments of the regulation on temporary CIT (corporate income tax) payment stipulated in Decree 126.

The decree, guiding the implementation of the Tax Administration Law, to take effect on December 5, stipulates that the total CIT amount that enterprises advance in the first three quarters of year must not be lower than 75 percent of the amount they have to pay for the whole year.

See full details here

2. Vietnam attractive to overseas investment: Deputy Minister

More and more overseas Vietnamese have turned to their homeland, finding Vietnam to be an attractive destination for their investment, thanks to its effective containment of COVID-19, according to newly-appointed Deputy Minister of Planning and Investment Tran Duy Dong.

Dong has discussed with the press on Vietnam’s investment attraction policy for overseas Vietnamese, saying that the success in controlling the COVID-19 epidemic in Vietnam has contributed to increasing the reputation and safety of its investment environment, thereby encouraging overseas Vietnamese to return home to live, invest and do business.

As of October 2020, overseas Vietnamese in 27 countries and territories have invested in 362 projects in the form of FDI in Vietnam, with a total registered capital of US$1.6 billion.

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3. Japan–Vietnam cooperation in tech, digital transformation set to flourish

Despite disruption caused by the Covid-19 pandemic, the Vietnam – Japan relations have become even stronger.

In addition to traditional fields of cooperation between Vietnam and Japan, such as investment, trade, agriculture, education and training, the two sides are set to join hands in technology development and the digital transformation process in the coming time.

This was a sentiment shared by delegates at the Meet Japan 2020 conference held on November 25 in Hanoi, which served as a platform for Vietnamese localities and enterprises to search for potential partners in Japan in fields of trade, investment, agriculture, smart cities, and education, among others.

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4. 124 Vietnam national brands generate over US$60 billion

With more Vietnamese national brands, the country would be nearer to the goal of prosperity, Prime Minister Nguyen Xuan Phuc has said.

The combined revenue of 124 Vietnamese enterprises having their products recognized as national brands reached over VND1,400 trillion (US$60.6 billion) and paid VND200 trillion (US$8.66 billion) in taxes in 2019.

Additionally, these firms have created more than 470,000 jobs and raised VND137 trillion (US$6 billion) by exporting Vietnamese products to international markets.

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5. Continuing to provide advantages for US investors

As the United States and Vietnam celebrate 25 years of diplomatic relations, the partnership between the two is arguably at its strongest level, with growing trade and investment ties.

Mary Tarnowka, executive director of the American Chamber of Commerce in Ho Chi Minh City and Danang, shared with VIR’s Thanh Van her insight about US investment into Vietnam, especially in the context of a new administration being set to enter the White House.

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6. Investment funds to pour US$ 815 million in Vietnamese start-up businesses

Thirty-three investment funds that has pledged to pour US$ 815 million in Vietnamese innovation start-up businesses in the next five years.

The commitment was made at the Viet Nam Venture Summit 2020 (VVS) held on November 25 under the theme "Going Digital." 

Some typical investment funds are VinaCapital Ventures, 500 Startups, AlphaJWC, BeeNext, CyberAgent Capital, Do Ventures, FEBE Ventures, Genesia Ventures, Monk’s Hill Ventures, Insignia Ventures, Patamar Capital, Smilegate, Vietnam Investment Group, and Viet Capital Ventures.

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7. PM urges garment, footwear sectors to build brands, promote supply chain linkages

Hanoi - Prime Minister Nguyen Xuan Phuc asked the garment-textile and footwear sectors to promote the building of Vietnamese brands and supply chain linkages, and develop supporting industries during a working session with the sectors’ representatives in Hanoi on November 23.

Hailing their achievements, he said that the textile-garment and footwear industries play an important role, employing a huge number of workers, up to 4.3 million. Their exports account for a large proportion of the total national export turnover. In 2019, these two industries exported products worth 62 billion USD, equivalent to 24 percent of the country's total.

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8. German, Swiss and Israeli firms to invest $350 mln in Vietnam

German, Swiss and Israeli enterprises will invest $350 million in areas like digital tourism, digital startups, healthcare, and manufacturing of personal medical appliances in Vietnam.

Former Vice Chancellor of Germany Philipp Rosler made the remarks while meeting with Vietnamese Prime Minister Nguyen Xuan Phuc on Wednesday afternoon. He led a foreign business delegation, which is seeking opportunities in Vietnam.

Rosler said some investors plan to move their manufacturing plants from other markets to Vietnam. While they hold Vietnam’s business environment in high regard, the investors expect the Vietnamese government to remove restrictions relating to administrative procedures.

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9. Tax duties closing in for digital services

Vietnam’s ability to charge taxes from cross-border platforms may soon improve thanks to the Organisation for Economic Co-operation and Development’s new tax rules, focusing on expanding the country’s taxing rights under international laws.

While tax on digital platforms is once again featured in discussions fuelled by the National Assembly last week, the Organisation for Economic Co-operation and Development (OECD) is preparing to launch a blueprint in the middle of next year.

According to information released in October, participating countries like Vietnam could be able to broaden the right to tax business profits of cross-border digital companies following the international law where users of automated digital services (ADS) are located. ADS is defined to include the provision of a digital service over the internet or other electronic network with minimal human involvement.

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10. Ministry of Finance seeks to keep jet fuel tax low

The Ministry of Finance wants the environment tax rate on jet fuel kept at VND2,100 (9 cents) per liter through 2021 to support the aviation industry.

In July, the National Assembly’s Standing Committee had approved a cut in the tax from VND3,000 to VND2,100 until the end of 2020 to help airlines weather the impact of the Covid-19 pandemic.

The ministry has recently been soliciting opinions about maintaining this rate for another year. This would reduce the government’s revenues by VND860-960 billion, it estimated.

See full details here