Legal news on June 2014

I. REAL ESTATE
New regulations on mortgage of houses to be formed in the future
On April 25, 2014, the State Bank of Vietnam, the Ministry of Construction, the Ministry of Justice and the Ministry of Natural Resources and Environment issued Joint-Circular No. 01/2014/TTLT-NHNN-BXD-BTP-BTNMT guiding the procedures for mortgaging houses to be formed in the future under the provisions of Government’s Decree No. 71/2010/ND-CP dated June 23, 2010 guiding the implementation of the Housing Law. Accordingly:

Types of houses to be formed in the future which are entitled to mortgage include commercial houses and social houses, particularly include condominium apartments and individual houses (including villas and attached house) built in housing construction investment projects.

Houses to be formed in the future which will be mortgaged at credit institutions must fully meet the following conditions:

 Having had technical designs for residential houses approved, foundation completely built; purchase and sale procedures completed and sale contracts signed with real estate enterprises according to the provisions of laws on housing or houses have been handed over to the buyers but Certificates have not yet issued by the State authorities under the provisions of laws.

 Being not subject to distrainment for judgment enforcement or for implementation of administrative decisions of the State authorities on houses that have been transferred to the buyers, but Certificates have not yet issued by the State authorities under the provisions of laws.

 Belonging to housing construction investment projects to which Certificates have been issued by the State authorities or decisions on land assignment or land lease have been issued by the State authorities to project investors in accordance with the provisions of laws on investment projects to build social houses.
Mortgagors will mortgage houses to be formed in the future only with credit institutions to borrow capital to buy house in housing construction investment projects of real estate enterprises.

In addition, this Circular provides the mortgage dossier, procedures of notarization of mortgage contracts and registration of mortgage of houses to be formed in the future.
This Circular takes effect from Jun 16, 2014 and replaces Joint Circular No. 05/2007/TTLT-BTP-BXD-BTNMT-NHNN dated May 21, 2007.


II. TAX
New regulations on invoices for sale of goods and supply of services
On March 31, 2014, the Ministry of Finance issued Circular No. 39/2014/TT-BTC guiding the implementation of Decree No. 51/2010/ND-CP dated May 14, 2010 and Decree No. 04/2014/ND-CP dated January 17, 2014 of the Government providing for invoices for sale of goods and supply of services. This Circular has the following notable contents:

There is no longer provision on export invoices. Therefore, when enterprises export goods, services overseas they must use value added tax invoices (applied to enterprises which pay VAT under the deduction method) or goods sale invoices (applied to enterprises which pay VAT under direct method or enterprises in non-tariff zones). From June 1, 2014, Tax agencies shall no longer receive Notices of issue of export invoices.

Enterprises, since obtaining tax codes, with charter capital of VND15 billion or more based on the capital actually contributed until the notice of invoice issue will be entitled to print invoices themselves (former provision was 1 billion or more).
Enterprises established from June 1, 2014 with charter capital of under VND15 billion being manufacturing, service enterprises which invest in purchase of fixed assets, machinery, equipment valued at VND1 billion or more and recorded on invoices of purchasing fixed assets, machinery, equipment at the time of Invoice issue notice will be entitled to print invoices themselves to use for their sale of goods and supply of services if they have fully met the conditions prescribed by this Circular.

Enterprises having high tax risk which are required to buy invoices within limited periods from tax authorities, but do not buy invoices printed to orders from tax authorities shall use invoices printed by themselves in the following forms:

Enterprises will access the websites of tax authorities (Tax General Department or Tax Department) and use the invoice self-printing software supplied by tax authorities to issue invoices for their sale of goods and supply of services.

There are 3 more objects which are required to buy invoices from tax authorities, including:

 Business organizations, enterprises paying VAT under the direct method by multiplying a percentage by their revenue;

 Enterprises using invoices printed by themselves, printed to orders with high tax risks.

 Enterprises using invoices printed by themselves, printed to orders have committed violations relating to invoices and been administratively sanctioned for tax evasion or tax fraud.

Newly established enterprises or enterprises using invoices printed by themselves, printed to orders which have committed violations will not be permitted to use invoices printed by themselves, printed to orders, enterprises having high tax risk that are required to buy invoices from tax authorities will have to report on their use of invoices monthly.

Enterprises, business organizations using invoices printed by themselves, printed to orders before June 1, 2014 but are not requested to buy invoices from tax authorities from June 1, 2014, are still entitled to print invoices by themselves, or use invoices printed to orders.

For self–printed invoices, invoices printed to orders, enterprises, business organizations have already conducted their Issue Notices in accordance with Circular No. 153/2010/TT-BTC dated September 28, 2010, Circular No. 64/2013/TT-BTC dated May 15, 2013 of the Ministry of Finance will continue the use.
This Circular takes effect from June 1, 2014 and replaces Circular No. 64/2013/TT-BTC dated May 15, 2013.

III. FINANCE - BANKING
Regulations of guarantee for small and medium enterprises’ loans at commercial banks.
On April 22, 2014, the Ministry of Finance issued Circular No. 47/2014/TT-BTC guiding the implementation a number of contents of the Prime Minister’s Decision No. 03/2011/QD-Ttg dated January 10, 2014 promulgating regulations of guarantee for small and medium enterprises’ loans at commercial banks.

According to the provisions of this Circular, Vietnam Development Bank is the guarantor for small and medium enterprises’ loans at commercial banks.

The conditions for small and medium enterprises to get guarantee for loans include:

 The investment project of such enterprise has been approved for loan extension by a commercial bank in writing and appraised and determined by Vietnam Development Bank an effective one and such enterprise has ability to repay the loan.

 Such enterprise has an equity for participating at least 15% in the total investment capital of the project and it is invested entirely in fixed assets, such capital must be reflected in its monthly or quarterly financial statements nearest to the time the application for guarantee is submitted and the enterprise must commit to use such loan for the project.

 At the time of application for guarantee, the enterprise has no bad debts at any credit institutions as well as at Vietnam Development Bank.

Scope of loan guarantee: Vietnam Development Bank may guarantee a part or the whole of enterprises’ loans at commercial banks but it will not exceed 85% of the total investment of projects, excluding working capital.
In case Vietnam Development Bank pays debts on behalf of enterprises, enterprises must then be mandatorily indebted to Vietnam Development Bank. Vietnam Development Bank shall base on business plans, financial status of enterprises to determine the mandatory payment terms. Interest rates on mandatory indebtedness shall be 150% of the loan interest rates applied to economic organizations by the guaranteed commercial banks for loans of the same terms at the time of mandatory indebtedness.
This Circular takes effect from June 6, 2014.

IV. RESIDENCE
New regulations on permanent residence registration in centrally-run cities.
On April 18, 2014, the Government issued Decree No. 31/2014/ND-CP detailing the implementation of a number of articles and measures to enforce the Law on Residence.

According to the provisions of this Decree, a citizen registering permanent residence in a centrally-run city must meet the following conditions:

 Having a lawful residing place in a centrally-run city

 Having continuous temporary residence duration in a centrally-run city of 1 year or more in case of registering permanent residence in a precinct or township under a centrally-run city, of 2 years or more in case of registering permanent residence in a district under a centrally-run city

 Place of registration for permanent residence must be the place of temporary residence.

Permanent residence registration in the inner district of Ha Noi city will be regulated by the Law on Capital and documents guiding the implementation of the Law on Capital.
Time for permanent residence registration is 12 months as from the date of moving to the new lawful residing place and all the conditions on permanent residence registration are met. Time for permanent residence registration of a child is 60 days as from the date the child’s birth is registered.

This Decree takes effect from June 15, 2014, replaces Decree No. 107/2007/ND-CP dated June 25, 2007 detailing and guiding the implementation a number of articles of the Law on Residence and Decree No. 56/2014/ND-CP dated May 24, 2010 amending, supplementing a number of articles of Decree No. 107/2007/ND-CP.


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