Legal news on Aug 2014

I. ENTERPRISE - TRADING
New provisions on conditions of sea shipping and sea shipping support service business

On April 14, 2014, the Government issued Decree No. 30/2014/ND-CP providing the conditions on sea shipping and sea shipping support service business
According to the provisions of this Decree, in order to be granted a license of sea shipping business, enterprises must meet the following conditions:

 Having registered the sea shipping business line.

 Having professional units to perform the following tasks: safety control, maritime security, seagoing vessel operation and enterprise legal affair implementation.

 Persons appointed to be in charge of seagoing vessel operation, safety and security systems, and enterprise legal affairs must meet the conditions provided for by this Decree.

 Having capital or other assets at least equal to VND20 (twenty) billion if conducting international sea shipping business and VND5 (five) billion if conducting inland sea shipping business.

In order to be granted sea shipping support service business (sea shipping agent service and sea shipping towage service) licenses, enterprises must meet the conditions provided by this Decree. Enterprises conducting sea shipping towage service business must have at least 2 special – use tugboats. In addition, in order to maintain its business activities of sea shipping agent service/sea shipping towage service, enterprises must have insurance for professional liabilities of sea shipping agent service/sea shipping towage service or equivalent financial guarantee and have sea shipping agency contracts/sea shipping towage contracts for each specific shipment or in a specific time limit.

Foreign organizations, individuals are entitled to establish joint venture enterprises to conduct sea shipping support service business, in which the percentage of foreign investors’ capital contribution must not exceed 49% of the total charter capital of enterprises.

This Decree takes effect from July 1, 2014 and replaces Decree No. 115/2007/ND-CP dated July 5, 2007.

New regulations on the management of multi-level marketing activities.
On May 14, 2014, the Government issued Decree No. 42/2014/ND-CP on management of multi – level marketing activities.

According to the provisions of this Decree, enterprises wishing to register multi – level marketing business must have legal capital of at least VND10 billion and must deposit an amount equivalent to 5% of their charter capital but not less than VND5 billion to a commercial bank at the locality where the enterprise head office is located.

The deposit account shall be blocked by bank during the operational duration of enterprise and the deposit shall only be withdrawn, used upon a written acceptance from the authority issuing the multi – level marketing registration Certificate or when the issue of a multi – level marketing registration Certificate is refused.

A multi – level marketing registration Certificate shall be valid within 5 years from the signing date and could be renewed many times, with 5 years for each renewal. This Certificate shall be revoked in the cases provided by this Decree.

In addition, this Decree provides the cases of suspension, termination of multi – level marketing activities, conditions on multi-level marketing participants, responsibilities of multi – level marketing business enterprises…

This Decree takes effect from July 1, 2014, replaces Decree No. 110/2005/ND-CP dated August 24, 2005 on management of multi – level marketing activities.

II. TAX
New regulations on enterprise income tax
On June 18, 2014, the Ministry of Finance issued Circular No. 78/2014/TT-BTC guiding the implementation of Decree No. 218/2013/ND-CP dated December 26, 2014 of the Government providing and guiding the implementation of the Law on Enterprise Income Tax with the new points as follows:

Enterprises paying value-added tax (VAT) under direct method, trading goods, services that are subject to enterprise income tax where revenues can be determined by enterprises but costs, income cannot be determined, will declare and pay enterprise income tax based on the percentage of sale revenue of goods, services, as follows:

 Service (including deposit interest, loan interest): 5% (particularly 2% for education, health, art performance)

 Goods trading: 1%

 Other activities: 3%

If enterprises have suffered losses from the transfer of real estate, investment project, transfer the right to participate in investment projects during the tax period (except for projects of exploring, exploiting natural resources); such losses will be offset against the profits of business activities.

In case enterprises are dissolved, after the decisions on dissolution, if any real estate being fixed assets of enterprises is transferred, profits (interests) gained from such transfer of real estate (if any) will be offset against losses from business activities (including losses of previous years carried forward in accordance with the regulations) in the tax period when the transfer of real estate is conducted.

Additional condition on deductible expenses when taxable income is determined is enterprises must have non-cash payment evidences for invoiced expenses on each purchase of goods, services costing VND20 million or more.

Expenses on advertising, marketing, brokerage, commission… that exceed 15% of the total deductible expense shall not be considered deductible expenses when taxable income is determined (formerly 15% was applied for the first 3 years from the establishment date, 10% for the following years).

This Circular takes effect from August 2, 2014 and will be applied to enterprise income tax period from 2014 onwards. This Circular replaces Circular No. 123/2012/TT-BTC dated July 27, 2012 of the Ministry of Finance.

III. LABOR
Regulations on conditions, procedures for grant of license for employment service activities

On May 23, 2014, the Government issued Decree No. 52/2014/ND-CP providing for conditions, procedures for grant of licenses for employment service activities of enterprises operating in employment service. Accordingly:
In order to be granted a license for employment service activities, enterprises must meet the following conditions:

 Places where head offices, branches of enterprises are located must be stable and have a duration of at least 3 years (36 months) or more; if houses are owned by the persons who have registered such enterprises, dossiers applying for licences must have valid papers, if houses are rented, there must be lease agreements with terms of 3 years (36 months) or more.

 Having professional apparatus to perform employment service activities comprising at least 3 persons with college level or higher, full civil act ability, clear resume.

 Having made a deposit of VND300,000,000 at a commercial bank where the main transaction account of an enterprise is opened.

License for employment service activities is valid 5 years (60 months) to the maximum and can be renewed but will not exceed 60 months for each renewal.
In addition, this Decree provides procedures, competence for grant of licenses for employment service activities, rights and obligations of enterprises operating in employment service.

This Decree takes effect from July 15, 2014. Enterprises that have been granted licenses for employment service activities before July 15, 2014 shall continue to operate until the expiration of their granted licenses.

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