Legal news on Feb 2014

I. ENTERPRISE - INVESTMENT
New Decree on re-registration, conversion of enterprises with foreign owned capital.
On December 21, 2013, the Government issued Decree No 194/2013/ND-CP on re-registration, conversion of enterprises with foreign owned capital and renewal of investment license of investment projects in the form of business cooperation contract.

Accordingly, enterprises with foreign owned capital which were granted investment license before July 1, 2006 shall have right to decide the time to re-register, convert of the enterprises and organize the operation management in accordance with the provisions of Law on Enterprises, Law on Investment and this Decree.

For enterprises with foreign owned capital which were granted investment license before July 1, 2006 and their operation term expired in accordance with the investment license after July 1, 2006; however, they have not carried out the procedures for dissolution yet, but they meet the certain conditions prescribed in this Decree, if they have requested to continue their operation, they shall have to re-register before February 1, 2014. After such duration, if the enterprises do not re-register, they shall be required to carry out the procedures for dissolution, termination their activities in accordance with the provisions of law.

For parties participating in business cooperation contracts shall have the right to register for renewal of investment license to be granted investment certificate and carry out investment activities in accordance with the provisions of Law on Investment.
This Decree took effect as from January 15, 2014, except for the provisions on re-registration of enterprises with foreign owned capital which were granted investment license before July 1, 2006 and their operation duration expired after July 1st 2006; however, they have not carried out the procedures for dissolution yet and they have requested to continue their operation implemented as from January 1, 2014.

II. TAX
Amended Law on Corporate Income Tax
On June 19, 2013, National Assemblely passed Law No. 32/2013/QH13 amending and supplementing a number of articles Law on Corporate Income Tax No.

14/2008/QH12 dated June 3, 2008. Accordingly, the corporate income tax rate of 22% (it was 25% in previous law) shall be applied as from January 1, 2014, except for the following cases:

 The enterprises with the annual total turnover not in exceeding of 20 billion Vietnam dong shall be entitled to the tax rate of 20% (Turnover as the basis for determining if an enterprise is entitled to the tax rate of 20% in this clause means turnover in the immediately preceding year) as from July 1, 2013.

 The corporate income tax rate to activities of prospecting, exploring, exploiting petroleum, gas and other precious and rare natural resources in Viet Nam is between 32% and 50%, depending on each project or business establishment.

 Other tax rate incentive cases provided by law.
For cases which are allowed to apply tax rate of 22% provided above shall be entitled the tax rate of 20% as from January 1, 2016.

III. LABOR - WAGES
New provision on region-based minimum wage levels.
On November 14, 2013, the Government issued Decree No. 182/2013/ND-CP providing for region-based minimum wage levels for laborers working for enterprises, cooperatives, cooperative groups, farms, households, individuals and labor – employing agencies and organizations.

Accordingly, the region-based minimum wage levels for laborers working for enterprises, cooperatives, cooperative groups, farms, households, individuals and labor – employing agencies and organizations shall be applied as from January 1, 2014 as follows:

 Region I: VND2,700,000/month
 Region II: VND2,400,000/month
 Region III: VND2,100,000/month
 Region IV: VND1,900,000/month

The above region-based minimum wage levels will be applied to laborers who have not undergone vocational training, doing the simplest works in normal working conditions. For laborers who have undergone vocational training (including laborers who are trained by enterprises), the lowest wage level payable to laborers must be at least 7% higher than the region-based minimum wage levels. This Decree takes effect as from December 31, 2013, replaces Government’s Decree No. 103/2013/ND-CP dated December 4, 2012.

The new region-based minimum wage levels to be applied in Ho Chi Minh City
On December 13, 2013, Social Insurance of Ho Chi Minh City issued Dispatch No. 4892/BHXH-THU guiding the implementation of paying social insurance and health insurance according to the new region-based minimum wage levels.

Accordingly, the minimum wage and salary levels for laborers working for enterprises operating in Ho Chi Minh City shall be applied from January 1, 2014 as follows:

 VND2,700,000/month – applied for all districts (from District 1 to District 12) and Cu Chi District, Hoc Mon District, Binh Chanh District, Nha Be District.
 VND2,400,000/month – applied for Can Gio District

The above is the minimum wage level applied for laborers doing the simplest works in the normal working conditions. For laborers who have undergone vocational training (including laborers who are trained by enterprises), the minimum wage level provided in the contracts must be at least 7% higher than the region-based minimum wage levels. For laborers who have job titles or do heavy, noxious, dangerous works, the minimum wage level must be at least 5% higher; for laborers having job titles or doing especially heavy, noxious dangerous works, the minimum wage level must be at least 7% higher than the wage levels of jobs, works with the normal working conditions.

Term for submitting dossiers to change the wage levels of paying social insurance, health insurance for laborers: March 20, 2014 at the latest.

IV. FOREIGN EXCHANGE
Circular guiding on restricting the use of foreign exchange
On December 26, 2013, the State Bank of Vietnam issued Circular No. 32/2013/TT-NHNN guiding the regulations on restricting the use of foreign exchange in the territory of Vietnam.

According to new regulations, within the territory of Vietnam, all transactions, payments, listings, advertisements, quotations, evaluating and marking the price in the contracts, agreements and other similar forms (including converting or adjusting the price of goods, services in the contracts, agreements) must not be affected in foreign exchange except for certain specific cases provided by law.

This Circular took effect as from February 10, 2014
Regulations on restricting the use of cash
On December 31, 2013, the Government issued Decree No. 222/2013/ND-CP on cash payment.

According to the regulations of this Decree, some transactions shall not be paid in cash as from March 1, 2014:

 For securities transactions: securities transactions on the Stock Exchange and securities transactions registered and deposited at the Center of Stock Depository, not being via the transaction system of the Stock Exchange shall not be paid in cash.
 For enterprises’ financial transactions: transactions of capital contribution, purchase, transfer of capital contribution into enterprises shall not be paid in cash; borrowing and lending between enterprises that are not credit institutions shall not be in cash.

For the disbursement of loan amount of credit institutions, foreign banks’ branches in cash to clients must comply with the regulations of the State Bank of Vietnam.
This Decree replaces the Government’s Decree No. 161/2006/ND-CP dated December 28, 2006, providingon cash payment as from the effective date of this Decree.

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