10 Regulations with Significant Impact on Businesses Effective in 2018

1. Small and Medium Enterprises (SMEs) are exempted from corporate income tax

Law on Supporting Small and Medium Enterprises 2017 officially took effect on January 01, 2018, with many favorable regulations for small and medium enterprises.

Notably, there is a temporary exemption and reduction of corporate income tax as per the law on corporate income tax; concurrently, SMEs are also exempt from land levy following land law regulations.

2. Applying anti-dumping measures if there is economic damage

This is specified in the Foreign Trade Management Law 2017, also effective from January 01, 2018.

Imported goods into Vietnam with a dumping margin exceeding the stipulated threshold or posing a risk of economic harm to domestic production sectors are subject to anti-dumping measures.

3. Interest rate support and loan guarantees for enterprises involved in technology decoding

Enterprises investing in technology decoding activities, organizations, and individuals participating in technology decoding activities are provided with capital, loan guarantees, and loan interest rate support.

This content is based on the Law on Technology Transfer 2017 effective from July 01, 2018.

4. Criminal liability for the heads of enterprises violating public debt management

According to Clause 1, Article 9 of the Law on Public Debt Management, depending on the nature and extent of the violation, the head of the agency or organization may be subject to disciplinary actions or criminal prosecution if violations in public debt management occur.

Public Debt Management Law 2017 takes effect on January 01, 2018.

5. Allowing enterprises to invest abroad in petroleum activities

Enterprises are permitted to use capital for foreign investment in petroleum activities through the following forms:

- Foreign currency in accounts at permitted credit institutions or purchased from permitted credit institutions or from other legal capital sources as specified by law;- Vietnamese Dong in accordance with Vietnam's foreign exchange management laws;- Machinery, equipment, supplies, materials, fuel, finished goods, semi-finished goods;- Value of industrial property rights, technical know-how, technological processes, technical services, intellectual property rights, brand names.

This content is based on Decree 124/2017/ND-CP effective from January 01, 2018.

6. Applying tax incentives for automobile manufacturing and trading enterprises

Decree 125/2017/ND-CP amends Decree 122/2016/ND-CP on the Preferential Import-Export Tariff Schedule, List of goods and absolute tax rates, mixed tax, and out-of-quota import tax rates.

It stipulates a 0% preferential import tax rate for imported auto parts; and for passenger cars with up to 9 seats, absolute tax rates apply if the engine displacement is under 1000cc, and mixed tax rates apply if the engine displacement is over 1000cc.

For details, see Decree 125/2017/ND-CP effective from January 01, 2018.

7. Criminal prosecution for enterprises evading tax and social insurance, health insurance contributions

Starting from January 01, 2018, enterprises will face criminal prosecution for acts such as tax evasion or evading social insurance, health insurance contributions for employees.

Depending on the severity, the maximum penalty for tax evasion is 10 billion VND, and for evasion of social insurance, health insurance contributions, the maximum penalty is 3 billion VND.

This content is based on the Criminal Code 2015 effective from January 01, 2018.

8. Applying regular tax rates on imported goods

From January 01, 2018, the Regular Import Tariff Schedule will be applied as per the Appendix attached to Decision 45/2017/QD-TTg, replacing the tariff schedule in Decision 36/2016/QD-TTg.

9. Changes in social insurance contribution levels and calculation-based wages

The regional minimum wage for workers will be increased from January 01, 2018, thereby affecting the social insurance contribution levels for enterprises, workers, and the calculation-based wages for social insurance.

For details, see HERE.

10. Import-export goods list of Vietnam for 2018

The Ministry of Finance issued Circular 65/2017/TT-BTC, stipulating the list of import and export goods of Vietnam.

Circular 65/2017/TT-BTC is effective from January 01, 2018, replacing Circular 103/2015/TT-BTC.

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