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Updates in PIT conditions for applying family relief, rewards to encourage efficient performance and PIT reduction when working in economic zones

In Grant Thornton’s recent Private Equity Survey the low level of Corporate Governance retained it’s ranking as the second issue of most concern to PE investors ranking just behind transparency. These two have ranked as the 2 most common concerns in most of the Grant Thornton PE surveys over the last few years, with little improvement.

Through the long process of formation and development, the bond market in Vietnam has been growing in both depth and scale, proving its role as a medium for long-term capital mobilization, in the economy, as well as addressing the shortfall of the State budget.

Private Equity investment in Vietnam remains a significant driver behind Vietnam’s economic growth. The sentiment expressed by those operating in the Private Equity sector has an important impact on the economy as a whole, which this survey seeks to measure.

In the 16th survey on the Private Equity sector, carried out by Grant Thornton Vietnam, in March 2017, the majority of respondents (78%) were positive about Vietnam’s economy and the economic outlook.

In this month’s newsletter, Grant Thornton Vietnam will provide updates, with regard to tax, customs and contracts with construction contractors for your reference as follows: 1.Corporate income tax incentives on interest from deposits, proceeds from defective materials, fines and compensation. 2.Setting production norms for all raw materials used for processing or manufacturing for export. 3.Customs procedures for handing over construction to Export-processing enterprises. 4.Handling breaches of contracts by members in the construction contractor partnership.

At last the Vietnamese authorities are waking up to the importance of Travel and Tourism as an economic sector and its growing contribution to GDP. In 2016 international visitor arrivals reached 10 million for the first time a growth of 26% over 2015. Domestic tourism also continued its rapid growth with over 63 million domestic travelers. The top 5 inbound countries are China ( 2.7 mn +51%); Korea (1.5 mn + 38%); Japan (0.74 mn + 10%); USA (0.550 mn +12.5%) Taiwan ( 0.507 mn + 15.8%). As can be seen China, Korea and Japan account for 50% of inbound foreign arrivals.

Much has been written and discussed about the impact of the demise of the Trans Pacific Partnership on foreign direct in Vietnam. With the first quarter statistics on FDI now available we can confidently say that there has been no significant impact on FDI.

1. Value Added Tax (“VAT”) and Personal Income Tax (“PIT”) declaration for individuals doing business under Business Cooperation Contracts (“BCC”) with Uber. 2. Tax and tax administration regulations on the operation of Foreign-Based Companies which are running businesses in the field of e-commerce or bookings/reservations, in Vietnam.

On February 24, 2017, the Vietnam Government issued a new transfer pricing decree—Decree No.20/2017/ND-CP (the ‘‘decree’’)—which is effective from May 1, 2017. The decree replaces the existing transfer pricing regulations and provides new compliance requirements aligned with the concepts and principles from the Organization for Economic Cooperation and Development (‘‘OECD’’) guidelines and Base Erosion and Profit Shifting (‘‘BEPS’’) framework.

The region accounts for 90% of the nation’s coffee growing area and over 90% of the country’s beans, however most of the production is Robusta with very little Arabica and although Vietnam is the world’s second largest coffee producer it is not well known internationally because Robusta is generally blended with a loss of identity. The central highlands has really failed to attract foreign investment of any real magnitude benefiting from only US$ 3.5 billion of foreign direct investment just about 1% of the total for the country since Doi Moi in 1988 and of that US$ 2 billion has been invested into wind power projects.

At last, after years of waiting, it seems that the Communist Party is willing to “flirt” with sports betting and Casinos for local gamers, for a 3 year pilot period. The Government is not only catering to foreign investor and local demand it will also open a door to collection of taxes much of which are currently lost to casino’s in Cambodia and also illegal betting syndicates in Vietnam.

Guidance on 2016 Personal Income Tax (PIT) Finalization

In a recent survey, conducted by Vietnam Works a leading on line job search and recruitment website, it was noted that the demand for employees in the Information Technology (IT) sector has doubled in the last 3 years.

The gender diversity issue has been on the business agenda for many years now, yet a third of businesses still have no women at a senior management level. Somewhere there is a disconnect.

The number of new SME’s continues to grow at a healthy rate with approximately 14,500 new enterprises established in the first 2 months of 2017, a year on year growth of 3.9%. In this period the registered capital of these newly established firms was US$ 6.7 billion an increase of 35% against the same period as last year. With over 600,000 registered SME’s and growing at over 100,000 per annum SME’s are an important sector of the economy. However the number of firms ceasing operations or closing has not been insignificant but over the last 12-18 months the number resuming operations has been increasing.