N2/2016
AUGUST 2016 www.icham.org
NETPLUS "Ciao Venice" (P.18-19) EU-Vietnam Free Trade Agreement: Opportunities for Business (P.12-13)
Celebrating the 70th Anniversary of the Italian Republic in HCMC (P.15) Extension of Vietnam visa waiver programs for Italian citizens (P.28)
IN THIS ISSUE News 3
Promoting VN-Italy cooperation in urban water supply and drainage management
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Collaboration Vietnam – Italy in design sector
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Meeting with Italian diplomats and entrepreneurs at Hanoi University
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Aperitivo Italiano
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Meetings with Italian partners
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Business opportunities in Vietnam for companies - conference in Forlì
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ICHAM became “Make It Sustainable – Ambassador”
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EVBN - SMEs and MNCs Annual Speed Meetings, 4th Edition
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NETPLUS is back with "Ciao Venice"
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TPP: Challenges realize opportunities
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Italian Food and Wine in Singapore 2016
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MoU signing between HUBA & ICHAM
10 Visit to Phu Tho Province of Italian institutions in Vietnam 12 EU-Vietnam Free Trade Agreement (EVFTA): Opportunities for Business 14 Fashion Show "Angels of Italy" marks Italy’s 70th National Day 15 Celebrating the 70th Anniversary of the Italian Republic in HCMC
Market Info 24 Tax Alert: Vietnam Amends Laws on Tax Administration, Special Consumption Tax, and VAT 26 Updated Requirements for Representative Offices in Vietnam 28 Extension of Vietnam visa waiver programs for Italian citizens
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n 5 April, ICHAM collaborated with the key economic region of Veneto (Italy) to implement the project "Promoting VN-Italy cooperation in urban water supply and drainage management". Focusing on drainage sector, the project aims to promote research and application of scientific and technological advances, information exchange, cooperation in water supply and drainage projects, contributing to sustainable development, improving efficiency of water use and management in Vietnam. The Veneto delegation, which consists of 3 companies - Kiasma, Deriplast and Majone & Partners - together with ICHAM Executive Director Mr Pham Hoang Hai, met with Vietnam’s water management companies in Hanoi, Da Nang and HCMC.
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APERITIVO ITALIANO Following the success of the first edition, The Italian Chamber of Commerce in Vietnam (ICHAM) in collaboration with the Consulate General of Italy in HCMC organized the second Aperitivo Italiano at NAMO Artisanal Pizzeria. The event continued to create a new networking space for ICHAM members and Italian community in HCMC.
5 Mr. Hai with Mr. Alfonso Santilli - Head of International Division
Mr. Hai with Mr. Fausto Maritan - Head of International Relations & Foreign Network
Banca Popolare di Vicenza APR 20
MEETINGS WITH ITALIAN PARTNERS JUN 24
JUN 23
UBI Banca
Banca Popolare di Sondrio
Mr. Hai with Mr. Alistair Robert Newell International Division
ICHAM Executive Director Pham Hoang Hai had some fruitful meetings with the representatives of three prestigious banks: Banca Popolare di Vicenza, Banca Popolare di Sondrio, and UBI Banca. During these meetings, all sides have been freely heard and have had thorough discussions regarding how to support the banks’ corporate
Mr. Hai with Mr. Andrea Speziale International Services Manager
clients in developing their business in Vietnam. Mr. Hai also pointed out different opportunities that Vietnamese market can offer to Italian companies. The visits are expected to further enhance the partnership and cooperation between both parties.
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Business opportunities in Vietnam for Italian companies - conference in ForlĂŹ 21st April at Confindustria Office there was an analysis on Vietnam, focusing on the 170 billion dollar plan for infrastructure development underway in this Asia country. "Go to Vietnam": the title does not leave room for interpretation. Confindustria ForlĂŹCesena, in collaboration with Servin, Ytasya and IC & Partners, organized on Thursday, 21stApril, in their headquarter, an afternoon of insight into the business opportunities in this Asian country, which is living a great development, with Domenico Polcaro as moderator. Vietnam - the organizers explained - has recently changed its economic policies, starting with an infrastructure development plan which will create great construction works worth 170 billion dollars, by 2020. The new development policies are already showing results: Vietnam grew by 6.7% in 2015 and
forecasts estimate that the positive trend will be maintained at around 6.5-7% until 2020. In addition, Hanoi and Brussels have just signed a free trade agreement which will come into force from 2018 and will lead to the mutual cancellation of 99% of existing duties, making Vietnam a more attractive business frontier. The conference began with the greetings of George Cangini, vice-president of Confindustria ForlĂŹ-Cesena with internationalization delegation, and Franco Torre, board of directors of Servin. Following was a discussion of how to enter Vietnamese market presented by the guest speakers: Roberta Fusaroli, vice president of Ytasya;
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SMEs-MNCs ANNUAL SPEED MEETING
T
aking place on 31st May in HCMC, the 4th edition of “SMES – MNCs Annual Speed Meeting” welcomed 16 multinational corporations and 34 small and medium enterprises from Europe and Vietnam, among which are five Italian companies: Bonfiglioli, Generali, Ariston, Datalogic and Danieli. This was an annual event organized by the EUVietnam Business Network (EVBN) in collaboration with other European Chambers of Commerce. The aim is to explore business opportunities, especially to connect MNCs and SMEs from both Europe and Vietnam, as well as the big brands already present in Vietnam such as
Schneider Electric, General Electric, Big C, Danieli... The B2B meetings were customized based on the needs and business strengths of each company so that they could introduce their products and services directly to the managers of MNCs. Over 230 meetings were arranged during this 4th edition. Regardless of company size, SMEs can offer original ideas and products which with a perfect collaboration will boost business growth for both sides. Other trade missions in the sectors of healthcare and green technologies will be organized from now until the end of this year in Hanoi and Ho Chi Minh City.
Roberto Guerrini, Senior Professional IC & Partners Group; Hoang Hai Pham, Executive Director of Italian Chamber of Commerce in Vietnam; Andrea Imbrenda, co-founder and technical director of Proges Engineering; Federico ChiodiDaelli, COO of AISPO Italian Association for Solidarity among People. The next part was dedicated to case histories, with the testimony of Andrea Acerbi, Area Director Trevi S.p.A.; Federico Pagliacci, Vice President of Development SOILMEC S.p.A.;
Beatrice Majone, partner of Majone & Partners S.r.l and President IDEAS Ltd. Hanoi. Alberto Zambianchi, president of the Chamber of Commerce of Forlì-Cesena, gave the conclusions. The conference ended with a small reception where the guests could taste typical dishes of the Vietnamese cuisine.
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TPP: CHAL ENGES
OPPORTUNITIES the Italian Chamber of Commerce (ICHAM) represented by its President Mr. Michele D’Ercole.
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ccording to a survey conducted by the Vietnam Chamber of Commerce and Industry (VCCI), around 90% of Vietnamese enterprises remain unaware of the TPP Agreement, of which 20% have never heard of TPP and 45% have heard but not understood. Only about 9% of companies have carefully studied this important trade agreement. The Trans-Pacific Partnership Agreement (TPP) was signed by its 12 member nations in February 2016 and will be valid in the next two years. There's not much time left to prepare, but many businesses aren’t even aware of the TPP. To provide information and listen to the voice of business about TPP, on April 20th, the Ho Chi Minh City Union of Business Associations (HUBA) organized the Investment & Trade Promotion Forum 2016: "TPP Agreement: Business support solutions". The event was attended by representatives from HCMC enterprises, foreign business associations, consulates in HCMC, and
TPP provides many great opportunities, but also many challenges for Vietnamese business community. In order to meet the requirements of this agreement, local companies need to be well prepared, especially when Vietnam’s economy is still weak compared to other TPP member countries. There are 4 key opportunities offered by TPP, which are: increasing exports and entering the international supply chain; balancing trade relations; trading freely with large partners and attracting FDI. However, there are four challenges that Vietnamese businesses will have to face, which are: poor competitiveness, difficulties in meeting TPP requirements, intellectual property rights and origin certification of products and services. In his speech, Mr. Pham Binh An, Director of the WTO Center, has briefly explained the opportunities and challenges from the TPP Agreement. He highlighted some major short-term challenges for businesses, such as the lack of information on the TPP, overcoming high technical barriers of the market in developed countries and the fact that businesses have to face a high level of competition,… those have resulted in the elimination of incompetent enterprises, narrowed many trades and provoked social disruption. Nevertheless, TPP also brings long-term benefits, such as institutional reforming and improving the
9 business environment, enhancing operating standards of businesses with the conditions of the TPP, reducing dependence on the market and business model of China as well as changing the growth model from width to depth. At the same time, some long-term challenges have also emerged, including the improvement of human resources, the inertia of the government body compared to the needs of businesses, as well as the challenge of establishing trade unions. He also said that the business supporting programs are not yet consistent, rarely assigned to ministries and business associations and need to change a lot to assist enterprises more efficiently. In order to grasp the opportunities and deal with the challenges brought by the TPP, the important thing is that enterprises themselves must actively take steps to prepare carefully, such as restructuring, enhancing training and improving human resources. At the forum, Mr. Antony Nezic, president of the Canadian Chamber of Commerce (CanCham) also shared the experiences of Canada joining the North American Free Trade Agreement (NAFTA) in which he emphasized the leadership role of the State, the process of privatization of enterprises and human resource training. Agreeing with Mr. Nezic, in his speech, Mr. Michele D'Ercole also said that Italy is and will always be boosting support for Vietnam in the field of education and training, through the cooperation agreement between the universities of Italy and Vietnam. Representing the voice of Vietnam’s business community at the forum were two large enterprises: Tien Loc Group and Tan Thanh Company. Ms. La Thi Lan, General director of Tien Loc Group, said that the group is gradually carrying out integration measures towards the TPP, such as personnel training, cooperation in technology transfer and copyright registration, restructuring the corporate governance system and transparency in the operation of the enterprise. Meanwhile, Ms Kieu Ngoc Phuong, deputy CEO
of Tan Thanh Company, representing businesses in the mechanical engineering industry, mentioned a few difficulties that the company itself encountered in the integration process towards the TPP, including weakness of supporting industries in the country, lack of support policies on borrowing money and credit, as well as high distribution costs due to suppliers that are too far apart.
MoU signing between ICHAM & HUBA
After discussing the problems and figuring out solutions that would help enterprises better integrate into the TPP, HUBA signed a memorandum of understanding (MOU) with ICHAM and CanCham for a better support for businesses in Ho Chi Minh City, creating a solid stepping stone for Vietnam to prepare to join the TPP trade agreement. According to this memorandum, HUBA and ICHAM will jointly carry out trade promotion activities between Vietnam and Italy, e.g. providing operational information for the two sides, welcoming business delegations and organizing a variety of networking and communication opportunities for businesses.
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Visit to Phu Tho Province of Italian institutions in Vietnam
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n May 4, an Italian institutional delegation led by Ambassador H.E. Cecilia Piccioni paid a visit to Phu Tho Province. The delegation which also includes Vice Ambassador Natalia Sanginiti, ICHAM President Michele D’Ercole and representatives of Italian companies - Marposs, Dezan Shira & Associates - was received by Mr. Hoang Dan Mac – Phu Tho Party Committee Secretary, Chairman of provincial People’s Council.
Mr. Hoang Dan Mac – Phu Tho Party Committee Secretary, Chairman of provincial People’s Council presented a bronze drum to the Italian Ambassador. On behalf Phu Tho’s leadership, he affirmed the developing cooperative
relationship between Italy and Vietnam in general and Phu Tho in particular. He also hoped that the Ambassador and the officials of the Italian Embassy and the Italian Chamber of Commerce would help Phu Tho to implement cooperation programs in sectors such as economy, culture - tourism, science - technology, etc., especially support in promoting and introducing policies to encourage and attract investment; encouraging Italian corporation and businesses to invest into the strongest fields of Phu Tho, such as agricultural processing, garment and textile, supporting industry, mechanics, electric components… Phu Tho is committed to creating the most favorable investment procedures as well as policies that encourage businesses to come and investigate the location for their investment projects. The delegation then met with Phu Tho provincial People’s Committee and joined Dialogue Phu Tho – Italy Economic Cooperation. There was the participation of Mr. Bui Minh Chau – member of CPV CC, Deputy Secretary of Phu Tho Party Committee, Chairman of provincial People’s Committee; Mr. Bui Van Quang -
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OVERVIEW OF PHU THO PROVINCE Phu Tho is located in the Northeastern region and was re-established on January 1st 1997 after separating from Vinh Phuc. Natural area: 3.519.65 sq. km Population: 1.351 million people (according to 2013 statistics). Distance: - 80km from Hanoi - 50km from Noi Bai International Airport - 170km from Hai Phong Sea Port
member of provincial Standing Committee, Deputy Chairman of provincial People’s Committee; leaders of provincial departments and e n t e r p r i s e s . On behalf of the Italian delegation, Ms. Cecilia Piccioni thanked Phu Tho province for the hospitality and hoped Italy and Phu Tho will have opportunities to cooperate in many sectors. The Italian Embassy will promote the potentials of Phu Tho to Italian enterprises so as to boost investment projects in the province’s key sectors.
- 200km from Cai Lan Sea Port Traffic: - National Highway 2 connects to Hanoi, National Highway 70 to China. - Noi Bai International Airport - Railway: Phu Tho-Hanoi, Phu Tho-Hai Phong and other provinces Economic situation: In the period of 2006-2010, the average growth of GDP was 10.6%. This rate in 2010 was 11.9%. Attracting foreign investment: Foreign direct investment (FDI): There are 112 running projects with the total registered capital of 679.5 million USD, of which 83 projects are in disbursing step with the capital of 440.5 million USD and the implemented capital of 372.8 million USD.
The delegation visited COSMOS 1 Ltd. Co in Thuy Van Industrial Park On this occasion, the delegation also visited representative companies in Thuy Van Industrial Park (Viet Tri city); discovered the typical Phu Tho Xoan Singing in Kim Duc commune (Viet Tri city) and visited Hung Kings Temple.
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n 2 December 2015, the EU and Vietnam officially concluded the negotiations of the Free Trade Agreement (EVFTA), which is an important milestone in the bilateral commercial, economic and investment links between Vietnam and the European Union. For EuroCham members and more generally for EU-Vietnam relations, the official conclusion of the free trade agreement negotiations will provide an array of new opportunities. To realize benefits gained from the EVFTA, the EU and Vietnam have agreed to attempt to complete the ratification process so that the Agreement can take effect in 2018. On the occasion of the visit to Vietnam of Mr.
Mauro Petriccione, Deputy Director General at the European Commission’s Directorate General for Trade and the EU’s Chief negotiator for the Free Trade Agreement (FTA), two seminars were held in Hanoi and HCMC to provide EU and Vietnamese enterprises with detailed clarification of the potential opportunities that EVFTA will bring about to business community in the near future. On 31st May 2016, the Ministry of Industry and Trade (MOIT), the Delegation of the European Union to Vietnam and the European Trade Policy and Investment Support Project (EU-MUTRAP) co-organized a seminar entitled “EU-Vietnam Fre e T rad e Agr ee men t (E V FT A):
13 Opportunities for businesses� at International Convention Center in Hanoi. The seminar is not only a timely forum that provides useful information about the opportunities but also points out the challenges arising from the Agreement for the business community, government agencies, organizations and individuals. Therefore, the seminar received much attention and attracted active participation of numerous representatives from Vietnamese and EU enterprises, government agencies, institutes, universities and other relevant units. At the seminar, Deputy Minister of Industry and Trade Tran Quoc Khanh - Vietnamese Government’s Chief negotiator on economic issues and international trade, Vietnam’s Chief negotiator for the EVFTA - and Mr. Mauro Petriccione introduced the EVFTA Agreement from the perspective of both Vietnam and the EU sides. The speakers of the CIEM, VCCI, and EuroCham also provided useful information on the positive impact and the expected challenges of the EVFTA Agreement to Vietnam and European businesses. ICHAM Executive Director Pham Hoang Hai also attended the event.
ICHAM Executive Director Pham Hoang Hai and Mr. Mauro Petriccione
At the similar seminar organised in Ho Chi Minh City on 1 June 2016 by the European Chamber of Commerce (EuroCham), Deputy Minister Tran Quoc Khanh affirmed that Vietnamese Government will strictly implement commitments in the Agreement and determine to create favourable conditions for enterprises to exploit benefits from the Agreement. However, whether Vietnamese enterprises are able to make best use of the opportunities offered by the FTA depends on their active initiative. The highlight of the EVFA is that Vietnam and EU will remove import tariffs for over 99% of tariff lines. For the remaining tariffs, the two sides will apply tariff quotas or partial tariff reductions. It is, therefore, essential that businesses have a good understanding of what has been achieved so as to reap benefits of the EU-Vietnam FTA. In addition to helping Vietnam boost export to Europe, the EVFTA is also expected to make state -owned enterprises (SOEs) operate in line with market mechanism and become more transparent in their activities so that the people can monitor. This will level the playing field between state-owned enterprises and enterprises of other economic sectors in Vietnam including enterprises with foreign investment.
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FESTA DELLA Fashion Show "Angels of Italy" marks Italy’s 70th National Day On June 2nd, the Embassy of Italy in Vietnam celebrated the 70th anniversary of the Italian Republic in Hanoi. The event included a remarkable fashion show: “Angels of Italy” - a program jointly organized by the Italian Embassy in Vietnam and the Italy Vietnam Fashion Council to mark Italy’s 70th National Day. The performance features Vietnamese designers' collections which were inspired by Italian stamps, depicting the country’s beauty and telling the story of its development over the past seven decades. The audience enjoyed Italian and Vietnamese music accompanying the fashion show reflecting a harmonious combination of both countries' cultures. Attending the event, ICHAM President Michele D'Ercole shared some of his feelings: "Two countries which have different cultures have created an interesting combination. And these designs gave me very familiar feelings."
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REPUBBLICA Celebrating the 70th Anniversary of the Italian Republic in HCMC On 3rd June, the 70th Anniversary of Italian National Day (2/6/1946 – 2/6/2016) was held formally by the Consulate General of Italy in HCMC at Park Hyatt Saigon Hotel. The ceremony welcomed the leaders of Ho Chi Minh City and southern provinces, representatives of diplomatic agencies along with Italian community living and working in Ho Chi Minh City. The staff of ICHAM also participated in this event. At the ceremony, the Italian Ambassador to Vietnam Cecilia Piccioni and the Italian Consul General in Ho Chi Minh City Carlotta Colli had some words about the memories of Independence Day, the day when Italian citizens voted to form the Republic of Italy; at the same time they shared about friendly relationship between Vietnam and Italy during the past years. Vietnam and Italy officially established diplomatic relationship on 23 March 1973. The two sides signed a joint declaration to set up a strategic partnership in the context of state visit to Italy of Vietnam’s Secretary
General Nguyen Phu Trong in January 2013. During the past forty years, many leaders of Vietnam including the Prime Minister Vo Van Kiet, the Secretary General Le Kha Phieu, the State President Nguyen Minh Triet, the National Assembly President Nguyen Van An, the Prime Minister Nguyen Tan Dung, etc. have paid official visits to Italy. On the Italian side, the first official visits of Italian leaders to Vietnam were marked by the visits of the Italian Diplomatic Minister G. De Michelis (December 1989), the Prime Minister Matteo Renzi (June 2014) and the State President Sergio Mattarella (November 2015). During the high level visits, the leaders of both countries affirmed that the relationship between Vietnam and Italy are entering a new phase of positive growth. Besides, this November Italy will attend Vietnam Food Expo 2016 as Country of Honor. It is believed that the bilateral relation will develop to a new level in the time to come.
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Collaboration Vietnam – Italy in design sector The strategic partnership between Vietnam and Italy has grown and diversified in various fields, including economy, commerce, culture and specially education. The training cooperation agreement signing ceremony between Hong Bang international university and Laba Academy of Fine Arts took place in HCM on June 6th. LABA is one of the most prestigious schools of design in Italy. This is indeed an opportunity for Vietnamese design students to approach Italian’s international standard education – a country has been well-known all over the world
Meeting with Italian diplomats & entrepreneurs at Hanoi University
about art and design, as well as to improve their skills and develop their creativity. On this occasion, the organizers introduced Italian international design bachelor program in Vietnam, created by Vietnam Design Institute (ADS) – Hong Bang international university and LABA. From this collaboration, many new generations of talented On 7th June 2016, the Italian department of Hanoi University organized the third meeting with Italian diplomats and enterprises. ICHAM President Michele D’Ercole was invited as a representative of Italian businesses in Vietnam. Speaking at the event, Mr. Michele D’Ercole shared with the students about “Presence of Italian enterprises in Vietnam: Best practices”. The presentation introduces about Icham and its activities, and at the same time providing useful information about Italian enterprises operating in Vietnam. On behalf of the Italian Embassy, the First Secretary,
Vietnamese future designers will be born. Delivering his speech at the ceremony, ICHAM President Michele D’Ercole believed that the cooperation in education field between Italy and Vietnam represents a remarkable step in the relation between the two countries, which helps the young Vietnamese labor force become more competitive in the context of globalization. In addition, this is a good opportunity for Italian companies operating in Vietnam to have a more qualified and efficient human resource.
Cultural Counselor Nicolò Costantini delivered a speech themed “Cultural diplomacy – Promotion for Italian language and culture in Vietnam” by a presentation about the formation the Republic and all activities held for the 70th anniversary of Italy. Additionally, Mr. Costantini also introduced to the students diplomatic and cultural activities in various sectors, emphasizing their importance in the maintenance and development of diplomatic relationship between Vietnam and Italy.
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ICHAM became
“Make It Sustainable – Ambassador”
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ssocamerestero, accepting one of the proposals that emerged during the area meeting of Italian Chambers of Commerce in Asia held in Mumbai last March, has decided to enter into a strategic agreement with ICMQ Institute, a leading Italian certification, inspection and training body in the field of quality, safety, environment focusing on "Italianità Sostenibile". ICMQ is the promoter of a community called "Make It Sustainable". The Community includes a wide range of actors (associations, companies, NGOs, training centers, certification bodies, etc.) that stand out for their concrete commitment in promoting the values and principles of sustainability and achieve tangible concrete over time. Within the Community are distinguished Ambassador, Non-profit organizations (NGOs, associations, etc.) that actively promote the values and the principles of sustainability. The intent of the Agreement between Assocamerestero and ICMQ Institute is to facilitate the repositioning of the role and function of the Italian Chambers of Commerce Abroad to generate new revenue sources. The goal of this agreement is therefore to use the voluntary certification of management
systems, products, processes and people, in accordance with requirements defined with the involvement of Italian stakeholders (from the associations) as the ideal technical instrument to differentiate the "Made in Italy" and "Made by Italics". During the Annual Meeting of the Executive Directors of the Italian Chambers of Commerce abroad held in Rome from June 20 - 23, Assocamerestero officially presented the agreement with ICMQ Institute. This agreement allows each Italian Chamber of Commerce abroad to acquire the role of Ambassador, to promote the idea of “Italianità Sostenibile”. Following the meeting, 23 Chambers of Commerce in Europe, Middle East, Asia, Australia, Africa, South and North America have completed or started the application process to achieve the “Make It Sustainable – Ambassador” recognition. ICHAM, represented by its Executive Director Pham Hoang Hai, has entered into the agreement with ICMQ Institute and became "Make It Sustainable - Ambassador".
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NETPLUS
“Ciao Venice”
T
aking place every two months, Netplus is always one of the most
expected networking events. Each edition is organized by a European partner Chamber of Commerce creating a perfect occasion for European and Vietnamese entrepreneurs to meet and expand their business network. This time, the 23rd edition led by ICHAM on 29th June attracted over 200 business guests from prestigious enterprises who had a chance to enjoy a beautiful evening in a cooling atmosphere and fancy designs on the rooftop of the Saigon’s heart. Featuring the theme “Ciao Venice”, this great networking occasion offered all guests an opportunity to experience the special atmosphere of Venice where they could take photo with unique
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masks, enjoy an amazing fashion show hosted by ADS –Vietnam Design Institute and win valuable lucky draw prizes. ICHAM would like to send our sincere thanks to all sponsors for their precious contribution to the success of the event: Air360 Sky Bar, ADS Vietnam Design Institute, Etihad Airways, Annam Fine Food, Ducati, Da Loc Wine, GEG Travel, Hausbrandt, La Hostaria, Liquid Gold Asia, Lune Production, NAMO Artisanal Pizzeria, Park Hyatt Saigon, VNA Travel, WMC Group.
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2016
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n the framework of cooperation between Italian Chambers of Commerce in Asia, the Italian Chamber of Commerce in Singapore, in collaboration with the Italian Chamber of Commerce in Hong Kong, Japan, China, Thailand, India, Philippines, South Korea and Vietnam, hosted the “Italian Food and Wine in Singapore” (IFWS) from June 27 – 28. The IFWS 2016 held in Suntec City Convention center in Singapore is a unique Italian F&B Regional Platform which has brought Asian importers and distributors with more than 50 Italian producers together. Many Italian companies offer excellent and competitively priced products, but often have difficulty in entering the Asian markets, which are though very receptive and interested in “Made in Italy”. At IFWS 2016, Italian SMEs had a chance to knock at the door of Asia through B2B meetings with various distributors. The Vietnamese delegation led by ICHAM was comprised of three Vietnamese companies.
13 SE
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Seminar: ITALIAN TECHNOLOGIES FOR GARMENT AND TEXTILE INDUSTRY Ho Chi Minh City
20 SE
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EVBN - HEALTHCARE TRADE MISSION TO VIETNAM 2016 Ho Chi Minh City & Hanoi
ITALIAN FOOD FESTIVAL 2016
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1 9 NO
Hanoi
MARKET INFO
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Tax Alert: Vietnam Amends Laws on Tax Administration, Special Consumption Tax, and VAT By: Dezan Shira & Associates
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n April 6th, Vietnam’s National Assembly approved amendments to a number of tax policies relevant to those with operations throughout the country. Changes cover a wide variety of tax policies and should be followed closely to ensure compliance. Specific policies that have seen amendment include Value Added Taxation (VAT), Special Consumption Tax (SCT), and Tax Administration. The general package of amendments is slated to become effective July 1st, while the rollout of specific instruments will be carried out over the course of the year.
Tax Administration For those failing to pay taxes by the dates specified within Vietnamese legislation, amendments are set to provide some relief from late payment penalties. Changes currently show interest on late payments falling to just 0.03 percent a day or around 11 percent a year. For those with outstanding
obligations to Vietnamese Authorities incurred prior to July 1st 2016, interest is to be calculated using the aforementioned rate going forward. It should be noted, however, that the rate will not be retroactively applied to the original principal. Special Consumption Tax Adjustments to Special Consumption Tax (SCT) will see three major adjustments under recent amendments. The first of these changes concerns the importation of vehicles with less than 24 seats. The amendments specify several adjustments to
capacity specific rates at which cars currently are taxed. Despite changes, rates applied continue to vary significantly based on the quantity of seats within a given vehicle. The secondary area of Special Consumption Taxation to see change is that of transfer pricing for manufacturing operations. Under new amendments, floors on the taxable price of goods sold will be imposed as a means of regulating intra-company transfer pricing. The determination of exact prices will be based on a percentage
25 of the average selling price of company’s good to all parties and will be applied to sales between entities enjoying the following relationships:
from VAT.
same parent company
In addition to the exemptions listed above, sales of select semi-processed or un-processed cultivation or aquaculture related goods are not subject to output VAT.
Parent companies and their
Refunds Restricted
subsidiaries
While exemptions have seen limited expansion, the ability of companies to apply for VAT refunds has been simultaneously restricted. For those operating and exporting from Vietnam, the following changes should be noted:
Companies that share the
Companies
enjoying a related party relationship with another company (i.e. a major shareholder in company A selling to company A) A final area of SCT that will see change as a result of amendments is the points at which SCT is levied on goods being brought into Vietnam. From July 1st, companies will be liable for SCT both at the time of import and sale. However, to prevent an excessive tax burden, import SCT will be creditable against SCT incurred at the point of sale.
For those investing in the
manufacturing sector after July 1 st , projects with combined natural resource and energy costs exceeding 51 percent of their good’s total costs will not be eligible for input VAT refunds. Investment projects where
Value Added Tax
capital has not been fully contributed will be ineligible for VAT refunds.
Exemptions Expanded
Investment projects involved
Exemptions from Value Added Taxation in Vietnam have been expanded under recent changes to include the following:
Companies
Exports with a combined
natural resource and energy cost exceeding 51 percent of the good’s value will be exempted from VAT Care services related to the
elderly or those with disabilities will be exempted
in restricted sectors that are incompliant with up to date regulation will be ineligible for VAT refunds. which have accumulated in excess of 12 months’ worth of VAT to be refunded will be prevented from doing so. Instead, this amount must be carried forward. For those involved in the
export sector, VAT refunds
accessible via the “VAT refund first, tax audit later” program will be limited to entities which have maintained a clean track record with customs and tax authorities for two years and are not deemed at tax risk by regulators.
Optimizing your Tax experience in Vietnam Taxation in Vietnam is likely to see continued change in coming years as Vietnamese officials attempt to attract investment and promote sustainable growth within their economy. Those able to adapt and thrive within these conditions will be perfectly positioned to take advantage of Vietnam’s competitive labor rates and emerging network of international trading agreements. With a team of seasoned tax professionals bringing decades of experience in Vietnam and Asia at large to their work, Dezan Shira & Associates is perfectly positioned to assist companies in their quest to navigate Vietnam’s tax landscape. For more information on how your business may be nefit from the amendments mentioned above, please get in contact with our tax professionals at vietnam@dezshira.com or visit us online at www.dezshira.com
26 By: Dezan Shira & Associates
Updated Requirements for Representative Offices in Vietnam
R
epresentative Offices (ROs) are an effective tool for foreign investors hoping to analyze Vietnamese market trends and engage in limited c o o p er at io n wi t h l o c al companies. Compared to 100 percent Foreign Owned Enterprises (FOEs), however, ROs offer significantly limited functionality. Representative Offices are typically a dependent unit of the ir re s pe cti ve par ent company, forbidden to generate their own profits and prevented from entering directly into contracts. Furthermore, ROs are strictly forbidden to issue invoices. In terms of permitted activities, ROs may recruit local and foreign employees directly or through an agency, lease office space – restricted to only one office in a province or city, equip themselves with facilities necessary for operations, obtain their own company seals and open local bank accounts for operational purposes. Decree No. 07/2016/ND-CP Introduced in January of 2016, and effective from March 10th, Decree 7 is to become Vietnam’s guiding document for the interpretation of the current Commercial Law on
Representative Offices (“RO”) and Branches of Foreign Business Entities in Vietnam. For current and prospective investors, there are a few notable differences between Decree 7 and its predecessor – Decree 72/2007 – that should be noted: 1. Limits to functionality – Previously included under permitted activities within Decree 72/2006, “monitoring and activating performance of contracts of the foreign business entity signed with Vietnamese parties or related to Vietnamese markets” has been removed from Decree 7. It should be noted that these changes are not retroactive; and thus companies operating in accordance with guidance issued under Decree 72 will be allowed to continue in this manner until the expiration of their existing licenses. 2. Staffing – If the head of the representative office plans to leave Vietnam, he or she is required to appoint another
individual to carry out his or her tasks during the planned absence. If this period is in excess of 30 days, Decree 7 stipulates that all powers should be formally delegated – in writing – or the head of the RO should be replaced. 3. Changes to Listed Information – Alterations to the address or names of representative offices currently registered with governmental authorities require the RO in question to report these changes. - Name changes must be notified within 60 days (up from the current limit of 10) via an application to amend the business license. - Changes to addresses must be notified to the relevant licensing body. If a change in address results in relocation to another jurisdiction within Vietnam, an application for the reissuance of a business license must be applied for no more than 30 days from the date at which the prior jurisdiction was notified. Updated Licensing Procedures RO establishment shall be granted if the parent company meets the requirements of possessing an authorized business registration certificate
27 in its country of incorporation and being in operation for at least one year since the effective date of incorporation. Licensing Authority Expanded For many companies, the application dossier for an RO license must be submitted to the Provincial Ministry of Industry and Trade. New to Decree 7, management boards of Special Economic Zones (SEZs) have also been vested with licensing powers for those companies operating within their respective industrial zones, export processing zones, or high tech parks. Shortened Issuance Times An RO license, valid for five years maximum with an option for renewal, shall now be issued within 7 working days from the governments receipt of valid application documents, excluding any time spent amending or supplementing the application. This timeframe is a significant adjustment from the 15 day timeline found under Decree 72. Requisite Documentation An application dossier for obtaining the RO license has not changed under Decree 7 and continues to require the following: An RO application letter and chief representative appointment letter, signed by the legal representative and affixed with the company chop or seal;
A notarized copy of the Certificate of Incorporation, business registration certificate of the parent company (if any), or another government certified document showing the business lines of the parent company (if the registration documents do not mention business lines); A notarized copy of the C o mp a n y C h a r t e r ( i . e . Memorandum and Articles of Association); A notarized copy and Vietnamese translation of audited financial reports or other legal alternative documents showing the parent company’s latest financial year issued by an independent auditing company;
An original copy or valid notarized copy of the official lease contract in Vietnamese, from a landlord certified to lease the office Note: All copies of these documents must be notarized by the Vietnam embassy in the foreign investor’s country. Documents in a foreign language must be translated to Vietnamese, notarized and certified by the Vietnamese competent agencies. If an application is invalid, the parent company shall receive a written notification within three business days of the date such an application is received. Post-Licensing Procedures Operating Announcement While Decree 72/2006 stipulated requirements relating to the publication of an RO’s Establishment, this is no longer
required under Decree 7. Opening Bank Accounts Regulations surrounding bank accounts have remained the same under decree 7. An RO is allowed to open bank accounts in Vietnamese Dong and foreign currency bank accounts at licensed banks in Vietnam for payment purposes. These accounts shall be used for the RO’s operation activities only. Due to the RO’s legal limited scope of activities, the accounts must not be used for profit-generating activities. In case the RO wants to transfer money abroad, it needs to give a reasonable purpose. Last but not least, all the activities related to the RO’s accounts including opening, use and closure must comply with the stipulations of the State Bank of Vietnam (SBV). Tax and Reporting Similar to banking, tax and reporting regulation has seen little change under Decree 7. An RO is not subject to Vietnamese corporate income tax (CIT). However, it still has to pay value-added tax (VAT) when consuming goods or services from other Vietnamese enterprises, and is responsible for declaring its employees’ personal income tax (PIT). An RO must submit a written annual report on its operations of the preceding calendar year before the final working day of January.
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Extension of Vietnam visa waiver programs for Italian citizens On 30th June 2016, the Government issued Resolution No. 56/NQ-CP. According to the Resolution, citizens of the Italy, United Kingdom, France, Germany, and Spain who enter Vietnam with temporary residence duration of no more than 15 days from the date of entry, regardless the type of passport or immigration purposes, and fully meet the conditions prescribed by the Vietnamese law, will have the visa requirement waived for one more year, until 30th June, 2017. This Resolution takes effect on the date of its signing.
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