Business Conditions for Condominium Management Training Service

On July 1st 2016, the Government issued Decree No. 79/2016/ND-CP guiding the business of training service, improving the professional knowledge, management profession and operation of condominium.

Accordingly, organizations and individuals providing the above services must fully satisfy the 05 following conditions:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has facility and classroom to ensure sufficient seat for students and location for student to practice on professional knowledge and practice.

– Third, has syllabus or teaching materials consistent with training framework program that promulgated by the Ministry of Construction.

– Fourth, has a minimum of 40% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

– Fifth, being recognized by the Ministry of Construction or the agency authorized by the Ministry of Construction as qualifying for business of condominium management training service.

In addition, this Decree also provides for conditions for business of real estate brokerage practice training service as follows:

– First, the organization was established and operating in Vietnam; has the function of vocational training or college, university or postgraduate education as prescribed.

– Second, has facility and classroom to ensure sufficient seat for students and location for student to practice on knowledge of real estate brokerage and administration of real estate trading floor.

– Third, has syllabus or teaching materials consistent with training framework program that promulgated by the Ministry of Construction.

– Fourth, has a minimum of 30% of the teachers on the payroll or a contract of indefinite term (has social insurance contribution) in accordance with the training framework program under the guidance of the Ministry of Construction.

Decree No. 79/2016/ND-CP officially takes effect upon signing.

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Licensing for Foreign Contractor

Under the provisions of the Vietnam law for operations of foreign contractors in Vietnam in the fields: investment and construction consulting, supply of materials and technology equipment together with technical services related to the construction works, construction of work, foreign contractors must apply for a contractor license.

Conditions for obtaining permits for foreign contractor in Vietnam:

Case for bidding packages that are subject to compulsory application in accordance with the bidding law of Vietnam: Won the bid or select the bid.

– Had won the bid or can select the bid.

– Had forwarding bid contract.

Case for bidding packages that are not subject to compulsory application in accordance with the bidding law of Vietnam:

– Had won the bid or can select the bid.

– Had forwarding bid contract.

Meeting all the conditions and capability that are consistent with contracted works prescribed by the law of Vietnam.

In all cases that foreign contractors are assigned the bid (due to win the bid through bidding or select the bid), foreign contractors have to codeshare with Vietnam contractors or have to use Vietnam sub-contractors (except the cases that are allowed by Prime Minister or prescribed by the law of Vietnam).

Foreign contractors have to commit to fully implement the provisions of the law of Vietnam relating to contracting activities in Vietnam.

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Tax Obligations for Foreign Entity Doing Business in Vietnam

The applicable taxes including value added tax (VAT), corporate income tax (CIT) and personal income tax (PIT).

On August 6th 2014, the Ministry of Finance issued Circular No. 103/2014/TT-BTC guiding the implementation of tax obligations that are applicable to foreign organizations and individuals doing business in Vietnam or having incomes generated in Vietnam.

Taxpayers: foreign contractors, foreign subcontractors; organizations established and operated under the law of Vietnam, organizations register to operate under the law of Vietnam, other organizations, individuals producing and trading.

The applicable taxes including value added tax (VAT), corporate income tax (CIT) and personal income tax (PIT).

Taxable income of foreign contractors and foreign subcontractors is income derived from the provision and distribution of goods; provision of service, service in association with goods in Vietnam on the basis of the contractor contract and subcontractor contract. 

CIT Payable = Revenue subject to CIT x CIT rate calculated on taxable turnover

Subjects liable for VAT: services or services associated with goods provided by foreign contractors, foreign subcontractors on the basis of the contractor contract, subcontractor contract to use for manufacturing, trading and consumption in Vietnam.

Incomes arising in Vietnam of foreign contractors and foreign subcontractors are earnings received in any forms on the basis of the contractor contract, subcontractor contract (except for cases specified in Article 2, Chapter I of this Circular), regardless of the place conducting business operations of foreign contractors and foreign subcontractors.

Circular specifically instruct the following cases:

1. Pay VAT by deduction method; pay CIT on the basis of cost and revenue declaration to determine taxable income.

2. Pay VAT and CIT by percentage on turnover.

3. Pay VAT by deduction method; pay VAT by percentage on turnover.

Issued together with Circular 103 is the tax declaration form for foreign contractor.

This Circular takes effect from October 1st 2014, replaces Circular No. 60/2012/TT-BTC dated April 12th 2012 of Ministry of Finance guiding the implementation of tax obligation applicable to the foreign organizations and individuals doing business in Vietnam or having income in Vietnam.

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Decree 118/2015/ND-CP Guiding the Investment Law 2014

Decree 118/2015/ND-CP was issued on November 12th 2015 by the Government. It takes effect from December 27th2015 clearly regulates some regulations of the Law on Investment on the application, control, publish investment business condition; measures to ensuring investment, investment incentives, investment procedures, operational implementation of investment projects and state management of investment projects.

Regarding investment conditions in Vietnam:

– In terms of the business investment sectors, investors may invest in conditional business lines when they meet the conditions of license, practicing certificate, certified professional liability insurance or other forms of required documents under the provisions of the covered agreements that Vietnam has signed or specific regulations of the law of Vietnam.

– In addition, investors also have to meet other conditions such as charter capital (for a certain number of business lines); forms of investment; scope of investment activities; Vietnam partners to join the investment execution.

– The form of investment for foreign investor:

+ Establish economic organization.

+ Capital contribution or share purchase.

+ Business cooperation contract.

+ Receive transfer of investment project.

– Foreign investors when investing in Vietnam in addition to meeting conditions like investor Vietnam, they will have to meet other specific conditions. Particularly for investors that have both Vietnam and foreign citizenships, they will be able to choose to apply the conditions for foreign investor or Vietnam investor.

On the issue of investment incentives, investors will receive incentives from the State in the following cases:

– Projects under the business lines of investment incentives.

– Investing in areas with difficult economic conditions.

– Project with capital from 6000 billion VND and will be disbursed within a period of 3 years.

– Investing in projects in rural areas and use more than 500 employees.

– Investment project in the fields of science and technology.

– For investment projects in Section 3 and 4 above will be entitled to preferential investment projects in areas with difficult economic conditions. The cases that projects simultaneously under both Section 1 and 2 above shall also enjoy incentives according to investment project in areas with difficult economic conditions.

Distinguishes 3 types of projects:

– The investment project that is not subject to the investment policy decision.

– The investment project under the jurisdiction on investment policy decision of the provincial People’s Committee.

– The project that is not subject to the granting of investment certificate.

In particular, for the project’s land that is granted, lease or allow the transfer of land use purposes by the State, it is necessary to deposit to ensure the investment. The deposit rate will be 3%, 2% or 1% depending on the scale of capital is 300 billion VND or above. Depends on the enjoyed incentives that the amount of deposit will be reduced according to different rate (the typical reduction rate is 25% or 50%).

Regarding the transfer of investment project:

Investor is allowed to transfer part or the whole of their investment project to other investor under the provisions of the law on investment (paragraph 1, article 45). In case when the transfer of projects generates income, investors must comply with the relevant tax obligations.

In addition, the Decree 118/2015 also provides details about:

– The procedures for the adjustment of investment projects in the case of division, separation, merger and transformation of economic organization (Article 38);

– The procedures for the termination of investment projects (Articles 41, 42);

– The investment procedures in the form of capital contribution, share purchase and capital contribution of foreign investors.

Decree 118/2015/ND-CP takes effect from December 27th 2015.

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