1. DECREE 39/2019/ND-CP
“Regulations on organization and operation of small and medium enterprise development fund”
Decree No. 39/2019/ND-CP (“Decree 39”) dated 10/05/2019 of the Government on organization and operation of small and medium enterprise (“SME”) development fund is effective as of 01/07/2019.
Accordingly, SME development fund (the “Fund”) will carry out a number of activities such as lending, financing and assisting in capacity-building for the purposes set out in Decree 39.
The Fund’s lending activities are carried out in two forms: (i) Direct lending (for creative startups, inter-sectoral complexes, value chains having needs to borrow capital); and (ii) Indirect lending (for SMEs through assignment of capital to commercial banks). The Fund’s direct lending interest rate shall be equivalent to 80% of the lowest commercial lending interest rate.
Regarding the lending rate, Decree 39 stipulates that the lending rate for each production and business plan or project shall not exceed 80% of the total investment capital of such plan or project. The total lending amount to SMEs shall not exceed 15% of the Fund’s actual charter capital, the lending term shall not exceed seven (07) years.
SMEs need to satisfy specific conditions in terms of business and production scale, plans, equity, loan security, etc. in order to receive loans.
In addition, creative startups, SMEs participating inter-sectoral complexes, value chains shall be financed by the Fund upon satisfaction of the conditions. The financing amount shall not exceed 01 billion Vietnamese Dong for each production and business plan or project, but not exceed 50% of total investment in construction of workshops and purchase of machinery and equipment.
Finally, the Fund shall organize seminars, training, consultation sessions, provide information and database to support SMEs to improve their capacity.
2. DECREE 54/2019/ND-CP
“New regulations on operation of karaoke venues and nightclubs”
Decree No. 54/2019/ND-CP (“Decree 54”) dated 19/6/2019 of the Government providing guidelines for operation of karaoke venues and nightclubs is effective as of 01/9/2019.
Regarding the conditions to operate nightclubs, Decree 54 has expanded the scope of entities entitled to operate nightclubs, now encompassing enterprises or business households established under the law, instead of Star- or luxury-grade hotels, cultural houses and cultural centers with the legal entity status as stipulated in previous regulations.
Besides that, Decree 54 also narrows down the non-operational time frame of nightclubs from 12 A.M – 08 A.M to 02 A.M – 08 A.M. Simultaneously, Decree 54 has abolished the exception that nightclubs and karaoke venues in luxury-grade hotels may operate for an extra 02 hours after 12 A.M. Especially, Decree 54 has supplemented the regulations that it is illegal to provide nightclub services for people under 18 years old.
In addition, Decree 54 introduced several changes to the application for issuance of Business license for karaoke venues and nightclubs. Specifically, enterprises or business households shall not only submit the application form but also the original certificate of public security and order.
3. DECREE 55/2019/ND-CP
“Women-owned SMEs are first-in-line to receive legal assistance”
Decree No. 55/2019/ND-CP (“Decree 55”) dated 24/6/2019 of the Government replacing Decree 66/2008/ND-CP on legal assistance for small and medium enterprises (“SMEs”) is effective as of 16/8/2019.
Decree 55 clearly states that authorities and organizations providing legal assistance for SMEs shall, based on their resources and assistance programs, decide the provision of legal assistance in the order of priority: Women-owned SMEs and SMEs using more women employees will be provided with legal assistance first if their applications for legal assistance are satisfactory; SMEs in which 30% or more of their employees are the disabled as defined in the Law on Persons with disabilities; SMEs that submit applications for legal assistance first shall be provided with legal assistance first if their applications are satisfactory.
Providing legal assistance for SMEs is the responsibility of ministries, ministerial agencies, provincial government to carry out the following activities: (i) creating, managing, maintaining and updating law databases; (ii) establishing and implementing legal assistance programs with the aims of increasing SMEs’ knowledge and awareness of the law, developing their habit of complying with the law, minimizing legal risks and issues encountered by SMEs during their operation, and then improving the competitiveness of SMEs and effectiveness in law enforcement.
The provision of legal assistance for SMEs through legal assistance service providers shall be given priority. Legal consultant network is a division of the consultant network as prescribed in the Law on assistance for SMEs, including lawyers, law firms, legal consultants and legal consulting centers that are eligible for provision of legal advice in accordance with law regulations, voluntarily apply for participation in the network and are approved and published by ministries or ministerial agencies to provide legal assistance for SMEs.
4. CIRCULAR 06/2019/TT-NHNN
“New regulations on direct investment capital account for foreign direct investment into Vietnam”
Circular No. 06/2019/TT-NHNN (“Circular 06”) dated 26/6/2019 of the Governor of the State Bank of Vietnam replacing Circular No. 19/2014/TT-NHNN (“Circular 19”), on 18/11/2014, providing guidance on foreign exchange management regarding foreign direct investment into Vietnam, is effective as of 06/09/2019.
Some notable changes prescribed in Circular 06 that foreign investors need to know are as follows:
- Foreign-invested enterprises required to open a direct investment capital account (DICA) in accordance with Circular 19 are enterprises in which foreign investors contribute capital to establish, manage the business and implement their investment activities in Vietnam. However, according to Circular 06, foreign-invested enterprises must open DICA, including: (i) Enterprises established under the investment form of establishing an economic organization whose shareholders or members are foreign investors, having an investment registration certificate (IRC); (ii) enterprises that are not established under (i) but at least 51% of charter capital is owned by foreign investors; (iii) project enterprises established by foreign investors to implement PPP projects. In addition, foreign investors participating in BCC contracts or directly implementing PPP projects without establishing a project enterprise are required to open DICA.
- Domestic loans of foreign-invested enterprises are not required to be made through DICA, while foreign loans do not necessarily have to be made through DICA in all cases. This is a significant change, since under Circular 19, all loans must be made through DICA.
- Circular 06 requires that foreign-invested enterprises not meeting the conditions specified in section 1 above (for example, foreign investors owning less than 51% of charter capital) shall close their DICA, simultaneously, foreign investors must open an indirect investment capital account (IICA) to operate unless such enterprise is established and operates under IRC. In addition, when a foreign-invested enterprise, which already has IICA, contributes capital, acquires shares or capital which results in the foreign investor owning 51% or more of charter capital, it must open DICA to operate.
It may be understood that when an enterprise has closed DICA when it does not meet the conditions of a foreign direct investment enterprise, it shall re-open DICA upon the conditions being met in the future (for example: foreign investors owning more than 51% of charter capital). Therefore, are the regulations on DICA closure actually necessary, when the procedures for opening and closing DICA are quite complex.
5. CIRCULAR 43/2019/TT-BTC
“Guidelines on investment expenditures in Industrial parks and Economic zones eligible for deduction when calculating taxable income of enterprises”
Circular 43/2019/TT-BTC (“Circular 43”) dated 12/07/2019 of the Ministry of Finance takes effect as of 26/08/2019, providing guidelines on the implementation of Clause 4, Article 24 of Decree No. 82/2018/ND-CP dated 22/05/2018 of the Government on management of industrial parks and economic zones.
Accordingly, the expenditures on construction, operation or renting of condominium apartments and social infrastructure for workers in industrial parks, economic zones are considered to be deductible expenses for calculating taxable income of an enterprise with investment projects therein in the following cases:
- For fixed assets: Such expenses shall be included in the value of constructions, depreciated and included in deductible expenses when determining taxable income if they are qualified as fixed assets pursuant to regulations of the law.
- For expenses (other than those specified above): Such expenses shall be included in deductible expenses when determining taxable income in accordance with law on corporate income tax.
6. CIRCULAR 34/2019/TT-BTC
“Supplementing the regulations on the equitization principles of state-owned enterprises and dealing with the Enterprise Arrangement and Development Fund”
Circular 34/2019/TT-BTC (“Circular 34“) dated 11/06/2019 of the Ministry of Finance amending and supplementing a number of articles of Circular No. 40/2018/TT-BTC of the Ministry of Finance, takes effect as of 29/07/2019.
According to Circular 34, the Ministry of Finance supplements the regulations on adjusting the charter capital structure for equitized enterprises which are state-owned enterprises and enterprises with 100% of charter capital invested by state-owned enterprises.
Specifically, the number of sold shares that are additionally issued according to the equitization plan approved by the owner’s representative agency shall be determined. In case the number of shares sold in the forms specified in this Circular (including shares issued to strategic investors) is greater than the number of shares additionally issued according to the plan for offering of shares, such positive difference is considered as shares from the sale of state capital. In addition, Circular 34 also supplements the provision that the owner’s representative agency shall make decision on approval for statement of the Enterprise Arrangement and Development Fund on 31/12/2017 after 30 days, as of 29/7/2019. The parent company shall transfer the increased amount compared to the amount payable to the Enterprise Arrangement and Development Fund (if any) within 05 days from the date the Fund’s settlement is approved. After the said time limit, the parent company shall pay interests on late payment according to regulations. The Ministry of Finance shall decide to use money of the Enterprise Arrangement and Development Fund (Fund) refund the overpaid amount to the enterprise within 10 business days, if the amount payable to the Enterprise Arrangement and Development Fund according to the calculation by the owner’s representative agency is lower than that determined and paid by the enterprise.