Guidance on tourism activities under the new normal from March 15

Below is Infographic describing Guidance No. 829/PA-BVHTTDL released by Ministry of Culture, Sports and Tourism on tourism activities under new normal from March 15.

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Fresh grapefruit

Fresh grapefruit is special food of Dong Nai Province, Viet Nam. Grapefruit is very delicious, sweet and fragrant. Furthermore, Grapefruit has many good ingredients for health.

Information supplier: Mr. Tien - ++ 84918386520

Benefits of Fresh Grapefruit

Weight loss

Some people claim that grapefruit is a miracle weight-loss fruit. Studies have shown that grapefruit demonstrates improvements in blood pressure and lipid level.

Reduces Bad Cholesterol

The bad cholesterol is lowered by 15% with regular grapefruit consumption. Yellow grapefruit was found to be more beneficial than red. Benefits are seen after only a month when at-risk patients added it to their diet.

Cancer

Grapefruit is a rich source of antioxidants, such as vitamin C. These can help combat the formation of free radicals known to cause cancer. Lycopene intake has been linked with a decreased risk of prostate cancer in several studies.

Digestion

Grapefruit, because of its water and fiber content, helps to prevent constipation and promote regularity for a healthy digestive tract.

How is the Fresh grapefruit grown?

Grapefruit is grown with organic methods without pesticides and chemical fertilizers. Therefore, it’s extremely good and safe for consumers.

Storage instruction

Keep in dry cool place.

Using instruction

Peeling off grapefruit skins to get the flesh inside.

Which dishes are made from the fresh grapefruit?

You can eat fresh grapefruit directly, or make salad.

Grapefruit juice

It is rich in Vitamin C and ranges from sweet-tart to very sour. Variations include white grapefruit, pink grapefruit and ruby red grapefruit juice.

Grapefruit salad

Information about the farm.

An Foods is located in Dong Nai Province, Viet Nam. They have natural and organic certification. They guarantee high quality of products.

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Hoa Loc Mango

Hoa Loc Mango are tropical fruits, plump and oval in shape. They have an inedible skin that ranges in color from yellow to green through to red-green, depending on the variety, inside is a soft, edible yellow flesh and a hard inedible stone.

Information of supplier: Mr. Tien Tel: ++84 918386520

Benefits of Hoa Loc mango

Prevents Cancer

Research has shown antioxidant compounds in mango fruit help protect against cancer. These compounds include quercetin, isoquercitrin, astragalin, fisetin, gallic acid as well as the abundant enzymes.

Lowers Cholesterol

The high levels of fiber, pectin and vitamin C help to lower serum cholesterol levels, specifically Low-Density Lipoprotein (the bad stuff).

Clears the Skin

Can be used both internally and externally for the skin. Mangoes help clear clogged pores and eliminate pimples.

Improves Eye Health

One cup of sliced mangoes supplies 25 percent of the needed daily value of vitamin A, which promotes good eyesight and prevents night blindness and dry eyes.

Alkalizes the Whole Body

Tartaric acid, malic acid, and a trace of citric acid found in the fruit help to maintain the alkali reserve of the body.

Using and Storage of mangoes

Mangoes shouldn’t be put in the fridge until they are ripe, so simply place unripe fruits at room temperature for a few days or you can place them in a paper bag to speed up the process. As soon as they are ripe, store in the fridge for up to five days. In order to tell if it is ripe, just gently squeeze it – it should feel soft and you may be able to smell sweet scent from the stem-end of the fruit.

Production area: Dong Thap province, Viet Nam.

Quality standard: GlobalGap.

Which are dishes made from Hoa Loc mango?

You can peel mango and eat directly or do some other things such as mango smoothies, mango ice cream,...

Mango smoothies

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How to Set Up a Representative Office in Vietnam

• A Representative Office (RO) is one of the most popular and common market entry options for foreign investors in Vietnam.
• An RO offers a low-cost entry option for businesses that want to get a feel of the Vietnamese market before making a commitment to a bigger investment in the country.
• Vietnam Briefing gives an overview of what is needed to set up an RO, including compliance, reporting, and tax requirements.

A Representative Office (RO) offers a low-cost entry for companies seeking to gain a better understanding of the Vietnamese market. As such, this option is among the most common for first-time entrants to the Vietnamese market and often precedes a larger presence within the country.

What are ROs permitted to do?

ROs are permitted to engage in the following activities:

1. Conducting market research;
2. Acting as a liaison office for its parent company;
3. Promoting the activities of its head office through meetings, and other activities, that leads to business at later stages.

Representative offices are dependent on their parent company and are not allowed to generate their own profits or enter directly into contracts. They are also not allowed to issue invoices.

What do you need to get a license?

Pre-licensing checklist for setting up a RO

1. File an application for setting up a RO with company chop or seal;
2. Appointment letter of Chief of RO with identification documents and company seal;
3. Power of attorney in favor of consultant to submit the application dossier;
4. Certificate of Incorporation for the Company and/or Business Registration Certificate of the Company;
5. Audited financial report of the company for the latest fiscal year;
6. Memorandum of Understanding (MoU) of leasing office or leasing contract;
7. Documents providing legal rights of landlord regarding the right of leasing office.

For steps 1 to 6, the foreign entity would require one notarized and consularzed copy of each document and a translated copy in Vietnamese by a Vietnamese competent authority.

A signed leasing contract is also required before registering a RO in Vietnam.

What do you need to do after you get the license?

Post-licensing checklist for setup a RO:

8. Make a seal for the RO;
   • License on the establishment of RO
   • Passport of Chief of RO if foreigner or passport/ID card if Chief is Vietnamese
9. Register a Tax code for RO;
   • Declaration to register a tax code
   • Power of attorney
   • Certificate of seal registration
   • Certificate of RO in Vietnam
10. Open a bank account of RO;
    • License on the establishment of RO
    • Certificate of seal registration
    • Certificate of tax code registration
    • Letter of authorization appointing the authorized signatories of the bank accounts
11. Announcement of the establishment of RO of Company.

For steps 8 to 10, notarized and translated documents will be required to complete the process.

How long does it take to set up an RO?

ROs can be set up in between six to eight weeks. We recommend hiring a professional service to deal with the myriad of laws and procedures.

Given the absence of in-country revenue and associated licensing requirements, the setup process for this option does not entail as many bureaucratic procedures as others.

An RO license is valid for five years but can be extended for another five years.

What comes next?

Hiring, tax, and reporting.

There is no cap on the number of local and expatriate employees that a representative office can hire as long as their employment is properly documented.

All expatriate hires including the chief representative are required to have a work permit. ROs can hire staff directly or use the assistance of recruiting agencies.

An RO is not subject to Vietnamese corporate income tax (CIT). However, it is responsible for declaring its employees’ personal income tax (PIT).

In order to determine payable tax, ROs have to undertake a tax audit that checks all revenues and expenses during the tax term to establish grounds for declaring and paying tax.

The RO also has to send reports of its activities of the previous year to the Department of Industry and Trade before January 30 of each year. These reports are also known as the Annual Report.

The Annual Report must be in accordance with Circular No. 11/2016/TT-BCT. Among other details, the annual report must include the list of employees working for the RO and any change within the reporting year. In addition, the report must also include what the RO has done during the year such as its promotion activities and marketing events.

Businesses that fail to submit the annual report on time, risk fines of up to VND 40 million (US$1,700). It can also result in difficulties if the RO wants to renew its license or change and upgrade its operations to a permanent establishment.

Tax risks if RO viewed as Permanent Establishment

As discussed earlier, an RO is only permitted to do market research activities and act as a liaison office for its parent company. It cannot engage in commercial activities or support the parent company with its commercial activities in Vietnam.

A Permanent Establishment (PE) is defined as per local laws as well as the double tax avoidance (DTA) agreement between Vietnam and other countries. Generally, the PE definition under a DTA takes precedence over domestic regulations.

If a foreign business wants to convert the RO into a PE but has been carrying out activities as per local laws, it could activate a licensing risk. Therefore, foreign businesses should ensure that their RO performs activities as per the DTA guidelines. In addition, if the RO performs activities that are outside its scope, it may be subject to additional tax in Vietnam.

To avoid any licensing or tax risks in case the RO is treated as a PE, businesses are advised to refrain from getting their ROs involved in buying and selling activities between two parties or any other activities generating revenue.

Foreign investors looking to establish a presence in Vietnam should use the services of registered local advisors who can ensure their set up process is accurate while complying with the relevant DTAs and local regulations.

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How to Avoid Double Taxation in Vietnam

Vietnam Briefing discusses how businesses and individuals can reduce their tax exposure by taking advantage of double tax avoidance agreements (DTAAs). Nevertheless, businesses should be aware of tax regulations when using this method or face significant tax fines and penalties.

Both foreign and domestic residents of Vietnam are able to obtain reductions and exemptions on their taxes through a variety of different methods. Thanks to the double tax avoidance agreements (DTAAs) that Vietnam has, businesses and individuals can reduce their tax exposure by taking advantage of the tax reductions and exemptions they may be subject to.

However, businesses should be aware of the tax regulations in place on DTAAs as these can be complex.

What are DTAAs?

DTAAs treaties effectively eliminate double taxation through identifying exemptions or reducing the amount of taxes payable in Vietnam. Double taxation is when two or more countries levy tax on the same income such as income taxes, assets, or financial transactions. DTAAs apply to both individuals and corporations who are residents of Vietnam, citizens of the country that Vietnam had signed a DTAA with, or both.

Tax exemptions or reductions under the DTAAs do not apply automatically, and foreign individuals and organizations are required to submit the relevant documentation to the provincial and/or municipal tax authorities in Vietnam to notify their eligibility for tax exemptions/reductions.

Tax avoidance methods

In respect to Vietnamese taxes, residents of Vietnam (foreign and domestic) can see certain double taxation avoidance methods applied when their payable tax amount is calculated. Depending on the specific agreement, Vietnam may apply one or a combination of the three methods below to calculate this.

Direct deduction method

If the taxpayer is a resident of Vietnam and had already paid income taxes to a DTAA partner country, the same amount will be deducted from the relevant taxes payable in Vietnam.

Deduction of deemed tax

Deemed tax is the amount of tax that should have been paid by a resident of Vietnam to a signatory country on income sourced from that country, but which is reduced because of favored treatment toward the signatory country. With this method, the deemed tax amount will be deducted from the taxes payable in Vietnam.

Deduction of indirect tax

If a Vietnamese resident receives income from a source belonging to a signatory of a DTAA and corporate income taxes have already been collected by the signatory country, the indirect tax amount will be deducted from the taxes payable in Vietnam.

The third method listed above is only applicable to the joint-stock company if the Vietnamese resident holds at least 10 percent of such company’s voting rights. It should be noted that the deductible tax amount may not exceed the total taxes payable in Vietnam.

Residents of Vietnam

Individuals and organizations that want to confirm their residency status for tax purposes need to submit application dossiers to the relevant state authority.

If the individuals or organizations do not declare and pay taxes in Vietnam, they must submit the following documents:

• Confirmation letter noting the civil status registration (for individuals), or a business certificate (for organizations) from the managing agency or local administration in their place of residence; and
• Confirmation of income payers (if any).

The city/provincial tax department will consider and grant written certificates noting residential status to applicants within 15 working days of receipt of the application dossier. The 15-day timeline does not include the time required for dossier supplementation and explanation.

Tax exemption and reduction

To notify the tax authority for tax exemptions and reductions, individuals and organizations must submit the following:

• A notice on eligibility for a tax exemption or reduction under the appropriate agreement;
• The original certificate of residence granted by the taxation agency of the country of residence for the year prior to the one that exemption is being applied for;
• A signed copy of the individual’s passport (for individuals whose signatory countries do not grant certificates of residence); and
• Documents to verify the source and nature of income (i.e., labor contracts, recruitment decisions, etc.).

The tax authority only acknowledges receipt of the notification submitted by the taxpayer without confirming their eligibility for tax exemptions or reductions. The taxpayer must self-assess their eligibility and should be well-prepared to substantiate upon being enquired by the tax authority.

Tax deduction

To apply for a tax deduction, residents of Vietnam (both individuals and organizations) must submit the following documents:

• An application form for the exemption or reduction under the appropriate agreement;
• For direct deduction: a copy of the income tax declaration form from the foreign country, a copy of the tax payment receipt from the foreign country, and the original certificate from the foreign tax authorities verifying that the taxes have all been paid;
• For deduction of deemed taxes: a copy of the income tax declaration form from the foreign country, a copy of the business registration certificate or legal documents certifying the business activities in the foreign country, a letter of certification from the foreign tax authority regarding the exempted or reduced taxes in that foreign country (this tax deduction must also be done in accordance with any agreements and/or laws of the foreign country); and
• For indirect deductions: legal documents proving the relationship and capital contribution percentage of the applicant, a copy of the income tax declaration form from the foreign country in which the applicant contributes capital, a copy of the declaration form for taxes deducted on dividends, and a certificate from the foreign tax authorities certifying that the relevant corporate income taxes were paid before the dividends were divided.

The tax departments will consider, approve and perform the relevant tax deductions according to the agreement within 30 working days of receipt of the application dossier. The 30-day time limit does not include time for dossier supplementation and explanation.

Residents of signatory countries

Tax exemption and reduction

In order to be considered for a tax exemption and/or reduction, foreign residents must prepare and submit a dossier to notify the tax authority about their eligibility. The dossier must include the following documents:

• A notice on the eligibility of a tax exemption or reduction under the appropriate agreement;
• The original certificate of residence granted by the taxation agency in the individual’s country of residence for the relevant tax year (note: individuals may submit a signed copy of their passport to replace this certificate if they are not granted certificates of residence);
• Copy of the tax payment receipt (note: if the relevant taxes have already been paid in Vietnam, then the resident will need to also provide a certificate issued by the State Treasury in Vietnam noting the amount that was already paid);
• Certificate from the Vietnamese partner (individual or organization) listing the term of the contract and the actual time of operations in Vietnam;
• Copy of the business registration certificate and/or the tax registration certificate from the country of residence (for organizations) or the professional practice license (for individuals); and
• A signed copy of the business and labor contracts.

The tax authority only acknowledges receipt of the notification submitted by the taxpayer without confirming their eligibility for tax exemptions or reductions. The taxpayer must self-assess their eligibility and should be well-prepared to substantiate upon being enquired by the tax authority. Theoretically, if a tax exemption or reduction dossier was submitted to the tax department in a previous year, then the foreigner is required to submit a new labor contract (if any) for all subsequent years. However, the tax authority often requires the notification for tax exemptions and reductions to be submitted on an annual basis.

Tax refund

Foreign residents are entitled to tax refunds if the amount of taxes paid to the State Treasury is higher than the total taxes payable. To obtain a tax refund, the resident must submit a refund request to the General Department of Taxation (GDT), the documents for which are the same as those for requesting a tax exemption or reduction.

The tax department will review and give out the tax refunds according to the appropriate agreement within 60 working days from the date of receipt of the application. It should be noted that refund requests are often subject to extensive audits and inquiries by the tax authority. The 60 working day time limit does not include time for dossier supplementation and explanation.

Confirmation of taxes paid

If a foreign resident needs confirmation of income taxes paid in Vietnam to deduct from the taxes payable in their country of residence, then the following documents need to be compiled and submitted to the relevant authority:

• An application for the confirmation of taxes actually paid in Vietnam;
• A copy of the tax payment receipt and a written certificate from the State Treasury in Vietnam noting the amount of taxes paid; and
• The original certificate of residence granted by the tax agency of their country of residence for the relevant tax year.

The tax department will issue a written confirmation of the taxes paid by the applicant within 15 working days from the date of receipt of the application. The 15 working day time limit does not include time for dossier supplementation and explanation.

Common DTAA practices in Vietnam

Most DTAAs are written comprehensively with complex terms; therefore, the implementation of the DTAA is subject to the interpretation of the provincial tax authority instead of the GDT of Vietnam.

Thus, the procedures for DTAA implementation are usually not consistently practiced and the provisions are often interpreted differently by different provincial tax authorities due to a lack of official guidance from the Ministry of Finance (MoF) as well as the GDT.

Moreover, the taxpayers must self-assess and must be responsible for their tax exemption and reduction eligibility under DTAA practices without any confirmation from the tax authority when submitting the DTAA notification dossiers.

Thus, taxpayers are subject to potential tax exposure of being questioned and challenged by the tax authority in future tax audits or tax inspections, which may result in significant tax fines and penalties for an incorrect declaration if inaccurate interpretations and self-assessments are made by taxpayers.

Based on our practical experience taxpayers, who wish to apply for tax exemptions and reductions, should always seek their provincial tax authority’s opinion on their eligibility status before proceeding with the DTAA application process to mitigate future tax risks. Alternatively, they can also seek advice from professional tax consultants who have extensive knowledge and experience in DTAA implementation.

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Assessing Vietnam’s Labor Market and Payroll Considerations

Vietnam has become an increasingly attractive place for businesses of all types, given the country’s growing consumer class and dynamic workforce.

Much of this economic growth has come from the movement of people from traditional agriculture to the manufacturing and services industries, in addition to the increased mechanization of the agriculture sector itself.

Vietnam has one of ASEAN’s largest labor markets, whose strength is approximately 56 million people, and with a labor participation rate of 76 percent. Due to the developing nature of the workforce in Vietnam, it is natural that there exists some difficulty in finding highly skilled employees — only 12 percent of Vietnam’s workforce are considered highly skilled.

Competitive minimum wage

Vietnam sets a different minimum wage level across its four regions. Region I (urban Hanoi and Ho Chi Minh City) registered the highest minimum wage of VND 4,200,000 (US$190) while Region IV registered the lowest at VND 3,070,000 (US$132). Moreover, employees that have had vocational training must be paid at least seven percent higher than the applicable minimum wage rate.

Social insurance

There are three types of mandatory social security in Vietnam that must be covered by foreign enterprises seeking to hire local staff:

• Social insurance;
• Health insurance; and
• Unemployment insurance.

Employers register and pay insurance contributions monthly on behalf of their employees at the provincial Department of Labor, Invalids, and Social Affairs (DoLISA). Contributions are determined based on the employees’ monthly salary or wages.

Challenges

Skills and talent shortages are particularly acute in industries such as technology and banking. The country is currently lacking over 70,000 IT workers per year and the government is setting a target of creating a pool of 1.3 million IT workers by 2025.

Further, the US-China trade war has aggravated the existing shortage of quality labor as more companies shift all or part of their manufacturing to Vietnam, particularly for engineers, managers, and software developers.

Going forward

To address the challenges within its labor force, the Vietnamese government has announced it will prioritize adapting its industries to a digital future and will improve the accessibility of on-the-job training programs in these fields.

The vocational education system is also increasing its commitment to work with the private sector to establish more enterprise-based training programs. Vietnam’s business climate already encourages innovation and attracts foreign investment, so an enhanced learning ecosystem will allow the country to respond well to the latest technological disruptions.

The benefits of outsourcing payroll processing

For several years, multinational companies with operations in one or more Asian countries began transitioning to an outsourced model for handling their payroll and HR administration. Already in the US and Europe, the accelerating trend towards outsourcing payroll processing is unlikely to reverse due to the huge efficiency and savings it can deliver.

In Asia, however, the cost-benefit of outsourcing is significantly less clear-cut. In essence, the transition towards outsourcing in Asia is primarily being driven by three factors:

• The increased importance of Asia-based employees to their organization, and the importance of ensuring the handling of their payroll in a professional manner.
• The increasing number of Asia-based employees, and increased complexity of their compensation packages.
• The increasing virtualization of HR administration has allowed work that previously entailed locally-based employees working with government bureaus to be handled from an online location.

In countries like Vietnam, savings are now kicking in due to the virtualization mentioned above, but the main motivation for companies to choose an outsourced model is more related to the ability to achieve a higher level of consistency in data management, greater transparency for management, and improved confidentiality across their Asia-based entities.

As companies continue to expand their operations across Asia, not only does their headcount grow, but the number of legal entities they must maintain also increases. Such expansion poses a great challenge to these companies when seeking vendors able to comprehend and efficiently explain local payroll requirements and produce reports that seamlessly link to their specific accounting platforms.

“One-country” vendors can often do an efficient job but communicating with several such companies every month can be very time-consuming for HR managers based at HQ. On the other hand, “global” vendors (a managed model) can sometimes struggle to meet all the local statutory requirements and customs in faraway markets that change rules and regulations frequently.

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