New decrees coming into force as of the beginning of May, 2017

1. Safe harbor for transfer pricing documentation

Decree No. 20/2017/ND-CP prescribing tax administration for enterprises engaged in transfer pricing comes into force as from May 01, 2017.

According to the Decree, the transfer pricing documentation shall be exempted in the following circumstances:

- Taxpayer is engaged in the transfer pricing but the total revenue arising within a specified tax period is less than VND 50 billion and the total value of the related-party transactions arising within a specified tax period does not exceed VND 30 billion;

- Taxpayer already entering into Advance Pricing Agreement (APA) has submitted the annual report in accordance with regulations.

For those related party transactions which are not covered by the APA, taxpayers are obliged to comply with the transfer pricing documentation requirements as regulated.

- Taxpayer performing business activities by exercising routine functions, neither generating any revenue nor incurring any cost from operation or use of intangible assets, generating sales of less than VND 200 billion, as well as applying the ratio of net operating profit before loan interest and corporate income tax relative to sales revenue, engages in related-party transactions in the following sectors:

+ Distribution: At least 5%;

+ Manufacturing: At least 10%;

+ Toll manufacturing: At least 15%.

2. Basis for making local-government budget estimates

Decree No. 31/2017/ND-CP providing regulations on formulation, verification and decision on financial plan, estimate and allocation of annual local-government budget shall come into force as from May 10, 2017.

According to the Decree, a local-government budget estimate is made according to the following grounds:

- Objectives and duties relating to economic – social development, national defense and security, external affairs and gender equality;

- Policies on budget revenues, budget allocation limits and policies, standards and limits of budget expenditures;

- Local five-year financial plan and local three-year state budget – financial plan (for provinces or central-affiliated cities); local five-year public investment plan;

- Reality of local-government budget in the current year;

- Budget collection and spending duties assigned by the higher-level authorities; sources of budget revenues and budget expenditures within liabilities of local government; reports on budget estimates made by affiliates of a local government and its inferiors; and other grounds.

3. A fine of up to VND 5,000,000 shall be imposed for distributing films inconsistently with regulations

This fine is prescribed in the Decree No. 28/2017/ND-CP on amendments to the Decree No. 131/2013/ND-CP on penalties for administrative violations against regulations on copyright and related-rights, and Decree No. 158/2013/ND-CP on penalties for administrative violations against regulations on culture, sports and tourism.

According to the said decree, a fine ranging from VND 3,000,000 to VND 5,000,000 shall be imposed for any of the following violations:  

- Making public films recorded in any kind of materials without control labels;

- Making public films with contents and extent other than those specified in the film exhibition license or broadcasting decision;

- Failure to satisfy requirements for facilities and equipment in film studios featuring special effects that affect moviegoers during the operation.

Decree No. 28/2017/ND-CP shall come into force as from May 05, 2017.

4. Foreign submarines entering the internal waters of Vietnam are not required to fly under Vietnamese flag

Decree No. 23/2017/ND-CP providing amendments to Decree No. 162/2013/ND-CP on penalties for administrative violations committed within coastal areas, islands and continental shelves of Vietnam comes into force as from May 01, 2017.

According to this decree, penalties will not be imposed on foreign submarines and underwater vehicles entering the internal waters of Vietnam without flying the Vietnamese flag. A foreign submarine or underwater vehicle must face penalties if it enters the internal waters of Vietnam without flying its state flag (excluding permitted cases).

5. Decree No. 30/2017/ND-CP providing regulations on response to emergencies, natural disasters and search and rescue shall come into force as from May 05, 2017.

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