Every nation is distinguished by its own culture. Thus, their national holidays are celebrated differently and uniquely. These also affect investors in making investment decisions, aside from the business and legal environment. Therefore, it is crucial for business owners to understand and familiarize themselves with  traditional holidays and practices. In this article, Viettonkin will provide insights and tips  for investors about Vietnamese national holidays and labor compliance.

Vietnam's public holidays

Vietnam is known for its deep-rooted and diverse culture, in which national holidays are often associated with Vietnamese traditions and customs, or special events in history. 

For example, Lunar New Year (“Tet Holiday”) is considered the most important and desirable public holiday of the year. Tet usually happens on the 1st day of the lunar new year and symbolizes warmth and family reunions. Besides, Hung King’s Anniversary on April 30th and May 1st annually reflect Vietnamese origin and philosophy  “when drinking water, remember the source”. Thus, people have several days-off to commemorate and show gratitude towards Hung King and his forefathers.  

In addition, another most significant holiday in Vietnam is on September 2 - Independence Day. Vietnamese people celebrate the day when the country was established and recall the heroic history of the nation. 

In Vietnam, the holiday schedule for special holidays such as the Lunar New Year, and Hung King's Anniversary, among others, will be regulated by the state. Traditionally, the Tet holiday is the longest holiday, lasting for 7 days, from January 20th to January 27th in 2023.  For the remaining holidays, employees will have a maximum of 4 days off.

Viet Nam Public Holidays 2023
Date	Day	Holiday
January 1, 2023	Sun	New Year's Day
January 2, 2023	Mon	New Year Holiday (compensatory time-off)
20 Jan to 26 Jan, 2023	Fri to next Thursday	Tet Holiday
April 29, 2023	Sat	Hung Kings Commemoration Day
April 30, 2023	Sun	Reunification Day
May 1, 2023	Mon	International Labor Day
May 2, 2023	Tue	Reunification Day Holiday  (compensatory time-off)
September 2, 2023	Sat	National Day
September 4, 2023	Mon	National Day  (compensatory time-off)

Implications of public holidays for enterprises and companies  in respect of the Calculation of Employee Salary and Holidays

The Labor Code 2019 stipulates how salary is calculated during public holidays, annual leave, and personal leave. In case employees are off work, the salary for employees on public holidays, annual leave, and personal leave is the salary according to the labor contract at the time they take leave. Some expenses, such as mid-shift lunches, allowances for gas, a car, a phone, and other items, are not included in the salary used as the foundation for public holidays.

In case the employees are on duty during public holidays, the employee’s salary is calculated as follows (Article 98 of the Labor Code 2019)

Employees who work overtime on public holidays, and paid holidays are paid at least 300% of their salary, not including the daily salary during the public holidays or paid leave for employees receiving daily salaries. Specifically, for employees who receive hour-based wages on public holidays, the overtime pay is equal to the actual hourly wage paid on a normal working day multiplied by 300% multiplied by the number of overtime hours, excluding the daily salary during public holidays or paid leave in case the employee receives daily salary..

Meanwhile, for employees who receive product-based wages on public holidays, the overtime pay is equal to the unit price of the product salary of the normal working day multiplied by at least 300% and multiplied by the number of products. 

One mindful note for investors in Vietnam is that holidays will affect the tax planning of investors. They might be extended if the legal and compliance due dates coincide with public holidays. Thus, paying attention to national holidays is essential. Being attentive to public holidays may help investors schedule their tax compliance ahead of the due date, hence fulfilling tax obligations on time. 

To avoid future legal violations, investors are  advised to consult leading experts in the field. In this way, investors can reduce the risk of non-compliance, and legal concerns, thus focusing more on core business activities. With decades  of experience in many Southeast Asia markets, along with a team of seasoned and professional experts insightful of the regional and domestic markets, Viettonkin is willing to accompany and support investors along Vietnamese legal procedures and compliance.

Thailand ranked in the Top 3 most developing economies in the ASEAN region, behind Singapore and Indonesia (World Bank 2022). Asides, this country was made of  an intriguing, diverse, and traditional culture with unique  Thai holidays. Therefore, bearing Thailand's cultural and traditional holidays in mind will help investors familiarize themselves with the business and legal environment. In this article, Viettonkin will provide insights and tips  for investors about Thailand's national holidays and labor compliance.

Thailand’s important holidays

Thai holidays include a wide variety of celebrations in which several holidays are to commemorate the country’s history, while the others are for religious observances. 

One of the most significant holidays is Chulalongkorn Day  on October 23rd each year, which honors the era of King Chulalongkorn. King Chulalongkorn is one of the most significant figures in Thai’s history, known for his achievements in Thailand's modernization, religious freedom, and national independence. 

Similarly, Coronation Day is held on May 5 annually to remember the coronation of the reigning monarch - King Bhumibol. The holiday is referred to as "Wan Chattra Mongkhon" in Thai.

The Visakha Puja Holiday is frequently referred to as "Buddha's Birthday." This holiday, which is celebrated in various Asian countries, is the major Buddhist festival, commemorating the birth, enlightenment, and death of the Buddha. 

In addition, Buddhists in Southeast Asia, including those in Thailand, Vietnam, Laos, Myanmar, and Cambodia, also observe Buddhist Lent. Buddhist Lent, known in Thailand as "Wan Khao Phansa" lasts for three months during the wet season. 

The Thai New Year's National Holiday, also known as the Water Splashing Festival - Songkran Day occurs every April from the 13th to the 15th. Songkran is a Sanskrit word that means "passing" or "approaching." Thais have a strong tradition surrounding the Songkran water festival, which symbolizes washing away all unfavorable omens and welcoming in a prosperous new year. These days, Thai people appreciate family reunions, with many of them traveling home to visit their elderly relatives.

The Kingdom celebrates Maha Songkran, often known as "Great Songkran," on April 13 to honor senior citizens. Families typically honor their older relatives by giving them presents and traditional foods. The Thai New Year's Eve is observed in Wan Nao on April 14. A widespread custom is to gather sand and bring it to monasteries and temples to represent the filth people's feet have accumulated over the previous year. The first day of the Thai New Year is called Wan Thaloeng Sok, which means "to start a new year or era," and it occurs on April 15.

Thailand Public Holidays 2023
Date	Day	Holiday
January 1, 2023	Sun	New Year's Day
January 2, 2023	Mon	New Year Holiday
January 22, 2023	Sun	Chinese New Year *
March 6, 2023	Mon	Makha Bucha Day
April 6, 2023	Thu	Chakri Day
13 Apr to 16 Apr, 2023	Thu to Sun	Songkran Festival
April 21, 2023	Fri	End of Ramadan *
May 1, 2023	Mon	Labour Day *
May 4, 2023	Thu	Coronation of King Vajiralongkorn
May 11, 2023	Thu	Royal Ploughing Ceremony *
June 3, 2023	Sat	Visakha Bucha Day
June 3, 2023	Sat	Queen Suthida's Birthday
June 5, 2023	Mon	Visakha Bucha Holiday
June 5, 2023	Mon	Queen Suthida's Birthday Holiday
July 28, 2023	Fri	King Vajiralongkorn's Birthday
August 1, 2023	Tue	Asahna Bucha Day
August 2, 2023	Wed	Khao Phansa Day *
August 12, 2023	Sat	Her Majesty the Queen Mother's Birthday
August 14, 2023	Mon	Her Majesty the Queen Mother's Birthday Holiday
October 13, 2023	Fri	Passing of His Majesty the Late King
October 23, 2023	Mon	Chulalongkorn Memorial Day
December 5, 2023	Tue	His Majesty the Late King's Birthday
December 10, 2023	Sun	Constitution Day
December 11, 2023	Mon	Constitution Day Holiday
December 25, 2023	Mon	Christmas Day *
December 31, 2023	Sun	New Year's Eve
Note:— Chinese New Year, Christmas Day and End of Ramadan are observed in Narathiwat, Pattani, Yala and Satun provinces only.— Labour Day is observed by all sectors except the Government sector.— Royal Ploughing Ceremony and Khao Phansa Day are observed by the Government sector only.

Every year, the Thai government publishes a list of 16 holidays, thus, employees can select the other twelve holidays besides Labor Day (May 1st) at the beginning of the year. This means that employees are given a minimum of 13 paid traditional holidays (according to Section 29 of the Labour Protection Act B.E. 2541). The following working day must be designated as a paid holiday if a traditional holiday falls on a weekend. 

Implications of public holidays for enterprises and companies in respect of the Calculation of Employee Salary and Holidays

In accordance with Section 62 of the Labour Protection Act B.E. 2541, if an Employer requires an Employee to work on a traditional Holiday, the Employer shall pay the Employee for the Holiday at the following rates:

• For an Employee who is entitled to Wages on Holidays, the payment shall be made in addition to Wages at a rate at least equal to the hourly wage rate of a Working Day for the number of hours of work done, or, where an Employee receives Wages on a piece rate basis, of not less than one time of the piece rate of Wages of a Working Day for work done; or
• For an Employee who is entitled to Wages on Holidays, the payment shall be made at not less than two times of the hourly wage rate of a Working Day for the number of hours of work done, or, where an Employee receives Wages on a piece rate basis, at not less than two times of the piece rate of Wages of a Working Day for work done.

There is no law requiring an employer to pay a bonus. Criteria and conditions of bonus payment or employee’s entitlement to bonus shall be in accordance with an agreement between an employer and an employee. Yet, when you want your company to be an attractive employer, you can pay an attractive salary plus a 13th-month bonus or normal salaries plus many months of bonus.

Investors should be aware of how wages are determined on public holidays in accordance with Thai law to reward workers for their efforts. They might be extended if the legal and compliance due dates coincide with public holidays. Thus, being mindful of public holidays may help investors schedule their tax compliance ahead of the due date, hence fulfilling tax obligations on time. Investors are advised to contact top industry professionals to avoid future legal non-compliances. Therefore, they can concentrate more on growing and expanding the business. With decades of experience in diverse global markets and a team of seasoned and professional experts insightful of the regional and domestic markets, Viettonkin is willing to walk you through your business journey. 

Singapore is a melting pot of diverse cultures with a socio-cultural fabric of Chinese, Malaysian, Indian, among others. This distinct yet harmonious blend of various traditional customs has brought about colorful public holidays and celebrations all year round. Thus, when venturing into Singapore, the cultural environment does affect how investors do business. This article provides you with insightful information about Singapore’s national holidays, and tips to legal compliances.

Major public holidays in Singapore

Chinese New Year is the most anticipated public holiday in Singapore. Similar to Tet Holiday of Vietnam, on this occasion, people return home to celebrate the new year with family and friends. In Chinatown, Chinese New Year activities are often held, namely lion and dragon dance, visiting temples, among others. 

In addition, both Thailand and Singapore have a public holiday for the birth, the enlightenment,  and the death of the Buddha. Yet, in Singapore, it is called “Vesak Day” when people of the Buddhist community practice public talks, vegetarian food fairs and hymn singing. 

Hari Raya Puasa - one of the most important events for the Malay community in Singapore - is commonly known as Eid Ul Fitr, marking the end of Ramadan. Meanwhile, known as the Feast of Sacrifice, Hari Raya Haji marks the end of the Haj pilgrimage to one of the holiest cities – Mecca. People spend these holidays by wearing their finest clothes, visiting families and friends and joining the thanksgiving feast. 

Implications of public holidays for enterprises and companies  in respect of the Calculation of Employee Salary and Holidays

Under the Employment Act 1968, employees are entitled to 10 paid public holidays annually. Therefore, if employers require their employees to work on one of those holidays, they are to pay an extra day’s salary or offer a grant. 

Additionally, in case a public holiday coincides with a non-working day, employees have another day off or one extra day’s salary instead of the paid public holiday at the gross rate. At the same time, if a public holiday falls on the rest day, the following working day will be regarded as a paid public holiday. 

However, in case the employees are not covered by the Employment Act, the Employee salary on public holidays will be decided based on the terms of the labor contract. 

How are employees qualified for a paid public holiday?

In 2 scenarios as follow, employees are paid at their gross rate on a public holiday:

• Not absent on the working day immediately before or after a holiday without any reasonable excuse and consent of the employers. 
• Or on authorized leave due to reasonable excuse on the day right before or after a holiday. 

Otherwise, if the holiday falls into approved unpaid leave, employees are not qualified for a holiday pay. 

How employers pay for employees in case they work on holiday?

By default, when employees work on a public holiday, employers are to pay them an additional day’s pay. Yet, under mutual agreement, employees can have alternative options, which are a public holiday or a time off. If any public holiday falls on a rest day, the working day next following that rest day is a paid holiday

Meanwhile, when the employees are required to work on public holidays, they are to be paid the following: The gross rate of pay for that day; An extra day’s salary at the basic rate of pay; and Any traveling allowance, if payable under the terms of their employment contract. The extra day’s salary can be replaced by either another day off.. 

One mindful note for investors in Singapore is that holidays will affect the tax planning of investors. If the legal and compliance due dates coincide with public holidays, they might be extended. Thus, paying attention to national holidays is essential. Being attentive to public holidays may help investors schedule their tax compliance ahead of the due date, hence fulfilling tax obligations on time. 

To avoid future legal violations, investors are  advised to consult leading experts in the field. In this way, investors can reduce the risk of non-compliance, and legal concerns, thus focusing more on core business activities. With decades  of experience in many Southeast Asia markets, along with a team of seasoned and professional experts insightful of the regional and domestic markets, Viettonkin is willing to accompany and support investors along Singapore’s legal procedures and compliance.

Famously known as “The Emerald of the Equator”, Indonesia is home to at least 300 ethnic groups, in which the majority of the population belong to Javanese, Sundanese, Batak, among others. With various distinguished communities across Indonesia, the country is a multicultural nation with diverse cultural identities. Hence, on doing business in Indonesia, investors are advised to take culture and customs into consideration. In this article, Viettonkin will bring helpful insights and tips related to Indonesian public holidays to investors. 

Major public holidays in Indonesia

Each year, Indonesia’s national holidays are stipulated by the Joint Ministerial Decree. The Indonesian Government has recently announced national holidays and collective leave days for 2023. In total, there are 24 days in which 16 days are national holidays while the rest are collective leaves^* . 

Indonesian National Holidays
Date	Day	Holiday
January 1, 2023	Sun	New Year's Day
January 22, 2023	Sun	Chinese New Year
February 18, 2023	Sat	Isra Mi'raj
March 22, 2023	Wed	Bali Hindu New Year
April 7, 2023	Fri	Good Friday
April 22, 2023	Sat	Hari Raya Idul Fitri
April 23, 2023	Sun	Lebaran Holiday
May 1, 2023	Mon	Labour Day
May 6, 2023	Sat	Waisak Day
May 18, 2023	Thu	Ascension Day of Jesus Christ
June 1, 2023	Thu	Pancasila Day
June 4, 2023	Sun	Vesak Day
June 29, 2023	Thu	Idul Adha
July 19, 2023	Wed	Islamic New Year
August 17, 2023	Thu	Independence Day
September 28, 2023	Thu	Prophet Muhammad's Birthday
December 25, 2023	Mon	Christmas Day
Indonesia Collective Leave 2023
Date	Day	Holiday
January 23, 2023	Mon	Chinese New Year
March 23, 2023	Thu	the Holy Day of Silence, Saka New Year
April 21, 2023	Fri	Eid Al-Fitr
April 24, 2023	Mon	Eid Al-Fitr
April 25, 2023	Tue	Eid Al-Fitr
April 26, 2023	Wed	Eid Al-Fitr
June 2, 2023	Fri	Vesak Day
December 26, 2023	Tue	Christmas Day

(*) collective leaves: In case the public holidays coincide with the weekend, Thursday, or Tuesday, the employees are granted an additional collective leave day, also known as “cuti bersama” in Indonesian.

Eid Al-Fitr - known as Lebaran -  is one of the most significant and celebrated holidays in Indonesia, marking the end of Ramadan. This holiday reflects Muslim’s holiest month, thus, people spend the day with close family members and friends. Idul Adha is another Muslim day that is quite wide-spread in Indonesia. On this holiday, Muslims will go to Mosques and share meat with other people. The day is filled with warmth and caring for those who are less fortunates. Similarly, Isra Mi’raj is also a holiday for the Muslims community. This holiday is an occasion for Muslims to  socialize and visit families and friends. 

In addition, besides having Chinese New’s Year like other ASEAN countries (Singapore, Thailand, among others), Indonesian people celebrate Balinese Hinduism New Year “Hari Raya Nyepi” on March 22 annually. The holiday is very popular in Bali with local residents enjoying the new year by not using electricity anywhere. They believe that this occasion is to reflect on oneself without any distractions. 

Furthermore, to every Indonesian, Indonesian Independence day is of the most importance. The celebration may even take place for over a month to remember the day Indonesia found liberation and independence from the colonists. It is also referred to as Hari Merdeka. Last but not least is Pancasila Day when Sukarno - Indonesia’s first president - declared the five important principles in Pancasila, by which the new nation ought to be governed. The principles hold strong life philosophy and Indonesian core values for Indonesians. 

Implications of public holidays for enterprises and companies in respect of the Calculation of Employee Salary and Holidays

Under the Manpower Law, employees can have all national public holidays off. In case employers require their employees to work on those days, they have to pay overtime wages. In accordance with Government Regulation 35/2021, overtime is payable at a rate of 1.5 times the hourly wage for the first hour and twice the hourly wage thereafter. 

In addition, according to Indonesian Regulations 6/2016, all local employees on a permanent basis and temporary basis are eligible for a yearly religious holiday bonus - the so-called Tunjangan Hari Raya (THR), which must be paid in Indonesian Rupiah. Yet, employers do not necessarily pay the THR to foreign employees. 

The Tunjangan Hari Raya (THR)

Indonesians appreciate their diverse religions and collectivist societies. Hence, through public holidays, they spend on significant things to their culture and customs. In this way, THR helps Indonesian people to afford these celebrations. 

THR is equal to the salary of one month for employees with a least 12-month work. Meanwhile, for those with less than 12 months of work, the THR will be paid on a prorated basis, which is calculated as follow:

(service period/12) x 1 month’s salary

In accordance with the amended law, freelance workers are also eligible for THR. Similar to the aforementioned conditions, those working for over 12 continuous months are entitled the THR equal to one month’s salary. This bonus is calculated on the average salary they received throughout this period.

In case employees have worked over 1 month yet less than a year, the THR bonus is calculated based on the average monthly salary throughout the employment period.  

How employers are fined with the non-compliance of THR?

Only businesses with permission from Indonesia’s Ministry of Manpower can delay this allowance payment to employees. Otherwise, they have to face a fine or other alternative administrative sanctions. To be more specific, 

• 5% of the THR is the penalty for delayed payment. Employers are obliged to pay their employees the full THR bonus with the fine without any exceptions. In case the employer is in financial difficulties, they must submit to the local Manpower Department for an exception of 30 days prior to the national religious holiday. 
• Written warning from the Manpower Department,
• Business activities restrictions,
• Temporary suspension of all production; and
• Suspension of business activities within a certain period;

The employees have all rights to sue their employer in the Industrial Relations Court if the employer still delays the THR payment despite the implementation of the sanctions. 

One mindful note for investors in Indonesia is that holidays will affect the tax planning of investors. If the legal and compliance due dates coincide with public holidays, they might be extended. Thus, paying attention to national holidays is essential. Being attentive to public holidays may help investors schedule their tax compliance ahead of the due date, hence fulfilling tax obligations on time. 

To avoid future legal violations, investors are  advised to consult leading experts in the field. In this way, investors can reduce the risk of non-compliance, and legal concerns, thus focusing more on core business activities. With decades  of experience in many Southeast Asia markets, along with a team of seasoned and professional experts insightful of the regional and domestic markets, Viettonkin is willing to accompany and support investors along Indonesian legal procedures and compliance.

The transfer of contributed capital and securities is becoming more widely used by both domestic and foreign investors as the tax environment for mergers and acquisitions (M&A) in Vietnam evolves. As a result, most shareholders who want to invest in or divest from a Vietnamese company consider compliance with regulations and tax efficiency to be top priorities. This is a guide from Viettonkin Audit to help interested investors become acquainted with the tax environment, particularly the capital transfer tax in Vietnam.

Capital Transfer Tax and Income Tax from Capital Transfer

In general, capital transfer tax can be described as the levy on the profit that an investor makes from the sale of an investment. The profit gained from the transfer of capital is classified as taxable income under Vietnamese law. 

According to Section 1(1) of Decree No. 12/2015/ND-CP, taxable incomes earned in Vietnam by foreign enterprises, as prescribed in Article 2 of the Law on Corporate Income Tax 2007 amended in 2012, are derived in Vietnam from the provision of services, provision and distribution of goods, grant of loans, payment for copyrights for Vietnamese entities or foreign entities doing business in Vietnam, or from the transfer of capital, projects of investment, right to contribute capital, right to participate in projects of investment, and right to mineral exploration, extraction, and refinement of minerals, regardless of the location of business premises.

For further clarification, Section 14(1) of Circular No. 78/2014/TT-BTC also states that an enterprise’s income from capital transfer is income earned from the transfer of part or the whole of the capital amount the enterprise has invested in one or many other organizations or individuals (including the sale of the whole enterprise).

Although most assets in Vietnam are subject to VAT upon being transferred, according to Article 4. 8 (d) of Circular No. 219/2013/TT-BTC, business establishments are not required to declare and pay VAT in a number of capital transactions. These include “the transfer of part of or the whole capital invested in another business organization (regardless of the creation of a new legal entity); securities transfer; transfer of the right to contribute capital; and other forms of capital transfer prescribed by law, including business acquisition in which the acquirer inherits all rights and obligations of the acquired company.”

How to Calculate Capital Transfer Tax?

Taxed income from capital transfer shall be determined as follows: 

Taxed income = Transfer price - Purchasing price of the transferred capital - Transfer expenses

Of which:

• Transfer price: price paid to the seller as shown in the relevant share/capital contribution purchase agreement;
• Purchasing price of the transferred capital, which can be either of: (a) paid-up equity if the seller has participated in establishing the target company; or (b) transfer price of the previous transaction for the rest
• Transfer expenses: actual payments directly relating to the capital transfer and supported by legitimate documents/invoices including statutory fees required for transfer of that type, transaction, negotiation, execution expenses and other expenses (e.g. – attorney fees) with supported documents.

Corporate Income Tax (CIT) Declarations Related to Capital Transfer

According to Article 16.7 of Circular No. 151/2014/TT-BTC, any company that receives income from capital transfers must calculate and record the corporate transfer tax (CIT) in its annual declaration forms.

CIT shall be declared whenever it is incurred by any foreign organization that does business in Vietnam or earns income in Vietnam (hereinafter referred to as a foreign contractor) from capital transfer but its operations do not comply with regulations of the Law on Investment or the Law on Businesses.

The capital transferee shall determine, declare, deduct, and pay the CIT payable on behalf of the foreign organization. If the transferee is also a foreign organization that does not comply with the Law on Investment and the Law on Enterprises, the company established under The foreign organization must declare and pay any CIT owed under Vietnamese law on its behalf when investing capital in Vietnam.

Conclusion

Capital transfer tax can be quite a tricky issue when it comes to foreign investors and how they conduct their business, especially mergers and acquisitions (M&A), in Vietnam. It would take a considerable time for the continued development of the rules to converge with international norms. Still, investment and enterprise regulations and licensing procedures play a significant role in the acquisition process in Vietnam and should be reviewed carefully.

Understanding the tax-related challenges that businesses may face, Viettonkin Audit offers a series of services that guarantee accuracy and quick results. With our team of experts in the field of taxes in Vietnam, Viettonkin Audit is confident in handling even the most sophisticated tasks, from determining capital transfer tax to completing CIT declaration dossiers. By letting us take care of these time-consuming processes, our clients have more time to concentrate on other major duties and are more confident in their ongoing and future investments in Vietnam. For more information on our services, contact us now.

Recently, the Vietnamese Government has approved Decree 20/2022/ND-CP (Decree 20), which demands construction contractors and investors to ensure the compulsory insurance for on-site workers, along with the compulsory civil insurance for surrounding residents and assets in construction investment activities. This new Decree amends and supplements the previous Decree 119/2015/ND-CP (Decree 119), valid from 01/07/2022.  

Specific requirements for the construction contractors

From July 1, 2022, construction contractors must purchase compulsory insurance for civil liability from third parties (before that, the construction contractor only has to buy insurance for the construction workers on the construction site, and the contractor is responsible for participating in civil liability insurance with the third party). According to Clause 7, Article 1 of the new Decree, the minimum sum assured regarding damage of health or life is 100 million VND/person/case, not limiting the number of cases of damage or losses. 

The minimum sum assured regarding damage of assets or related legal costs (if any) is: 

• 10% of the value of the works for the entire valid duration of the insurance regarding works valued at less than 1.000 billion VND, not limiting the number of cases of damage or losses. 
• 100 billion VND for the entire valid duration of the insurance regarding works valued at 1.000 billion VND or more, not limiting the number of cases of damage or losses.. 

The compulsory third-party civil liability insurance, according to Clause 4, Article 1 of this Decree, shall be within a specific period, from the start date to the end date of the construction time according to the construction contract and included in the insurance policy.

Legal implications in the new Decree

From the perspective of our legal experts, Decree 20 has introduced a synchronized, stable and transparent legal framework for agencies, insurance companies, organizations and individuals. The supplemented regulations have created favorable conditions for each stakeholder to participate in compulsory insurance in construction investment activities.  This will thus help to avoid the case of unexpected incidents during the construction process which can cause damage to nearby residents and properties yet not being compensated. 

For example, in the case of Hoa Anh Dao Real Estate Joint Stock Company as investors in the King Palace project, during construction activities, a large iron bar suddenly fell from the construction site onto the road. Fortunately, no single residents were harmed, yet this incident was an alarming warning for construction contractors and investors in considering compulsory insurance. 

What to be aware for investors

On constructing, accidents might happen out of expectation of construction contractors. Under that circumstance, the “out-of-damage” needs to be specified in the Insurance Contract between the contractor and the insurance company. Otherwise, the damage sufferers are not compensated. Yet, the investors still must consider purchasing the compulsory insurance along with the compulsory civil insurance. Or else, they may face legal suits and risk their investment. 

In accordance with Clause 3, Article 32 of Decree 16/2022/ND-CP, the construction contractors shall face an administrative punishment if violating the safety requirements on on-site work. Following the regulation, failure to purchase compulsory insurance for workers and civil liability insurance for the third parties shall lead to investors being fined from VND 50 million to VND 70 million. 

To avoid such penalties and legal suits due to the non-compliance, construction contractors are advised to consult leading experts in legal issues. Thus, understanding legal implications and a good awareness of legal issues will enable investors (as construction contractors) to avoid the pitfalls or issues that may arise later on. With 13 years of experience in over 100 sectors and various industries, Viettonkin is one of the top local consultants that can support you along your business journey in Vietnam. Our team of high-profile leaders who are well-informed and specialized in Vietnamese markets and legal systems can help you through the legal challenges and settle down your venture here. Let us be by your side! 

In the context of current changes in the tax law and tax inspection tightening measures, businesses are in great need of reviewing their tax compliance. According to Hoang Thuy Duong, partner and head of Tax at KPMG in Vietnam, businesses are beginning to stabilize and restore production, hence preparing for the tax examination and inspection activities in 2022-2023. 

Along with tax issues that existed prior to COVID-19, some new issues emerged and needed fresh eyes. Particularly, the Vietnam tax law will be revised in 2022 to comply with international obligations, which will suit the public's needs.

Why do enterprises need tax audits?

Vietnamese businesses are experiencing many financial difficulties due to the Covid-19 pandemic, while tax inspections, tax penalties, and tax collection are constant. Given that non-compliance with tax regulations can negatively affect a business' budget or cash flow, it is imperative that businesses are aware of the key tax risks and have appropriate action plans. 

Moreover, tax audits also help publicize and transparent the financial statements of foreign-invested enterprises. Simultaneously, through proper tax inspection, the government can detect and prevent the violation of the law. Clause 1, Article 15 of Decree 17/2012/ND-CP guiding the Law on Independent Audit stipulates that annual financial statements of foreign-invested firms must be inspected by auditing firms or branches of foreign auditing firms in Vietnam. 

On the businesses' side, independent assessment of financial statements does not only help firms meet and comply with the government's requirements but also identify risks and efficiencies in the utilization of resources. What's more, tax inspection will create a greater trust for customers including tax authorities, banks, partners, and investors, among others. For example, with a fully accepted financial statement, businesses can be classified as trustworthy customers. Therefore, they can enjoy better credit services from banks with reduced interest rates. 

A brief instruction on submitting tax audits

According to the Circular 200/2014/TT-BTC on December 22, 2014, accounting units that are private enterprises and partnerships must submit annual financial statements within 30 days from the end of the yearly accounting period. Besides, the time limit for submitting annual account statements for other accounting units, including FDI enterprises  is 90 days at the latest (Clause 2, Article 109 of Circular 200).

Thus, conforming to the above regulation, FDI enterprises in Vietnam must prepare to provide a financial report within the determined period. Furthermore, it is noteworthy that the financial statements must be audited under the law. 

A financial agency with FDI must submit financial statements to the Financial agencies (Department of Finance) together with other authorities such as Tax agencies, Statistics agencies, Superior enterprises, Business registration agencies of the province or municipality where the enterprise registers its head office (Article 110 Circular 200). Likewise, foreign-invested businesses with headquarters located in industrial parks and high-tech zones need to provide financial reports to the Management Boards of their particular zones if required. 

Challenges that enterprises might face conducting tax audits

The current risks while conducting tax audits lie in unclear laws, incomplete knowledge and understanding of the law, bad consultation, or violations made by partners. 

Specifically, the most common tax area that might be challenged by the tax authorities is Corporate Income Tax (CIT). There are several incentives for CIT in Vietnam. Tax authorities, however, may challenge incorrect incentives applied to new or expanded projects. Expected issues are: offset profit and loss between business activities and losses carried, inventory stock discrepancies, and intragroup service engagements without adequate supporting documents. 

Another problematic area is the value-added tax (VAT). Businesses using tax audit plans should be mindful of the difference of revenue in VAT/CIT reconciliation and input VAT on stock discrepancies. Plus, VAT on discounts can turn out to be confusing. 

Other problems can show up in personal income tax and foreign contractor tax. To prevent the loss, FDI enterprises need to pay special attention to the preparation process, from tax payment deadlines, inspection period and scope, to the estimated amount of tax payable. 

Viettonkin’s tips to minimize risk and planning ahead

An old saying goes “Prevention is better than cure”. From our 13 years of professional experience, helping our client through the difficulties of tax compliance in Vietnam, we realized that the taxpayers should thoroughly understand the regulations and comply strictly with the procedures. In particular, extra attention should be paid to the compliance of the day-to-day bookkeeping and tax compliance per the prevailing regulations. Alternately, an in-house or outside controller or auditor can be the right person who can provide the ongoing support to ensure the fulfillment of the compliance requirements mentioned above. 

At the same time, minimizing the risk and avoiding tax fines means being well-prepared for the tax audit and inspection. As tax is always inspected first, enterprises will have careful and comprehensive preparation in advance. Along with that, self-assessment on accounting storage and tax system of the enterprises can help taxpayers reduce the possibility of tax non-compliance. 

Important as tax audit is, many businesses, especially foreign enterprises, fail to navigate common mistakes and figure out how to avoid them.

Tax audits might be daunting and confusing. However, businesses can always count on Viettonkin Consulting as a reliable tax assistance partner who can guarantee firms a smooth tax inspection procedure. Contact our dedicated team of experts now via our website to have access to world-class tax service. 

Overview of foreign workers in Vietnam

Overall, the situation regarding foreign workers entering Vietnam has changed and improved a lot in the past 15 years (period 2005-2019). In 2005, the number of foreign workers in Vietnam was 12,000 people, and this number has climbed to roughly 180,000 people in 2019. 

From 2015 to 2019, there has been a major shift in the type of positions held by foreign workers. In 2019, only 12% of foreign workers held management positions, while the percentage holding expert positions rose to 56%. The decrease in the percentage of management positions is due to domestic talents taking over, while the increase in expert positions can be attributed to the future directions set by the Government.

On May 11, Deputy Prime Minister Vu Duc Dam signed Decision No. 569/QD-TTg promulgating the Strategy for Science, Technology and Innovation Development until 2030. In it, the Government specifically emphasizes the importance of attracting foreign experts and Vietnamese experts living abroad in the development of the country’s technology industries. 

One of the steps that the government has taken to make Vietnam more attractive to foreign experts is passing policies to support funding and facilitate entry/exit procedures, visas, and work permits.

Notable work permit exemption cases:

The government has taken actions to make it easier for experts to come to Vietnam through Article 7 of Decree No. 152/2020/ND-CP dated December 30, 2020 on foreign workers working in Vietnam. In it, there are 20 cases where foreign workers are exempt from work permits (full list can be found in exemption cases), notable cases include:

• The person is an intra-company transferee within 11 sectors in the plan of commitments in services between Vietnam and WTO.
• The person is sent by a foreign authority or organization to Vietnam to teach and study at an international school for a foreign diplomatic mission, the United Nations, or for a foreign facility under the authorization of Vietnam.
• The person enters Vietnam to hold the position of a manager, executive, expert or technical worker for a period of work of less than 30 days and up to 3 times a year.
• The person takes charge of establishing a commercial presence.
• The person is certified by the Ministry of Education and Training as a foreign worker entering Vietnam for teaching and research purposes.
• The person is the manager of a representative project, an international organization or a foreign non-governmental organization in Vietnam.
• The person enters Vietnam for a period of less than 03 months to do marketing for a service.
• The person enters Vietnam for a period of less than 03 months to resolve a complicated technical or technological issue which (i) affects or threatens to affect business operation and (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam.
• The person gets married with a Vietnamese citizen and wishes to reside in Vietnam.

Permit exemption on the basis of marriage, and what companies need to know

Among the exemption cases, marriage with a Vietnamese citizen is the most different. As a result, domestic organizations and companies that hire foreign workers can be unsure on the required procedures relating to their work contracts. In these cases, companies hiring foreign workers are obligated to follow the three steps: 

Step 1: Determination of demand for foreign workers

At least 30 days before the date on which foreign workers are expected to be employed, the company shall submit dossier to determine the demand for foreign workers to the Ministry of Labor, War Invalids and Social Affairs or the Departments of Labor, War Invalids and Social Affairs where the foreign workers are expected to work.

Step 2: Apply for Certification of exemption from work permit

The company shall submit dossier to the Ministry of Labor, War Invalids and Social Affairs or the Department of Labor, War Invalids and Social Affairs of the province where the foreign worker is expected to work to certify that such foreign worker is eligible for exemption from a work permit at least 10 working days before he/she starts to work.

Step 3. Sign the labor contract with foreign workers

According to Clause 2, Article 13 of Labor Code 2019, before recruiting an employee, the company shall enter into an employment contract with such employee.

Clause 1, Article 20 of this Code, the Labor Contract must be concluded in one of the following types:

• An indefinite-term employment contract is a contract in which the two parties neither fix the term nor the time of termination of the contract;
• A fixed-term employment contract is a contract in which the two parties fix the term of the contract for a duration of up to 36 months from the date of its conclusion.

Clause 2 Article 151 of Labor Code 2019 stipulates: “The duration of a foreign employee’s employment contract must not exceed that of the work permit”. 

In this case, foreign workers who are exempted from the work permit are not constrained within this period, therefore, depending on the agreements between parties and the actual situation of the enterprise’s labor recruitment demand, enterprises can establish a labor contract with a definite or indefinite term, may sign conclusion of multiple fixed-term labor contracts.

It's always a challenge to any investors coming to Vietnam to get deep insights into legal environment. n such a context, advice should be sought from top-notch experts with the right local expertise. Viettonkin is one of the leading professional firms with more than 12 year experience in diverse industries and majors. Our team of well-informed professionals in Vietnamese markets and legal systems are capable of assisting you navigate through the process of establishing a new business in Vietnam. With us by your sides, you can focus on what really matters to you. Let us be your trustworthy partner!

The Hanoi People's Committee has lately published Official Letter No. 1633/UBND-KTTH, which focuses on improving tax administration for homes and people that do business on digital platforms.

Accordingly, the Hanoi City People's Committee assigns tasks regarding to departments, branches, People's Committees of districts, and towns to perform in order to improve the efficiency of tax collection, prevent loss of state budget revenue, strengthen support for business households and individuals in well implementing new tax policies, change the method of declaring and using e-invoices, and contribute to promoting administrative reform and digital transformation.

This is one of the requirements of the Hanoi People's Committee to the authorities in the area to strengthen tax management for business households and individuals with e-commerce activities. 

Furthermore, the Hanoi Tax Department continues to collaborate in order to review, capture, guide, and implement tax administration for households and individuals doing business on digital platforms (Google, Facebook, Youtube, etc. ); deploying and applying electronic invoices generated from cash registers (payment devices) with electronic data transfer connection with tax authorities.

The Hanoi City Tax Department also implemented the use of electronic invoices generated by cash registers (payment devices) linked to electronic data transfer with tax authorities; proactively propose and report to the City People's Committee to consider and direct departments, agencies, and People's Committees of districts and towns to closely coordinate with tax authorities to synchronously implement solutions to improve the efficiency of business tax management. 

The Hanoi City People's Committee also assigned the Tax Department as the focal point for synthesizing difficulties and obstacles encountered while performing tasks and reporting them to the City People's Committee for consideration and direction.

The Department of Information and Communications collaborates closely with the Hanoi Tax Department to propagate and disseminate new policies and regulations for business households and individuals, ensuring that business households and individuals are aware of them.

According to the document, the Hanoi People's Committee also requested the State Bank - City Branch to direct and guide commercial banks in the area in providing information to the Tax Department about financial institutions' and individuals' e-commerce transactions.

People's Committees of districts and towns direct culture and information offices, and People's Committees of wards, communes, and townships coordinate with tax agencies in disseminating tax policies applicable to households and individuals doing business in their localities, particularly new tax policies that go into effect in 2022.

People's Committees of districts and towns direct culture and information offices, and People's Committees of wards, communes, and townships coordinate with tax agencies in disseminating tax policies applicable to households and individuals doing business in their localities, particularly new tax policies that go into effect in 2022.

The Hanoi City People's Committee also requested that the People's Committees of districts and towns direct the People's Committees of communes, wards, and townships to closely coordinate with tax authorities to review the area to manage the subjects; improve the role and responsibilities of the tax advisory council, advise tax authorities to determine the annual revenue and flat tax amount close to the reality of business households and individuals...

The draft Law on Road Traffic has added the concept of what is an electric bicycle. Accordingly, for vehicles with a capacity of over 250 volts, they will be called motorcycles, and all current electric bicycles will be regulated as motorcycles for management.

Many new regulations have been supplemented

This is information that Ms. Hoang Hong Hanh - Deputy Director of the Legislation-Inspection Department (Directorate for Roads of Vietnam) said at a press conference to introduce new regulations in the revised Law on road traffic by the Directorate for Roads of Vietnam, held on the afternoon of June 8, in Hanoi.

At the press conference, Ms. Hoang Hong Hanh said that the draft Law on road traffic supplements the concepts of smart transportation means, public passenger transport, and prohibited acts in accordance with the Law on Prevention of Harmful Effects of Alcohols.

Regarding traffic rules, the draft Law on on road traffic adds the principle to ensure that traffic drivers stand in a convenient position for road users to observe and see clearly both at night and during the day; revise the regulations on seat belts at points with seat belts in accordance with the provisions of the Convention on Road Traffic.

According to Ms. Hanh, regarding rules to protect vulnerable people such as the elderly, the disabled and children such as the rules of concentrating on giving way to pedestrians, the rules of giving way to buses, and school buses moving in and out the pick-up and drop-off stops on the road, stipulating the use of dedicated seats for children under 13 years old.

Regarding vehicle identification lights, the draft Law on Road Traffic also provides regulations related to identification, this is the content of the law localization as prescribed in Article 32 of the Convention on Road Traffic. After receiving comments and adapting to the reality, Vietnam will not toughly stipulate that all vehicles must turn on identification lights, but only identification lights become a mandatory component of vehicles, to both ensure the provisions of the Vienna Convention, while ensuring the accident prevention mechanism for the people.

Since validation of the law, all vehicles, including motorcycles and motorbikes, must be designed with identification lights. Technically, identification lights are not for lighting, they can be combined with lighting lights or work independently. The identification light will not have a separate switch, but will be automatically turned on when the vehicle is started.

As for the road signaling system, Ms. Hanh said, the draft law introduces regulations on the order of validity of the road signaling system, more specific regulations on signals of traffic controllers, traffic light signals, of which a new notable point is the regulation on green light signals, which is codified under the Convention on Road Signs and Signals.

Accordingly, the green light signal is a signal to move, except in the case that the forward direction is congested, if entering the intersection, you will not be able to exit the intersection before the traffic signal changes to signalize the other directions to enter the intersection. This green light regulation also guides road users to follow the exclusion rule that does not apply in case the moving direction is congested and no exit is possible if moving in.

Classification of Driving Licenses in accordance with International Conventions

According to Ms. Hanh, the draft Law on Road Traffic will adjust the classification of driving licenses in accordance with the International Convention on Road Traffic to facilitate the use of Vietnamese driving licenses abroad and foreign driving licenses in Vietnam. Accordingly, the classes of the driver's license have been added with A0 (vehicle under 50cm3) and C1 (vehicle weighing 7400kg).

This classification of driving license will not give rise to administrative procedures for re-issuance of issued and valid driving licenses. The issuance of a new class license will be applied for the first-time issuee and the issuance for an expired license will be subject to re-issuance case. Particularly for the A0 class license, it is carried out according to the roadmap so that people have time to implement

Regarding the question of identification light rules, Mr. Pham Minh Tam - Deputy Director of the Traffic Safety Department (Directorate for Roads of Vietnam) said that Vietnam's traffic organization is basically mixed traffic. In this mixed traffic flow, motorcycles and motorbikes are the venerable means of transport. Regulations that vehicles participating in traffic during the day must have identification lights is a technical solution to help reduce traffic accidents or reduce the severity of accidents.

Currently, the Vietnam Register is developing standards for identification lights. When new cars are manufactured, they will have to satisfy the criteria such as easily recognizable locations, brightness levels that do not cause glare for people on the opposite. Specifically, the draft law will not retroactively apply to manufactured vehicles without built-in identification lights./.