Conditions for equitization of state enterprises
On November 16th, 2017, the Government promulgated Decree No. 126/2017/ND-CP on conversion from state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies.
Accordingly, State-owned enterprises including: Wholly state-owned single-member limited liability companies (LLCs) that are parent companies of state-owned economic groups, parent companies of state corporations (including state-owned commercial banks), parent companies in groups of parent companies; Wholly state-owned single-member LLCs; Wholly state-owned enterprises that have not been converted into single-member LLCs; Single-member LLCs with 100% of charter capital invested by state-owned enterprises (hereinafter referred to as “level II enterprises”). These enterprises may be equitized when the two following requirements are satisfied:
- Such enterprises are not on the currently effective list of wholly state-owned enterprises that is made by the Prime Minister;
- State capital is still available after settling financial issues and revaluation of such enterprises.
In addition, the enterprises that have financial issues settled and enterprise value recalculated as stated the actual enterprise value is lower than payables shall perform following solution:
- In case of enterprises on the list of enterprises over 50% shares of which has to be held by the State after equitization under the Prime Minister’s decisions, representative authorities shall direct enterprises to cooperate with the Vietnam Debt and Asset Trading Corporation (DATC) and creditors of enterprises in making debt sale plans to restructure enterprises.
The State shall not provide further capital for equitization, even for enterprises over 50% shares of which have to be held by the State after under the Prime Minister's regulations.
This Decree takes effect from January 01, 2018.
Regulations on outward investment in petroleum industry
On November 15th, 2017, the Government adopted Decree No. 124/2017/ND-CP on outward investment in petroleum industry. Accordingly, Outward investment capital is represented in the following forms:
- The foreign currency account of the licensed credit institution or purchased in the licensed credit institution in foreign currencies or foreign exchange from other legal capitals in accordance with regulations of law.
- Vietnam dong in accordance with regulations on foreign exchange administration
- Machinery, equipment, raw materials, fuel, finished and semi-finished products.
- Value of industrial property rights, technical know-how, technology process, technical services, intellectual property rights and brands.
- Other legal assets.
When transferring the recovered capital (expense) from a foreign investment project to Vietnam, the investor shall be allowed to subtract the total investment capital already transferred abroad when determining the investment capital already transferred abroad. Time after the written report is sent to the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam;
Upon transfer of the revenues (expense) from a foreign investment project to Vietnam, the investor may offset it against the total investment transferred abroad after submitting a report to the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam; In case the total outward investment is smaller than the registered value, the investor may, in accordance with regulations of the host country, use the revenues (expense) from the project that remains after tax payment to invest in the petroleum project already issued with the outward investment registration certificate or other petroleum projects of the investor that are issued with the outward investment registration certificate.
This Decree takes effect from January 01, 2018.
Special mechanism for lottery enterprises
On November 13, 2017, the Government adopted Decree No. 122/2017/ND-CP to provide certain contents about financial management and performance assessment of lottery enterprises.
Revenues earned by a lottery enterprise include: Revenues from licensed lottery operations, revenues from other business operations, financial incomes as regulated by law and other incomes.
With regard to accumulated prizes of computerized lottery products, if over the claim period but the winner fails to claim his/her prize, the lottery enterprise that is licensed to engage in online lottery business may record such unclaimed prize as its other incomes.
When making declaration of the corporate income tax, the lottery enterprise may record the following expenses as its deductible expenses: Prize expenses; Agent commissions; Fees of authorization for payment to prize winners; Drawing cost and supervisory fee; Contributions towards preventing illegal numbers game and issuance of fake lottery tickets; Contributions to prize reserve fund; Lottery ticket expenses; Costs of providing information about lottery tickets, draws and drawing results; Contributions towards maintaining operation of the Regional Lottery Council
This Decree takes effect from January 01, 2018.
Penalties for administrative violations against regulations on investment and construction
Pursuant to the Decree No. 139/2017/NĐ-CP dated November 27, 2017 providing for penalties for administrative violations against regulations on investment and construction; extraction, processing and trading of minerals used in construction, production and trading of building materials; management of infrastructural constructions; real estate business, housing development, management and operation of apartment buildings and office buildings regulated, the maximum fine imposed for administrative violations against regulations on investment and construction is VND 1,000,000,000; The maximum fine imposed for administrative violations against regulations on extraction, processing and trading of minerals used in construction, production and trading of building materials; management of infrastructural constructions; real estate business, housing development, management and operation of apartment buildings and office buildings is VND 300,000,000.
Fines regulated under this Decree are imposed for administrative violations committed by organizations (except for some cases). The fine incurred by an individual is a half of that incurred by an organization for the same administrative violation.
This Decree takes effect from January 01, 2018.
Le Thi Diem Quynh