Improving Financial Accountability Project Training of

Report
S & S NEWS LETTER FOR
2010 OCTOBER
Part 1
CIRCULAR 09/2010/TT-BTC
GUIDANCE
ON INFORMATION DISCLOSURE
ON THE SECURITIES MARKET
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CONTENT
1. General provisions
2. Disclosure of information by:
 Public companies
 Issuing organizations making a public offer of bonds
 Listing organizations
 Securities companies and fund management companies
 Public funds
 Securities investment companies
 Stock exchange
3. Circular No. 09/2010/TT-BTC replaces Circular No.
38/2007/TT-BTC
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GENERAL PROVISIONS
 Applicable entities:
Public companies, issuing organizations making a public offer of
bonds, organizations which are listed or registered for trading,
securities companies, fund management companies, securities
investment companies, the Stock Exchange and affiliated persons.
 Requirements when disclosing information:
• A disclosure of information must be complete, accurate and
prompt;
• A disclosure of information must be made by the legal
representative of a company or by an authorized person
(Applicable entities must register the person authorized to
disclose information in accordance with Appendix 1);
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GENERAL PROVISIONS - continued
A
disclosure of information must be made at the same time
as a report on the contents of disclosed information to the
State Securities Commission (SSC) and the Stock Exchange
(SE);
 In the case of any change to the contents of disclosed
information, the entities shall be required to prepare
simultaneously a report and a written explanatory statement;
 The SE shall periodically report to the SSC on the disclosure
of information; the SSC shall provide information to its
member securities companies, and such member securities
companies shall supply the above-mentioned information to
investors.
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GENERAL PROVISIONS – continued
Methods and forms of disclosing information:
 Media:
Annual report, Website, newsletter, electronic
display board...
 Forms: written documents, electronic data. Entities
disclosing information must set up their own websites
which have a shareholder relationship column including:
company charter, internal administration rules, financial
statements, annual reports, general meeting of
shareholders
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GENERAL PROVISIONS – continued

Temporary postponement of information disclosure:
In case of force majeure, entities disclosing information must
report the reason SSC and SE
 Dealing with offences: Any organization of individual
breaching the provisions of the law on information disclosure
shall be subject to a disciplinary penalty, an administrative
penalty, or shall be criminally prosecuted or pay
compensation.
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DISLOSURE OF INFORMATION BY PUBLIC
COMPANY

Periodical disclosure of information:
No later than 10 days from expiry of the period for completion
of annual financial statements, a public company must
disclose information about its annual financial statements
audited by an independent auditing firm which satisfies
practicing conditions prescribed by the MOF. Financial
statements must be in Vietnam dong, in accordance with the
Law on Accounting, and the explanation of the financial
statements in accordance with Accounting Standards number
26,28 and guiding circulars.
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DISLOSURE OF INFORMATION BY PUBLIC
COMPANY
Extraordinary disclosure of information:
(Article 101 of the Law on Securities): identify events, causes,
plans and solutions.
24 hours of the occurrence of one of the following events: An
account of the company at a bank is frozen or released;
temporary suspension of business; revocation of certificates,
licenses; a resolution is passed by the general meeting of
shareholders (Article 104 of the Law on Enterprises 2005);
redemption of resale of redeemed shares; date for implementing
share purchase rights, results of separate issuing tranche;
decision on legal proceedings, tax office; dividends and changes
of key personnel.

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DISLOSURE OF INFORMATION BY PUBLIC
COMPANIES
Extraordinary disclosure of information: (Article 101 of the
Law on Securities):
24 hours of the occurrence of one of the following events:
There is a decision to borrow or issue bonds with a value of 30
percents or more of the company's equity; there is a decision by
the board of management on medium term strategies and plans,
or on the annual business plan, or a decision to change the
applicable accounting method; the company receives a notice
from a court accepting jurisdiction of a petition to commence
enterprise bankruptcy proceedings; there is a decision on
establishment, acquisition, sale, or dissolution of a subsidiary
company, or on investment in an affiliated company.

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DISLOSURE OF INFORMATION BY PUBLIC
COMPANIES (cont)

Disclosure of information on request: 24 hours from receipt
of a request from the SSC regarding: information which
seriously affects the lawful interests of investors; information
which affects the price of securities;
 Disclosure of information about trading of shares by major
shareholders: Any organization, individual or group of
affiliated persons holding 5% or more of the voting shares
must make a report on ownership (Appendix 3)
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DISLOSURE OF INFORMATION BY PUBLIC
COMPANIES
Trading
of treasury shares;
 Trading of shares by founding shareholders during the
period the assignment is restricted
 Public trading and offer
Offer for sales of securities and schedule of use of
capital received from the offer tranche
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DISCLOSURE OF INFORMATION BY ISSUING
ORGANIZATIONS MAKING A PUBLIC OFFER
OF BONDS
Time-limit: From the date of issuing the bonds up until
the date of completion of payment of bonds
 Contents: Periodical and extraordinary disclosures
of information
 Disclosure of information about public offer of bonds
and schedule of use of capital received from the offer
tranche.
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DISCLOSURE OF INFORMATION BY LISTING
ORGANIZATIONS
 Periodical
disclosure of information: Same as public
companies...
 Extraordinary disclosure of information,
 Disclosure of information on request: of SSC, SE, Disclosure
of information about trading by internal shareholders, major
shareholders and authorized persons,
 Disclosure of information relating to the last registration date
for existing shareholders to exercise their rights,
 Disclosure of information relating to corporate governance.
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DISCLOSURE OF INFORMATION BY SECURITIES
COMPANIES
AND
FUND
MANAGEMENT
COMPANIES
 Periodical disclosure of information
 Extraordinary disclosure of information : 24h.
 Disclosure of information on request: 24h from
receipt of a
request from the SSC, SE when there is information relating to
the company which seriously affects the lawful interests of
investors.
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DISCLOSURE OF INFORMATION ABOUT
PUBLIC FUNDS
A
fund management company shall make a periodical
disclosure of information about the annual assets report
of a public fund within 10 days from the date such report is
audited.
 A fund management company shall make a periodical
disclosure of information about a public fund: Report on
changes in the net asset value of a public fund on a weekly,
monthly, quarterly and annual basis.
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DISCLOSURE OF INFORMATION ABOUT
PUBLIC FUNDS (cont)
Extraordinary disclosure of information about a public
fund: Within 24 hours of the occurrence of: A resolution of the
general meeting of investors; a decision to make an offer of
certificates in the public fund; the public fund is issued with a
certificate of acceptance to establish the fund; a decision to
change the investment capital of the public fund; revocation of a
certificate of acceptance of a public offer; an offer tranche is
suspended or rescinded; there is an amendment or addition to
the charter or prospectus; the chairman of the committee of
representatives of the fund or the public find operator is
changed.
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DISCLOSURE OF INFORMATION ABOUT
PUBLIC FUNDS (cont)
Disclosure on request: Within 24 hours from receipt of a request
from the SSC, SE on the occurrence of: a rumor about an offer of
or the price of certificates in a public fund; an abnormal change in
the price and volume of transactions of certificates in a public fund.
 Disclosure about the last registration date for existing
shareholders to exercise their rights.
 Disclosure about trading certificates in a fund by related
entities: Founding members, members of the committee of
representatives, members of the board of management or board of
controllers, the general directorate, operators, staff making
disclosures of information and related organizations and
individuals.

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DISCLOSURE
OF
INFORMATION
SECURITIES INVESTMENT COMPANIES
BY
Public securities investment companies must
disclose information as stipulated for securities
companies, fund management companies and
public funds
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DISCLOSURE OF INFORMATION BY THE
STOCK EXCHANGE (SE)

Information about trading:
 During trading hours: Total number of classes of
securities; closing price of the previous day, opening
and closing prices of each session/day; implementing
prices, proposed prices, the levels and symbols of
price fluctuations of each class of securities; three
levels of offering prices, best offering prices of shares,
fund certificates including the corresponding volume of
purchase and selling orders.
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DISCLOSURE OF INFORMATION BY THE
STOCK EXCHANGE (SE)
 During trading days: Status of classes of securities; total number of
classes of securities; consolidated price indices, level of fluctuation
compared to the previous trading day; level of oscillation of share
prices during trading day; number of orders, number of purchases and
sales, corresponding prices; total volume of transactions on the whole
market; prices, volume and value of trading implemented for each
class of securities; percentage of securities holdings by foreigners and
the residual availability for foreigners to purchase; trading details of 10
shares with the highest volume traded and 10 shares with the highest
price fluctuation; 10 shares with the highest listed price, 10 shares with
the highest market price; bonds traded; number of currently circulating
listed shares and changes compared with the previous trading day;
other information at the request of the SSC.
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DISCLOSURE OF INFORMATION BY THE
STOCK EXCHANGE (SE)
Information about organizations listed or registered for trading on
the SE, member securities companies, fund management
companies, securities investment companies, public funds, public
securities investment companies
 In form at ion
about
securities
market
regulatory
activities: suspension of trading/permission to re-commence
trading; securities subject to warning/released from warning; 1%
change in the number of shares owned by major shareholders;
persons holding 25% shareholding capital of an organization;
public offer of shares by any organization listed or registered for
trading;

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DISCLOSURE OF INFORMATION BY THE
STOCK EXCHANGE (SE)
trading by a member of the board of management, board of
controllers,
general/director/director,
deputies,
chief
accountant explanation of the case when there is a ceiling
increase or floor reduction in the price of shares in 5
consecutive sessions not following the common tendency or
in 10 sessions; breach of the law on disclosure of
information, penalties applied for a breach; guidelines and
notifications of SSC, SE on securities market regulation
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SOME DEPARTURES FROM CIRCULAR
No. 38

The listing organization must explain the reason for such
fluctuation if the after tax profit as between the current reporting
period and the same reporting period of the previous year
fluctuates 10% or more, instead of explaining if the business
operation results as between two reporting periods fluctuate 5% or
more as stipulated in Circular No. 38
 The listing organization must disclose when there is a ceiling
increase or floor reduction of share prices in 10 consecutive
sessions or in 5 consecutive sessions not following the common
tendency of the market, compared to disclosure when there is a
ceiling increase or floor reduction in 5 consecutive sessions as
stipulated in Circular No. 38.
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SOME DEPARTURES FROM CIRCULAR
No. 38
A
public company must disclose information about annual
financial statements on the information disclosure media of
the SSC, SE and concurrently publish the full text in one
edition of a newspaper published nationwide accompanied
by the address of the website instead of summary
disclosure in 3 consecutive editions of 1 central newspaper
and 1 local newspaper in the area where the company has
its head office or on the information disclosure media of the
SSC as stipulated in Circular No. 38
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SOME DEPARTURES FROM CIRCULAR
No. 38
 Circular
No. 09 requires entities disclosing information to
set up their own websites, which must have a shareholder
relationship column;
 Circular No. 09 requires a securities company to disclose
information on a quarterly basis about the list and price of
classes of unlisted securities of which the company conduct
brokerage within the first 10 days of the next month on the
websites and in the publication of the company
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DECREE No. 85/2010/ND-CP,
DATED AUGUST 2, 2010
PENALTIES FOR ADMINISTRATIVE
OFFENCES IN SECURITIES AND
SECURITIES MARKET SECTOR
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SOME MAIN POINTS
 Breaches of provisions on
 Hindering an investigation
 Authority
auditing
for imposing penalties for administrative
offences
 Procedures regarding fines
 Decision
on
compulsory
consequences
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remedying
of
BREACHES OF PROVISIONS ON AUDITING
Penalties for breaches of provisions on auditing securities issuing
organizations, listing organizations and trading organizations shall
be applied as follows:
1. A fine of 30-50 million VND shall apply to an auditor, an auditing
organization who commits the following breaches:
a. Fails to provide notice to a securities issuing
organization, a listing organization, a trading organization
on detection that this organization fails to comply with the
law and regulation related to audited financial statements
and recommend measures for remedying, prevention.
b. Fails to explain, provide information, data regarding the
audit as required by the SSC
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BREACHES OF PROVISIONS ON AUDITING
2. A fine of 50-70 million VND shall apply to an auditor, auditing
organization who commits the following breaches:
a. Fails to include an opinion in the audit report on the
breaches of the audited entity which have not been dealt
with in accordance with the requirements of accounting
standards
b. Fails to provide, promptly provide notice to the audited
entity and the third party according to the requirements of
auditing standards; fails to report, promptly report to the
SSC on suspicion or detection of material misstatement by
the auditing organization as a result of non-compliance
with the law and regulation related to audited financial
statements after the audit report has been issued.
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BREACHES OF PROVISIONS ON AUDITING
3. A fine of 70-100 million VND shall apply to an auditor,
auditing organization who makes untruthful, incorrect,
incomplete audit report.
4. Additional penalties: Suspension for a limited period or
rescission of the title of approved auditor, auditing
organization as a result of their breaches of the provisions
in items 1, 2, 3 above
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HINDERING AN INVESTIGATION
1. A fine of 30-50 million VND shall apply to a public company, an
issuing organization, a listing organization, a securities company,
a fund management company, a securities investment company,
a custodian bank, the Stock Exchange, a Securities Depository
Centre and any other related organization, individual who
commits the following breaches:
a. Refuses to provide information, documents; fails to
provide complete, prompt information, documents,
electronic data to the inspection mission or the authorized
person.
b. b.Hinders, causes difficulties for or evades an
investigation by the authorized person
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HINDERING AN INVESTIGATION
c. Intentionally delays, evades implementation of
administrative decision of the authorized person; fails to
implement the requirements, conclusions, decisions of
the inspection mission
2. A fine of 50-70 million VND shall apply to a public
company, an issuing organization, a listing organization, a
securities ,company, a fund management company, a
securities investment ,company, a custodian bank, the
Stock Exchange, a Securities depository Centre and any
other related organization
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HINDERING AN INVESTIGATION
3.
A fine of 70-100 million VND shall apply to a public; company,
an issuing organization, a listing organization, a securities
company, a fund management company, a securities
investment company, a custodian bank, the Stock Exchange, a
Securities Depository Centre and any other related
organization and individual who commits the following
breaches
a. Hides, changes documents, records, electronic data or
changes exhibits during the course of being investigated;
b. Deliberately dismantles, removes or otherwise changes
objects which have been sealed such as money, source
documents, data, files, accounting books, exhibits or other
sealed facilities
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HINDERING AN INVESTIGATION
4. Additional penalties: Suspension of operation; revocation of
license, certificate, practicing certificate in securities and
securities market sector of organizations, individuals who
commit the breaches of provisions of item 3 of this Article
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AUTHORITY FOR IMPOSING PENALTIES
1. The head of the Inspectorate of the SSC shall have
authority:
a. To impose a warning
b. To impose a fine up to 70 million VND
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AUTHORITY FOR IMPOSING PENALTIES
2. The chairman of the SSC shall have authority:
a. To impose a warning;
b. To impose a fine up to 50 million VND;
c. To impose penalties for breaches as stipulated in item 3
of Article 7, item 5 of Article 8 and item 2 of Article 12 of
this Decree;
d. To impose additional penalties and measures
for remedying consequences as stipulated in this
Decree.
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REMEDYING CONSEQUENCIES
1. At the expiry of the time-limit for imposing penalties for
administrative offences as stipulated in Article 4 of this
Decree or time-limit for issuing a penalty decision a
stipulated in Article 41 of this Decree, the authorized
person shall not be permitted to issue a penalty decision
but shall still have the authority to apply the measures for
remedying consequences
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REMEDYING CONSEQUENCIES
2. The decision on compulsory remedying of consequences
must be in pre-defined written form. The decision must
clearly inscribe: the last name, first name, address,
occupation, position of the person issuing the decision; the
last name, first name, address, occupation, position of the
offender; the administrative offence; the article, item of the
legal document applied; the reason for not applying the
penalty;
the
applicable
measures
for
remedying
consequences; the time-limit of implementing the decision on
remedying consequences; the signature of the person issuing
the decision
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PROCEDURES REGARDING FINES
1. Imposition of fines must be correctly implemented in
accordance with the procedures stipulated in Articles 40 and
41 of this Decree. Within a time-limit of 10 working days from
the date the penalty decision is sent, organizations,
individuals subject to the fine must make the payment to the
State Treasury and shall receive a receipt for payment of the
fine. At the expiry of this time-limit, if the offender fails to
voluntarily comply with a penalty decision, compulsory
enforcement shall apply
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PROCEDURES REGARDING FINES
2. Multiple payments of fines shall apply when there are
sufficient conditions and in accordance with the
procedures stipulated in Article 27 of the Decree No.
128/2008/ND-CP dated December 16, 2008 of the
Government providing detailed provisions and guidelines
for implementation of some articles of the Ordinance on
penalties for administrate offences issued in 2002 and
the Ordinance amending and supplementing some
articles of the Ordinance on penalties for administrative
offences issued in 2008.
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.
CURRENT TAX LAWS
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Contents
I. Introduction of the Vietnam current system of
tax laws and policies
II. New issues in the 20C
III. Q&A
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PART I
THE VIETNAM CURRENT SYSTEM OF TAX
LAWS AND POLICIES
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CURRENT TAX LAWS AND POLOCIES
1. License tax
2. Import, export duties
3. Value added tax
4. Special consumption tax
5. Enterprise income tax
6. Personal income tax
7. Natural resources tax (royalties)
8. Land and housing tax (currently, tax is only imposed
on lands, is not on houses)
9. Agricultural land use tax
10.Charges for land use, land rent
11. Fees, charges (288 types)
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1. LICENSE TAX
 Is
imposed annually on business entities (half of the annual
amount of tax shall be paid if the business is started in the
second half of the year);
 Has the nature of registration, for business control purpose
 Does not depend on the turnover or efficiency of business;
 Is considered as a deductible expense when determining
enterprise income tax
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LICENSE TAX - TAXPAYERS
 Independent
business entities
 Dependent
business establishments (branches,
shops) that register with tax offices and is granted
with 13 digit tax identification number;
 Individuals, groups of individuals who do business;
Individuals with assets for rent.
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LICENCE TAX- RATE FOR A YEAR
Economic entities (classified according to level of
capital)

Registered capita!
Rate
Grade 1
Over 10 billions dong
3.000.000 dong
Grade 2
5 to 10 billions dong
2.000.000 dong
Grade 3
2 to 5 billion dong
1.500:000 dong
Grade 4
Less than 2 billion dong
1.000.000 dong
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LICENCE TAX- RATE FOR 1 YEAR
Individuals, groups of individuals: tax according to
income

Grade
Monthly average income
Rate
1
Over 1.500.000 dong
1.000.000 dong
2
Over 1 million to 1.5 million dong
750.000 dong
3
Over 750.000 to 1 million dong
500.000 dong
4
Over 500.000 to 750.000 dong
300.000 dong
5
Over 300.000 to 500.000 dong
100.000 dong
6
300.000 dong or lower
50.000 dong
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IMPORT, EXPORT DUTY
 Are
indirect taxes imposed on imported, exported goods
 Are regulated by the partner countries when Vietnam
participates in the international and regional trade agreements
 Are subject to the tariff reduction according to the committed
schedules
 Are different rates according to the Agreements (MFN tariff
schedule, preferential tariff schedule, special tariff schemes of
ASEAN, ASEAN + China, Japan, Korea, India, Australia, New
Zealand)
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IMPORT, EXPORT DUTY - LEGAL DOCUMENTS


Law on import, export duties (.revised,) dated 14/06/2005
Decree 149/2005/ND-CP dated 15/12/2005 providing
detailed implementation of Law on import, export duties
 Related Decrees No. 66/2002/NO-CP dated 01/7/2002;
No. 12/2006/ND-CP dated 23/01/2006; No. 108/2006/NDCP dated 22/9/2006; No. 85/2007/ND-CP dated 25/5/2007
on tax administration; No. 29/2008/ND-CP dated
14/03/2008 on industrial zones, export processing zones,
economic zones; Decision No. 33/2009/QD-TTg dated
02/03/2009 of the Prime Minister on the financial regime for
economic border gates
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IMPORT, EXPORT DUTY - LEGAL DOCUMENTS
 Circular
No. 79/2009/TT-BTC dated 20/04/2009
guiding the implementation on customs procedures,
customs inspection, import-export duties and tax
administration for imported, exported goods
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GOODS SUBJECT TO IMPORT- EXPORT
DUTIES

Goods imported, exported through Vietnam border gates
including those imported, exported through gates of inland,
waterway, railway transportation, international post, through
seaports, airports and places of customs procedures as
specified by competent State agencies.
 Goods are transferred from domestic market to non tariff
zone and from non tariff zone to domestic market.
 Other exchanged, traded goods which are considered as
imported, exported goods
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BASIS FOR IMPORT- EXPORT
CALCULATION

Goods which are subject to ad valorem rates:
 Actual amount of imported, exported goods;
 Dutiable value (the circular provides 6 methods of
valuation);
 Rates specified in the tariff schedule.
 Goods which are subject to specific rates:
 Actual amount of imported, exported goods;
 Specific rate is applied to one unit of goods. Currently,
this rate is only applied to the used passenger car with
less than 24 seats
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IMPORT DUTIES – 3 TYPES OF RATES



Preferential rates (MFN): are applied to goods imported
from countries, territories with MFN treatment in the trading
relations with Vietnam (WTO members). The schedule was
promulgated with Circular No. 216/2009 of the Ministry of
Finance dated 12/11/2009 and other revised Circulars.
Specially preferential rates: are applied to specific goods as
regulated in Circulars of the Ministry of Finance.
Common rates: are of 150% preferential rates.
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PREFERENTIAL TREATMENT OF IMPORT
DUTIES






Tariff schedule of CEPT/AFTA: ASEAN - Decision No. 36/2008 dated
12/6/2008, Decision No. 73/2008/ dated 5/9/2008 of the Minister of
Finance (period 2008 - 2013)
Tariff schedule ACFTA: ASEAN + China - Decision No. 111/2008/QDBTC dated 18/11/2008 (period 2009 - 2011).
Tariff schedule AKFTA: ASEAN + Korea - Decision No. 112/2008/QOBTC dated 18/11/2008 (period 2009 - 2011)
Tariff schedule AJFTA: ASEAN + Japan - Decision No. 83/2009/TTBTC dated 28/4/2009 (period 2008 - 2012)
Tariff schedule AANFTA: ASEAN + Australia & New Zealand - Circular
No. 217/TT-BTC dated 17/11/2009 (period 2010 -12)
Tariff schedule AIFTA: ASEAN + India - Circular No. 58/2010/TT-BTC
dated 16/4/2010 (period 2010 - 12)
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SUPPLEMENTARY IMPORT, EXPORT DUTIES


Beside the import, export duties as mentioned above, if
goods are imported excessively into Vietnam with subsidies,
dumping or discrimination against the Vietnam exported
goods, then the anti-dumping, countervailing tax or
safeguard measures shall be applied.
The above supplementary taxes shall be applied in
accordance with relevant legal documents.
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TAX DECLARATION, PAYMENT



Principles of tax declaration, payment are applied according to
Article 4, Decree 85/2007/IMDCP dated 25/5/2007 of the
Government guiding the implementation of Law on tax
administration
Tax documents are customs declaration and documents
provided in Circular No. 79/2009 of the Ministry of Finance
Time for tax payment
 Exported goods: 30 days after submitting customs
declaration
 Imported goods: upon the receipt of goods; within 30 days,
within 275 days or longer subject to type of goods and
taxpayers' records on law compliance
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INCENTIVES – IMPORT, EXPORT DUTIES
EXEMPTION, REDUCTION



Decree 149/2005/NO-CP dated 8/12/2005 provides 18
cases of tax exemption (Article 16) and 3 cases of tax
exemption consideration (Article 17)
Enterprises with investment projects which import goods for
implementing investment projects in preferential sectors or
projects in difficult, especially difficult socio-economic
conditions
List of areas, sectors which are specified in the Decree
149/2005. In cases other than those specified in Decree
108/2006, a letter should be sent to the customs office
where customs declaration is filed.
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IMPORT DUTY EXEMPTION FOR ENTERPRISES
WITH INVESTMENT PROJECTS




Enterprises which have investment projects in sectors, ares or investment
preference as specified in Decree 108/2006 are exempted from import
duties in respect of the imported goods regulated from subparagraph 6 to
subparagraph 18, including:
Equipment, machinery, specialized means of transport used in the
technological line certified by the Ministry of Science and technology;
means of transport for carrying workers including cars of 24 seats or more
Spare parts, components, accessories for uniform assembling or uniform
use with equipment, machinery, specialized means of transport;
Raw materials, materials used for manufacturing equipment, machinery in
technological line or to manufacture spare parts, components, accessories
for uniform assembling or uniform use with the above mentioned
equipment, machinery.
Construction materials which can not be produced domestically.
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IMPORT, EXPORT DUTIES REFUND







Goods which have been subject to import duties but are under
supervision of customs offices and are now re-exported
Goods which have been subject to import, export duties but are not
actually imported or exported or are imported, exported in smaller
amount
Goods which have been imported for manufacturing exports shall be
entitled to import duty refund in proportion of the actual exports
Goods which have been subject to import duties but then are exported
Goods which are temporarily imported for re-export, are temporarily
exported for reimport
Goods which have been exported but should be re-imported into
Vietnam
Goods which have been imported but should be re-exported
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IMPORT, EXPORT DUTIES REFUND

Machinery, equipments, means of transport of contractors which
have been brought into VN and been subject to import duty, when
re-exported, shall be entitled to import duty refund in proportion with
the use period.
 For goods imported, exported though international express delivery
if the service providing enterprises have paid tax for goods owners,
but are not able to deliver the recipients and have to re-export, reimport, shall be entitled to tax refund
 Mistakes in tax filing, calculation, payment (including mistakes by
both enterprises or customs offices) shall be entitled to tax refund if
the mistakes are within period of 365
 Goods which have been subject to import, export duties but the are
exempted according to the decisions of competent State agencies
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IMPORT, EXPORT DUTIES RECOVERY

Goods which have been duty exempted, but are then changed for
another use purpose, except cases of transfer to the exempted
persons as regulated in Decree 149/2005
 In cases where enterprises or customs offices make mistakes in
tax declaration, calculation, payment, they have to pay the tax
deficiency within period of 365 days from the date of mistake
identification.
 If tax evasion, tax fraud are identified, the tax shall be recovered
with the time limit of 5 years from the date of identification (date
when State competent authorities sign decisions for tax
recovery).
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3- VALUE ADDED TAX (VAT)




Is an indirect tax which is imposed on the consumption of
goods, services within the economic territory
Has nature: tax is collected at the later stage (output tax)
and tax paid at the earlier stage is refunded (input tax) (the
tax credit regime);
Taxpayers transfer tax into the selling price for the
purchaser of goods and services;
High risk if invoices regulations are not complied.
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VAT- TAXABLE PERSONS



Goods, services which are imported into Vietnam;
are manufactured, exchanged, consumed in Vietnam
(except 25 groups which are not subject to tax);
For the VAT exempted person: tax is not imposed at the
stage where tax is exempted, but input tax is not credited
In special cases as regulated in Government agreement, the
VAT input will be refunded for exempted cases (ODA
projects).
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VAT- TAXPAYERS



Entities, individuals producing, trading goods, services
in all stages: imports, production, supply.
Entities, individuals, agencies which make payments to
foreign entities, individuals that are non-residents of
Vietnam for purchasing services accompanied with goods
shall pay VAT according to the law on contractors' tax
Purchasers of goods which were previously subject to
tax exemption but are now used for another purpose (e.g..
Goods of diplomatic agency, foreign non-government
organization...)
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VAT REFUND
Tax refund shall be allowed in cases where:
 Taxpayers apply the credit method and have positive input
tax during 3 consecutive months (the input tax has not been
totally credited);
 Newly established businesses in the investment period.
Refund is allowed on annual basis
 Businesses with the accumulated amount of 200 million
dong;
 Businesses with the input VAT of exported goods, services
which is of 200 million dong or more. Refund is allowed on
monthly basis.
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VAT REFUND

Businesses are entitled to VAT refund if upon ownership
transformation, enterprise transformation, merger, consolidation,
separation, split, dissolution, bankruptcy or operation termination, they
have an overpaid value-added tax amount or have some input valueadded tax amount not yet fully credited
 ODA programs, projects shall be subject to refund of the VAT paid for
goods, services purchased in Vietnam.
 Refund of the VAT paid when purchasing goods, services in Vietnam
for the use by persons under the Ordinance on diplomatic exemption
privileges.
 Refund is made according to the decision by the competent agency as
provided by the law.
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4- SPECIAL COMSUMPTION TAX (SCT)



Is an indirect tax applied for purpose of directing production,
consumption, regulating income, bringing revenue for state
budget.
Is imposed at stage of importation or the first stage of
domestic sales (not imposed at trading stage or on exported
goods).
The rates are high, the tax base is narrow, the SCT is
imposed on goods and services of which the consumers are
high income earners or of which the use causes adverse
impact on society, environment
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SPECIAL COMSUMPTION TAX

SCT taxpayers:
 Entities, individuals producing, trading goods, services
which are subject to SCT
 Importers of goods which are subject to SCT
 Basis for calculation: Quantity, price and rate.
 For the goods, services produced domestically, taxable
price is SCT, VAT exclusive price (imputed net selling
price )
 For the imported goods, taxable price = GIF + import duty
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SPECIAL CONSUMPTION TAX



From 01/01/2010: SCT taxable price for beer include the
value of the cans.
The tax office shall determine taxable price in the case
where goods sold by manufacturers to traders at the price of
10% lower than the selling price of traders.
Goods produced under the cooperation between
manufacturer and the label, trade mark owner: SCT is the
VAT exclusive selling price of the label, trade mark owner.
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5. ENTERPRISE
NEW ISSUES
INCOME
TAX
(EIT)
1. Taxpayers
2. Taxable income
3. Exempted income
4. Deductible expenses for determining taxable income
5. Tax rates
6. Tax incentives
7. New policies
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EIT - TAXPAYERS





Enterprises established under Vietnamese law; Business households
have changed to pay tax according to the personal income tax since
2009
Enterprises established under foreign laws with or without Vietnambased permanent establishments;
Organizations established under the Law on Cooperatives; Nonbusiness units established under Vietnamese law; Other
organizations engaged in income-generating production and
business activities despite the fact that they are not known as
enterprises
Private enterprises pay EIT, then the enterprise owner shall not have
to pay tax on the business income;
Farms belonged to individuals shall be under the scope of personal
income tax law; Farms belonged to cooperatives or enterprises shall
be under the scope of enterprise income tax law.
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TAXABLE INCOME


Taxable incomes include income from goods and service
production and business activities and other incomes;
Other incomes cover income from the transfer of capital or real
estate; income from the right to own or use assets; income
from the transfer, lease or liquidation of assets; income from
interests, loans or foreign currency sales; refund of provisions;
recovery of bad debts already written off; collection of payable
debts of unidentifiable creditors; omitted income from previous
years' business activities, and other incomes, including income
generated from production and business activities outside
Vietnam
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EXEMPTED INCOME (7 ITEMS)
1.
2.
3.
4.
Income from cultivation, husbandry and aquaculture of
organizations established under the Law on Cooperatives.
Income from the application of technical services directly for
agriculture.
Income from the performance of contracts on scientific research
and technological development, trial products and products
turned out with technologies applied for the first time in
Vietnam.
Income from enterprises' goods and service production and
business activities exclusively reserved for disabled, detoxified
and HIV-infected laborers. The Government shall specify
criteria and conditions for the determination of enterprises
exclusively reserved for disabled, detoxified and HIV-infected
laborers.
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EXEMPTED INCOME (7 ITEMS)
5.
6.
7.
Income from job-training activities exclusively reserved for
ethnic minority people, the disabled, children in extremely
disadvantaged circumstances and persons involved in social
evils.
Incomes divided for capital contribution, joint venture or
association with domestic enterprises, after enterprise income
tax has been paid under the provisions of this Law.
Received financial supports used for educational, scientific
research, cultural, artistic, charitable, humanitarian and other
social activities in Vietnam (if not used for the right purpose,
the tax shall be recovered at the rate of 25%).
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DEDUCTIBLE EXPENSES FOR DETERMINING
TAXABLE INCOME
Enterprises are entitled to deduction of all expenses which
fully meet the following conditions:
a. They are actually paid expenses related to production
and business activities;
b. They are accompanied with adequate invoices and
documents as prescribed by law
The under law documents list non deductible expenses;
items which are not listed shall be understood as
deductible
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EIT RATES




Standard rate 25%
Preferential rates 10% and 20% with time limit;
Preferential rate 10% for the whole period applied to
enterprises operating in education-training, vocational
training, healthcare, cultural, sports and environmental
domains (which meet the conditions regulated by the
Government)
Special rates (from 32% to 50%) for oil and gas exploration,
exploitation projects.
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EIT INCENTIVE

Incentives for attracting investment:
 Time bound preferential rates for newly set up enterprises
under investment projects in geographical areas with
extreme socio-economic difficulties or sectors where
investment is highly encouraged;
 Time bound tax exemption, reduction for certain income of
certain persons.
 Special incentives in certain period will be provided in
accordance with requirement of socio economic development
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EIT INCENTIVES


Rate of 10% for 15 years, exemption for period up to 4 years,
reduction of 50% for period up to 9 years will be provided to
newly set up enterprises under investment projects in
geographical areas with extreme socio-economic difficulties,
economic zones or hi-tech parks; newly set up enterprises under
investment projects in the domains of high technology, scientific
research and technological development, development of the
State's infrastructure works of special importance or manufacture
of software products;
In special cases where investment with large scale and high
technology is needed to be attracted, the period for tax incentives
might be extended (at the maximum of 15 years).
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EIT INCENTIVES

Newly set up enterprises under investment projects in
geographical areas with socio-economic difficulties are entitled to
the tax rate of 20% for ten years, the tax exemption up to 2 years
and 50% tax reduction up to 4 consecutive years
 Agricultural service cooperatives and people's credit funds are
entitled to the tax rate of 20%.
 Incentives for newly established enterprises operating in industrial
zones have been abolished since 01/01/2009
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TRANSITION TO NEW POLICIES


Enterprises which enjoy EIT incentives under Enterprise Income
Tax Law dated 17/6/2003 may continue enjoying those
incentives for the remaining duration under Enterprise Income
Tax Law dated 17/6/2003; in case EIT incentives, including tax
rate incentives and tax exemption and reduction duration, are
lower than the tax incentives specified in this Law, the tax
incentives under this Law apply for the remaining duration.
Enterprises which are entitled to tax exemption or reduction
duration under Enterprise Income Tax Law dated 17/6/2003 but
have no taxable income yet, the tax exemption or reduction
duration will be counted under this Law and from the date this
Law takes effect.
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6- PERSONAL INCOME TAX
Separate document is provided
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PART II
New issues in the tax policies of the
period 2009- 2010
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NEW ISSUE SINCE 01-01-2009
 Value
added tax
 Special consumption tax
 Enterprise income tax
 Personal income tax
 Foreign contractor tax
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VALUE ADDED TAX – LEGAL DOCUMENTS

Law on Value added tax No. 13/2008/QH12 dated
03/6/2008
 Decree no 123/2008/ND-CP dated 08/12/2008 provides
guidance on the implementation of some articles of the Law
on Value added tax
 Circular No. 129/2008/TT-BTC dated 26/12/2009 of the
Ministry of Finance
 Circular No. 131/2008yTT-BTC dated 26/12/2008 providing
guidance on VAT according to the Preferential import duty
schedule (HS Nomenclature)
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VALUE ADDED
(SINCE 2009)
TAX
–
NEW
1. To broader tax bases
2. To change tax rates
3. To change provisions on tax credit, refund
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ISSUES
1. TO BROADERN VAT BASES
New articles are subject to VAT:
 Survey - mapping, geological exploration belonging to basic
survey of the State, (rate 10%)
 Activities of cultural, exhibition, sport, gymnastics, art
performance, film producing, importing, distributing and
presenting film, (rate 5%)
 Machinery, equipment and specialized means of transport
which form part of a technological line and construction
supplies which have not yet been domestically
manufactured and which need to be imported to form fixed
assets of enterprises (rate 10%)
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II. 2- CHANGES IN TAX RATE


International traffic, goods and services directly supplied for
international traffic are subject to 0% with input tax refund
(before these activities are VAT exempted).
More articles are subject to the rate of 10%, more articles
are changed from 5% to 10%:
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3 - TAX CREDIT, REFUND (from 01/01/2009)
Exported natural resources, minerals are exempted from VAT →
All natural resources, minerals when exported are not
eligible for input tax credit.
 If there are errors in declaring input tax, the supplementary
declaration is allowed for maximum period of 6 months from the
date of the invoice (2 months more are allowed)
 New conditions for VAT filing, credit and refund: via bank payment
receipts are required for goods and services which have value
from 20 million dong or more for each transaction

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VIA BANK PAYMENT IS REQUIRED



Total value of goods, services each time according to the
invoice is 20 million dong or more.
In case value of purchase from a supplier is lower than 20
million dong but purchases are made many times a day and
total value of all purchases in the day is higher than 20
million dong, if there is no via bank payment receipt, the
input VAT credit shall not be allowed
Clearing is considered as via ban payment for input tax
credit.
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... VIA BANK PAYMENT IS REQUIRED

Goods, services purchased on installments which have
value from 20 million dong or more: bases for declaring
input tax credit are commitments in the contracts, VAT
invoices and via bank receipt. When the time for payment as
stipulated in the_ contract does not expire, credit is allowed.
If the time of payment expires, but there are no via bank
payment receipt -^ amendment in input tax declaration is
required for credit purpose.
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ENTERPRISE INCOME TAX (EIT)
Legal documents
 Law on Enterprise Income Tax no 14/2008/QH12 dated
03/6/2008
 Decree no 124/2008/NĐ-CP dated 11/12/2008
 Circular no 130/2009/TT-BTC dated 26/12/2008
 Circular no 134/2008/TT-BTC dated 31/12/2008 of Ministry
of Finance providing guidance on the tax applied to foreign
organizations, individuals which conduct business in
Vietnam or derives income in Vietnam (contractor tax)
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EIT-NEW ISSUES (6)
1. Scope of application
2. Deductible expenses for determining taxable income
3. Setting up of enterprises' scientific and technological
development funds
4. Place for tax payment
5. EIT for real property transfer
6. EIT tax incentives
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EIT-NEW ISSUES (6)
1. Scope of application:
 Only applied to entities which conduct production, business
activities
 Business individuals have changed to pay personal income
tax (PIT)
2. Deductible expenses when determining taxable income
 Provides 31 non deductible expenses (or deductible with
limitation)
 The other expenses which are not listed shall be
understood as deducted
 Some expenses should be noticed
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(NEW ISSUE 2) DEDUCTIBLE EXPENSES

Fixed assets depreciation: (i) Enterprises should register
methods for depreciation, determine the rate of accelerated
depreciation and change the rate according to the regulation
by Ministry of Finance; (ii) Upon the capital contribution,
merge, acquisition, division, change in type of business the
enterprise receiving fixed assets shall be allowed to calculate
depreciation according to the revalued historical cost; (iii)
Deductible expenses do not include depreciation with respect
to fixed assets with historical value exceeding VND 1.6 billions
with respect to vehicles with 9 seats and less; depreciation with
respect to civil aircrafts, yachts which are newly registered for
use from 1/1/2009 (except those specially used for
passengers, goods transportation for business purposes).
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DEDUCTIBLE EXPENSES




Bonus: amount or bonus to be paid is not limited but
conditions for bonus should be paid
Salary and other payables: should be paid before 31/3 of
the following year, except cases where enterprises make a
salary provision for the consecutive following year (provision
is not allowed to exceed 17% of the salary fund.
Clothing for employees is not allowed to exceed VND1.5m
per employee per year (in kind) or VND1m (in cash)
Bonus for innovation should be provided in the
Rule/Regulation
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DEDUCTIBLE EXPENSES


Payment for electricity, water in cases of renting houses,
places for business but the enterprise is not a contract's
party: list of payments according to form 02/TNDN together
with the payment vouchers
Provisions are allowed and deductible for: provision for
decline in inventories, loss of financial investment, bad debt,
provision for guarantee of products, assembling projects
according to the regulations by Ministry of Finance
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EIT- NEW ISSUES
3. Setting up of enterprises' scientific and technological
development funds
 Source of making fund: from before tax income (up to 10%
of annual taxable income).
 Fund should be used up within 5 years
 Within 5 years from the date of its establishment, if the fund
or 70% of the fund has not been used up, the enterprise
shall have to re-pay the corresponding CIT and interest at
the rate of 1 year treasury bond for 2 years.
 If the fund has not been used for proper purpose, the
enterprise shall have to re-pay the corresponding OT and
interest arising from such CIT at the rate of 0.05 per day
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EIT-NEW ISSUES
4. Places for tax payment
 Enterprises shall pay tax at places where they are
headquartered.
 In case an enterprise has a dependent cost-accounting
production establishment operating in a province or centrally
run city other than the place of its headquarters, the payable
tax amount shall be calculated based on the ratio of expenses
between the place where the production establishment is
located and the place where the enterprise is headquartered.
 The ratio of expense shall be based on the previous year ratio
 The headquarter pays tax but receipts are made separately
for treasury agencies
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EIT-NEW ISSUES
5. Income from real property transfer: progressive rate is
abolished
 Income from transferring real properties include income
from transferring land use right, land renting right, income
from releasing land by enterprises operating in real
property business in according to provisions of land
code, regardless the released land attached with
infrastructure facilities, construction works or not.
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EIT for income from real estate transfer



If expenses related to turnover can be determined, the EIT
shall be calculated and temporarily paid on the basis of
turnover minus expenses
If expenses related to turnover have not been determined,
the temporary payment is of 2% of turnover on cash basis
Rate is 25%; if an enterprise is enjoying tax preferences,
then income from transferring real properties shall not be
enjoyable to BIT preferences and loss from transferring real
properties (if any) shall be accounted separately without
offsetting against the profits derived from other businesses
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EIT - New issues
6. EIT incentives: simpler and narrower scope
 To abolish the rate of 15%, abolish the incentives for newly
established enterprises in industrial zones (except in areas
with difficult, especially difficult conditions).
 To narrow the industries, sectors for preferential treatment
(as listed in Decree 124/2008).
 To retain preferential rates of 10%, 20% and the time for tax
exemption, reduction applied to areas with difficult, especially
difficult conditions and special sectors.
 The tax exemption is calculated from the year where income
is made (from the fourth year if there are losses in many
years).
 To abolish the tax incentives for expansion of investment
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CONTRACTOR TAX-NEW ISSUES
Circular of Ministry of Finance no. 134/2008
dated 31/12/2008 , Circular no. 197/2009 and Circular
no. 64/2010
 Providing clearer the scope of application
 Providing in details cases that are not subject to tax
 Providing in details withholding rates
 Abolishing
Circular no. 16/1999/TT-BTC dated
04/02/1999 of the Ministry of Finance providing
freight tax for foreign shipping companies operating
in Vietnam
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SCOPE OF APPLICATION




Contractor tax includes VAT, EFT, PIT
Organizations, individuals doing business in Vietnam who
make payment for purchasing services from foreign
organizations, individuals (including services attached to
goods) shall be responsible for:
Paying VAT for the services consumed in Vietnam (pay
output VAT and is entitled to input VAT credit)
Withholding the EIT/PIT of the foreign contractors to pay to
the State budget (withholding from amount paid overseas).
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CONTRACTOR TAX IS NOT APPLIED TO
1.
2.
Foreign organizations or individuals conducting business in
Vietnam in accordance with the Law on Investment, the
Law on Petroleum or the Law on Credit Institutions.
Foreign organizations or individuals supplying goods to
Vietnamese organizations or individuals not associated
with services provided in Vietnam, in the following forms:
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CONTRACTORS TAX IS NOT APPLIED TO
3.
4.
5.
6.
Services supplied and consumed outside Vietnam.
Repair of machinery, equipment, means of transport
outside Vietnam
Services performed outside Vietnam such as advertising,
marketing, trade and investment promotion, brokerage,
training;
Freight
sharing
for
international
post
and
telecommunication according to the Ordinance on post and
telecommunication between Vietnam and foreign countries
in which these services are performed; Services for renting
transmission line and satellite from foreign countries
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EIT payment extension for
2010 (to stimulate investment,
consumption, solve
difficulties for enterprises)
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EXTENSION FOR 2010 EIT PAYMENTS


In 2010: EIT payment is extended for 3 months (in 2009, EIT
is extended for 9 months)
Applied to small and medium enterprises which meets
criteria of capital or employees as regulated in paragraph 1
Article 3 Decree no. 56/2009/NĐ-CP dated 30/6/2009 of the
Government on supporting the small and medium
enterprises (SME) development.
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CRIRERIA FOR MEDIUM ENTERPRISES 2010
 Total
capital: 100 billion dong or lower for enterprises in
agricultural, forestry, fishery, industrial and construction
sectors; 50 billion dong or lower for enterprises in trading
and services sectors.
 Total employee Y.300 employees or lower for enterprises in
agricultural, forestry, fishery, industrial and construction
sectors; 100 employees or lower for enterprises in trading
and services sectors.
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PART III
Q&A
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PERSONAL INCOME TAX 2009
PERSONAL INCOME TAX
(PIT)
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PERSONAL INCOME TAX 2009
 Legal
documents which have been introduced up to
the second quarter of 2010
 Main contents
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1 - PERSONAL INCOME TAX – LEGAL
DOCUMENTS

Law no. 04/2007/QH 12 dated 21/11/2007
 Decree no. 100/2008/ND-CP dated 8/9/2008
 Circular no. 84/2008/TT-BTC dated 30/9/2008
 Circular no. 62/2009/TT-BTC dated 27/3/2009 amending
Circular no. 84/2008
 Circular no. 160/TT-BTC dated 12/8/2009 providing
guidance on the PIT exemption in 2009 according to the
National Assembly's Resolution.
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PERSONAL
INCOME
DOCUMENTS
 Circular
TAX
–
LEGAL
no. 160/TT-BTC dated 12/8/2009 providing guidance to
the PIT exemption in 2009 according to the National
Assembly's Resolution
 Circular no. 161/TT-BTC dated 12/8/2009 providing guidance to
the PIT for a number of cases of transfer, receiving inheritance,
gift in the form of immovable property.
 Circular no. 02/2010/TT-BTC amending Circular no. 84/2008
 Circular no. 20/2010/TT-BTC providing guidance on the
amendment of PIT administrative procedures
 Circular no. 37/2010/TT-BTC guiding PIT credit receipts which
are printed from computers
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2 - PIT – MAIN ISSUES
 Taxpayer
 Taxable
income
 Exempted income
 Tax reduction
 Calculation of tax, family allowance
 Tax administration
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WHO HAS TO PAY PIT?



Residents: have to pay tax for the income deriving in Viet
Nam and outside VN (global income)
Non-residents: have to pay tax for the income deriving in
Viet Nam
Residents are individuals who meet one of the two
conditions:
 Being present in Vietnam from 183 days or more in a
calendar year or in 12 consecutives months counting
from the first date of his/her presence in Vietnam
 Having a place of habitual residence in Viet Nam (having
a house or renting a house to live for 90 days or more).
S & S Auditing and Consulting Co.,Ltd
TAXABLE INCOME (10)
Income from business
2. Income from wages, salaries
3. Income from capital investment
4. Income from capital transfer
5. Income from transfer of real estate
6. Income from won prizes
7. Income from copyright
8. Income from commercial franchising .'i9. Income from inheritance (for certain assets which are
subject to registration for use)
10. Income from gifts
1.
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INCOME FROM SALARIES AND WAGES
Includes all items received from employers in monetary
or non-monetary forms:
1. Salaries, wages and amounts of similar nature
2. Subsidies, allowances excluding those subsidies,
allowances mentioned bellows.
3. Remuneration received as brokerage commissions,
payments for participation in researches, projects;
royalty, teaching; cultural performance, arts, sports...,
and other services. Cont. ->
S & S Auditing and Consulting Co.,Ltd
INCOME FROM SALARIES, WAGES
4.
5.
Money received from participating in professional
associations, business associations; board of directors;
enterprise control boards, project management units,
management councils, business councils and other
organizations.
Other benefits in monetary or non-monetary benefits other
than salaries and wages paid by employers to or on behalf
of taxpayers. The benefits are only calculated as personal
income when beneficiaries are identified (Circular 62 dated
27 March). These benefits include:
S & S Auditing and Consulting Co.,Ltd
BENEFITS INCLUDED IN SALARIES AND
WAGES
House rents, charges for electricity, water and associated services
(house rents are the actual amounts paid but do not exceed
15% of total house rent exclusive income)',
 Insurance for employees which employers are not obliged to
purchase under law;
 Membership fees provided to individuals (membership cards for
golf club, sports, art club with specific names of individuals on the
cards
 Payments, gifts for individuals in the form of healthcare,
entertainment, recreation, beauty care services, consultancy
services
 Other benefits provided on holidays, festivals,...

S & S Auditing and Consulting Co.,Ltd
BENEFITS INCLUDED IN SALARIES AND
WAGES

Expenses for individuals for using consultancy services, hiring
servants for domestic work.
 Other benefits which employers pay for employees consistent with the
law (excluding the presumptive expenses for stationery and
telephone, working expenses and uniforms at the rate specified in
Circular 62 dated 27/3/09)
 Monetary or non-monetary bonuses on a monthly, quarterly, annual or
one-off basis, thirteenth month Tet bonus and so forth (including
bonuses in the form of securities)
 The allowances for mid-shift meals which exceed the regulated
amount (these allowances will not be included in the taxable amount if
the businesses prepare the meals or the allowances are within
S & S Auditing and Consulting Co.,Ltd
ALLOWANCES, SUBSIDIES THAT ARE NOT
INCLUDED IN TAXABLE INCOME




Allowances paid under legal provisions on preferential treatment
of persons with meritorious services;
Defence or security allowances;
Hazard or danger allowances for persons working in branches,
occupations or jobs at places where exist hazardous or
dangerous elements; allowances for attraction of labourers to
work in certain branches or in certain regions specified by law
Allowances for sudden difficulties, allowances for labourers
having labour accident or suffering from occupational disease,
lump-sum maternity or child adoption allowances; allowances for
working capacity loss, lump-sum retirement allowances, monthly
survivorship allowances, severance and job loss allowances
specified in the Labour Code, other allowances paid by the Social
Insurance
S & S Auditing and Consulting Co.,Ltd
ALLOWANCES, SUBSIDIES THAT ARE NOT
INCLUDED IN TAXABLE INCOME

Allowances for combat of social evils as specified by the law; List of
allowances, subsidies which are deducted when determining taxable
income : according to the guiding documents by the competent
authorities.
 One-off subsidies for foreigners who come to reside in Vietnam
according to the level specified in the labour contract or the
agreement between employers and employees.
 The return ticket paid by the employer for employees who are
foreigners for travelling on holiday to home country once a year.
 School fees for children of foreigners who go to primary and
secondary school in Vietnam and the fees paid by employer
according to the labour contract and school fee receipt.
S & S Auditing and Consulting Co.,Ltd
BONUSES THAT ARE NOT INCLUDED IN
TAXABLE INCOME





Monetary awards attached to titles bestowed by the State including
monetary awards attached to emulative titles and all forms of
commendations and rewards as prescribed in the law on rewards
and commendations,
Monetary awards attached to State honorary titles comprising title of
"Heroic Vietnamese Mother", titles of heroes of the people's armed
forces, titles of heroes, titles of People's Teacher, Doctor, Artist and
so forth.
Monetary awards attached to national and international awards
recognized by the State of Vietnam.
Monetary awards for technical improvements, inventions and
innovations recognized by competent State authorities.
Monetary awards for detecting and reporting breaches of law to
competent State authorities
S & S Auditing and Consulting Co.,Ltd
PIT-EXEMPT INCOMES (14)
Incomes from transfer of real estate between spouses; parents and
their children; adoptive parents and their adopted children; fathersin-law or mothers-in-law and daughters-in-law or sons-in-law;
grandparents and their grandchildren; or among blood siblings.
2. Incomes from transfer of residential houses, rights to use residential
land and assets attached to residential land received by individuals
who have only one residential house or land plot each.
3. Income from the value of land use rights of individuals who are
allocated land by the State.
4. Incomes from receipt of inheritances or gifts that are real estate
between spouses, parents and their children; adoptive parents and
their adopted children; fathers-in-law or mothers-in-law and
daughters-in-law or sons-in-law; grandparents and their
grandchildren; or among blood siblings
1.
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PIT-EXEMPT INCOMES
5.
6.
7.
8.
9.
10.
Incomes of households and individuals directly engaged in
agricultural or forest production, salt making, aquaculture, fishing
and trading of aquatic resources not yet processed into other
products or preliminarily processed aquatic products.
Incomes from conversion of agricultural land allocated by the State
to households and individuals for production.
Incomes from interests on deposits at credit institutions or interests
from life insurance policies.
Incomes from foreign exchange remittances.
Wages paid for night shift or overtime work, which are higher than
those paid for day shifts or prescribed working hours in accordance
with law.
Retirement pensions paid by the Social Insurance.
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PIT- EXEMPT INCOMES
Incomes from scholarships, including. Scholarships granted from
the state budget; Scholarships granted by domestic and foreign
organizations under their study promotion programs.
12. Incomes from indemnities paid under life insurance policies, nonlife insurance policies, compensations for labour accidents,
compensations paid by the State and other compensations as
provided for by law.
13. Incomes received from charity funds licensed or recognized by
competent state agencies and operating for charity, humanitarian
or non-profit purposes.
14. Incomes received from governmental or non-governmental foreign
aid for charity or humanitarian purposes approved by competent
state agencies.
11.
S & S Auditing and Consulting Co.,Ltd
PIT REDUCTION


Taxpayers who face difficulties caused by natural disasters,
fires, accidents or severe diseases and affecting their tax
payment ability may be considered for tax reduction
corresponding to the extent of damage they suffer from but
not exceeding payable tax amounts. •
The amount of tax payable as the basis for a consideration
of reduction of tax, shall comprise: personal income tax
already paid or already deducted on items of assessable
income in accordance with the flat rate and personal income
tax payable on income from business and on income being
salary.

S & S Auditing and Consulting Co.,Ltd
PIT CALCULATION

To determine the types of taxable income for applying the
relevant shedule of rate :
 Salaries, wages and business income derived by
residents are entitled to allowances (compulsory
insurance, family allowances, humanitarian donation) the
balance after deducting allowances is subject to the
partially progressive rates;
 The other types of income derived by residents and
income derived by non-residents are subject to tax each
time when income arises
S & S Auditing and Consulting Co.,Ltd
FAMILY ALLOWANCES

Is the amount deducted from their taxable incomes before tax
calculation
 Includes 2 parts: (i) Reduction for a taxpayer himself/herself, which
is VND 4 million/month; (ii) Reduction for each dependant of a
taxpayer, which is VND 1.6 million/month given from the month the
taxpayer's obligation to nurture the dependant arises.
 Applies to business income and income from salaries, wages of
residents. The family allowances for dependant are calculated if the
individuals register taxes and have TIN.
 Each dependant is entitled to allowance in the income of one
taxpayer in the tax year. The allowance is given in the month where
the obligation to nurture arises
S & S Auditing and Consulting Co.,Ltd
FAMILY ALLOWANCES



In case several taxpayers share a dependant they are
obliged to nurture, they shall reach agreement on
registration of this dependant for family allowance for one
among them.
The taxpayer shall declare the number of dependant and be
responsible before the law for this declaration.
Registration for dependant: form 16/DK-TNCN should be
used. If the dependant do not live together with the
taxpayers, form 21a , 2ib/XN-TCNN (promulgated with
Circular No 62 dated 27/3/2009) should be used.
S & S Auditing and Consulting Co.,Ltd
BUSINESS INCOME AND INCOME FROM
SALARIES, WAGES
Reduction for charity or humanitarian donations: Resident
individuals who earn incomes from business activities,
salaries or wages enjoy their charity or humanitarian
donations deductible from their taxable incomes, including:
a. Donations to organizations or establishments that care for
or nurture children in special plights, disabled people and
helpless elderly people;
b. Donations to charity funds, humanitarian funds or study
promotion funds which operate according to Decree
148/2007/NDD-CP dated 25/9/2007 for humanitarian,
charity, study promotion purpose
S & S Auditing and Consulting Co.,Ltd
PARTIALLY PROGRESSIVE TARIFF
Tax
grade
Taxed income per year
(million dong)
Taxed income per month
(million dong)
Tax
rate
(%)
1
Up to 60
Up to 5
5
2
Between over 60 and 120
Between over 5 and 10
10
3
Between over 120 and 216
Between over 10 and 18
15
4
Between over 216 and 384
Between over 18 and 32
20
5
Between over 384 and 624
Between over 32 and 52
25
6
Between over 624 and 960
Between over 52 and 80
30
7
Over 960
Over 80
35
S & S Auditing and Consulting Co.,Ltd
INCOME SUBJECT TO FLAT RATES
Incomes from capital investment
2. Incomes from capital transfer
3. Income from transfer of real properties
4. Income from won prizes
5. Royalties
6. Incomes from commercial franchising.
7. Incomes from inheritances (for certain asset that are
subject to registration)
8. Incomes from gifts
1.
S & S Auditing and Consulting Co.,Ltd
FLAT RATES
Taxed income per year
(VND million)
Tax rate
(%)
a.
Incomes from capital investment (dividends, interest)
5
b.
Incomes from royalties, commercial franchising (the part
exceeding 10 million dong/payment)
5
c.
Incomes from won prizes (the part exceeding 10 million
dong/payment)
10
d.
Incomes from inheritances, gifts (the part exceeding 10
million dong/payment)
10
S & S Auditing and Consulting Co.,Ltd
FLAT RATES
Taxed income per year
(VND million)
Tax rate
(%)
e.
Incomes from securities transfer (net income)
20
f.
Incomes from securities transfer (selling price)
0,1
g.
Incomes from transfer of real estate (net income)
25
h.
Incomes from transfer of real estate (transfer price)
2
S & S Auditing and Consulting Co.,Ltd
PIT ADMINISTRATION



Registration
Tax withholding
Tax filing
S & S Auditing and Consulting Co.,Ltd
PIT ADMINISTRATION- REGISTRATION

An individual with taxable income being salary shall lodge his or her
file for tax registration with the income-paying entity. Individuals with
other taxable income items shall lodge their files for tax registration
with the Tax Department where they reside (E-REGISTRATION NOW
IS ALLOWED).
 Entities and individuals paying taxable incomes shall make tax
registration with tax offices in order to be granted tax identification
numbers for the entities and their staff
 Individuals with a number of income sources such as from business,
salary and other taxable income items may select the place to lodge
their files for tax registration either at the income-paying entity or
body/ or at the Tax Department in the locality where they conduct
business.
S & S Auditing and Consulting Co.,Ltd
PIT ADMINISTRATION - TAX WITHHOLDING


Tax withholding: The income-paying organizations and individuals
deduct payable tax amounts from incomes of taxpayers before paying
incomes.
Tax withholding for SALARIES, WAGES:
 Individual with a labour contract and who was employed on a long
term and stable basis: tax shall be deducted on a monthly basis. The
income-paying entity shall calculated the tax withheld on the basis of
the amount of income, the registered family allowances and the
progressive tax rate.
 Other individuals with income of 500.000 dong/payment or more: tax
withheld at the rate of 10% (TT so 62/2009)
S & S Auditing and Consulting Co.,Ltd
PIT ADMINISTRATION -TAX FILING



Monthly tax declaration is applicable to income-paying
organizations which have total monthly withheld tax amount
of VND 5 million or higher: the declaration should be no later
than the 20th of the following month
Quarterly tax declaration is applicable to income-paying
organizations which have total monthly withheld tax amount
of less than VND 5 million: the declaration should be no
later than the 30th of the first month of the following quarter
Declaration form : Circular 84/2008 . From 2010 according
to the form issued in Circular 20/2010
S & S Auditing and Consulting Co.,Ltd
PIT ADMINISTRATION - TAX FINALIZATION
TAX FINALIZATION is applied to the income-paying
organizations which withhold tax of employees:
 Finalize with tax offices on the amount of PIT that should be
withheld, the amount actually withheld, the amount actually
paid to the State budget and the amount carried forward.
 Before that the final amount of tax of each employee should
be determined (conduct the tax finalization for each
employee )
 Form for tax finalization: Circular 84/2008 and 20/2010
(applied to tax period 2009)
S & S Auditing and Consulting Co.,Ltd
TAX FINALIZATION


Income-paying organizations will, on behalf of their
employees, declare the final tax in respect of the income
that organizations have paid to the employees. The forms
for authorization are provided on the website.
Individuals who are residents having many sources of
income (salaries, business income) shall declare the final
tax with tax offices when the amount of tax to be paid is
higher than the amount already withheld or when they
request for tax refund or tax offset in the following period.
S & S Auditing and Consulting Co.,Ltd
DISCUSSION ON THE LAW ON
INDEPENDENT AUDITING
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
1. General structure
 General provisions
 Practicing auditors
 Auditing companies
 The entity which is the subject of the audit
 Independent auditing operation
 Audit of financial statements of public interest entities
 Implementing provisions
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
2. Definition "Public interest entities" (Article 4)
Are enterprises, that are of significant public relevance
due to the nature and size of their business and if audits
of these entities' financial statements are not properly
conducted, this will significantly affect public trust in audit
reports
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
3. Value of audit reports (Article 6)
(1)Audit reports confirm the integrity and reasonability of
financial statements, in all material respects, in accordance
with applicable financial reporting framework; evaluate the
compliance with law, economy, validity and effectiveness in
managing and using money
and assets of the audited entity.
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
3. Value of audit reports (Article 6)
(2) Audit reports are one of the bases for:
Shareholders, investors, joint venture parties, associates, clients
and other organizations and individuals getting direct benefits from
or related to the audited entity to deal with relationships of the
relevant parties in respect of rights and obligations;
b. State administrative bodies and higher level entities for
c. Management and operation in accordance with the functions and
duties assigned;
d.
Entity which is the subject of audit to use for detecting, dealing
with and timely preventing errors, weaknesses in operations of the
entity;
a.
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I. NEW CONTENTS
3. Value of audit reports (Article 6)
(3) Competent bodies, other organizations and
individuals shall consider using audit report as an opinion of
an independent consultancy organization to serve their
management and business requirements.
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
4.State management of
operations (Article 10, 12)
independent
auditing
The Ministry of Finance shall: "Issue, suspend, revoke
establishment and operation licenses of audit firms,
branches, representative offices of audit firms; approve the
establishment of overseas branches or subsidiaries of audit
firms"
"Establishment and Operation License is simultaneously the
Business Registration Certificate"
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
5. Audit professional organizations (Article 11)

Are established in accordance with the legal regulations on
associations to gather auditors, practicing auditors and audit
firms in the whole country
 Provide training, CPD, advisory, quality review; monitor,
protect members' rights and interests; develop legal
documents...
 Are responsible for observation of legal regulations on
independent auditing and relevant legal documents
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
6. Conditions for registration for practicing audit
(Article 16)
 To
have 36 months or more of practicing as an auditor in
audit firms, other organizations in Vietnam.
 To be a member of an audit professional organization of
Vietnam.
 To have international certificates recognized by the
Ministry of Finance and pass the conversion exam in
Vietnamese on Vietnamese legislation.
 To be granted with Practicing Registration License by the
Ministry of Finance...
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
7. Conditions for establishment and operation of an
audit firm (Article 23, 24)
 To
have at least five people with CPA certificates
 To be a member of an audit professional organization of
Vietnam
 To have the Director (General Director) work full time for
the firm...
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
8. Annual financial statements of audit firms must be
audited in compliance with regulations (Article 44)
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
9. Audit firms and practicing auditors approved to
audit financial statements of public interest entities
shall disclose information on the website Of the
MOF (Article 64, 65)
 Information
regarding practicing auditors and audit firms;
 Information regarding quality assurance;
 Information regarding inspection, disciplines, breach
handling, dispute resolution and public monitoring...
S & S Auditing and Consulting Co.,Ltd
I. NEW CONTENTS
10.Audit firms qualified for audit of public interest entities'
financial statements are required to publicly disclose on
their websites their annual prospectus within 90 days
since the end of fiscal year at maximum" (Article 65)
S & S Auditing and Consulting Co.,Ltd
II. MATTERS FOR DISCUSSION
A. Contents, requirements in the Law on Independent
Auditing
Compulsory audit (Article 65).
2. Conditions for attending the examination for CPA
certificates (Article 15).
3. Circumstances in which a practicing auditor, auditing
company is not allowed to perform an audit (Article 20,
Article 36).
4. Types of auditing firms (Article 21, items 1, 2, 3).
1.
S & S Auditing and Consulting Co.,Ltd
II. MATTERS FOR DISCUSSION
A. Contents, requirements in the Law on Independent
Auditing (cont)
Audit fee (Article 51).
6. Audit service quality control (Article 61).
7. Public interest entities (Article 62).
8. Approval of auditing companies who are entitled to audit
public interest entities' financial statements (Article 63);
5.
S & S Auditing and Consulting Co.,Ltd
II. MATTERS FOR DISCUSSION
B. Other matters
1.
2.
3.
4.
Disclosure of audit fee in the notes to financial
statements of enterprises, organizations.
Compulsory change of auditors and auditing companies
after a number of years.
Regulations to prevent reduction of audit fee and
change of auditors and auditing companies if there is no
valid reason.
Are enterprises, organizations allowed to engage more
than one auditing company for an audit of financial
statements?
S & S Auditing and Consulting Co.,Ltd
NEW ACCOUNTING POLICY
(APPLIED FROM 2010]
 Circular
206/2009/TT-BTCdated October 27th, 2009 of
the Ministry of Finance to guide accounting for
Government bond repurchase agreement
 Circular 244/2009/TT-BTC dated December 31, 2009
of the Ministry of the Finance to guide the
supplementation
and
revision
on
corporate
accounting policy
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Circular 206/2009/TT-BTC dated October 27th,2009 of
the Ministry of Finance to guide accounting for
Government bond repurchase agreement (REPO)
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Scope
This Circular is to apply for Government bond REPO
transaction designated in the Decision 46/2008/QDBTC dated July 1st 2008 of the Ministry of Finance for
issuing administrative regulation of Government bond
transaction in Hanoi Stock Exchange
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Accounting principle
applied for Government bond REPO agreement


Comply with the rule of form and term of transaction as well
as the interest arising from Government bond.
The buyer in the REPO agreement should not recognize the
bond coupon received as a financial income during the
effective time of agreement. Alternatively, the buyer has to
recognize the coupon received as a payable to the seller.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC


The seller should recognize the difference between
Government bond selling price and repurchase price as a
financial expense; The buyer should recognize that
difference as a financial income in P/L.
In case transaction is related to more than one pi
expense or income should be allocated for those periods.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Supplementation to a new Account Gov bond sale and
repurchase agreement
This account is to reflect value of Gov bond REPO transaction
arising in the reporting period. This account does not reflect
the coupon which the buyer received on behalf of the seller
during the time of the transaction
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Accounting method for seller
in the REPO agreement.
a.
b.
Cash received at the beginning of agreement:
Dr Cash (Cash received - selling price)
Periodically, the seller allocates the difference between
Government bond selling price and repurchase price to
financial expense:
Dr Financial expense:
Cr Gov bond sale and repurchase agreement.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
c.
d.
At the expired date, buying back the bond sold:
Dr Gov bond sale and repurchase agreement
Cr Cash.
The amounts of coupon received from the buyer during the
time of agreement:
Dr Cash
Dr other receivables
Cr Financial income.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Accounting method for the buyer
in the REPO agreement.
a.
b.
Cash paid to the seller at the beginning of agreement:
Dr Gov bond sale and repurchase agreement Cr Cash.
Periodically, the buyer allocates the difference between
Government bond purchasing price and resale price to
financial income:
Dr Gov bond sale and repurchase agreement.
Cr Financial income
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
The bond coupon received should be recognized as a
payable to the seller
Dr Cash
Cr other payables.
d. At the expired date, the buyer resales bond to the sellers
Dr Cash
Cr Gov bond sale and repurchase agreement
c.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 206/2009/TT-BTC
Supplementation to new items
of the financial statements
1.
Supplementation to a new item "Gov bond sale and
repurchase agreement" in the assets side of buyer's
balance sheet to show the value of Gov bond hold at the
reporting date.
2.
Supplementation to a new item "Gov bond sale and
repurchase agreement" in the liability side of seller's
balance sheet to show the value of Gov bond sold and
shall be boughtback at the reporting date.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
Circular 244/2009/TT-BTC dated December 31st, 2009 of
the Ministry of Finance to guide the supplementation
and revision on Corporate Accounting Policy
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
Abandoned documents since 2010


Accounting policy applied for constructors (Decision
1864/1998/QD-BTC dated December 16th, 1998 of The
Ministry of Finance;
The rules of accounting for foreign direct investment
enterprises (Circular 55/2002/TT-BTC dated June 26th, 2002
and circular 122/2004/TT-BTC dated December 22nd, 2004 of
the Ministry of Finance.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
I.
Selection of accounting currency
1.
The selection of foreign currency for accounting and
bookkeeping purpose is applied for foreign entities whose
transactions are mainly attributable to a foreign currency
2.
Foreign entities are responsible for their selection of
accounting currency and have to inform to their tax
administrative agency.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
3. Criteria for selection of accounting currency:
 The accounting currency must be used in the most of
enterprise's transactions for sale of goods, rendering of
service and has to be significant influence on selling
pricey Normal, the currency will be used for decision of
selling price;
 The currency must be used in the most of
enterprise's transactions for purchasing goods and raw
materials
 The currency is used for determining revenue, expense
and business result of an enterprise.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
4. A subsidiary whose parent located in oversea will be allowed
to apply its parent currency if one of two circumstances is
met:
 The subsidiary is found for processing and producing
finished goods for its parent; Most of raw materials are
purchased from and finished goods are exported to its
parent;
 Ratio of subsidiary's transactions to its parent are
significant (over 70%).
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
5. Conversion of financial statements^ prepared by a foreign
currency into Vietnam Dong when submit to Government
agencies
 Foreign entities apply a foreign currency for prep
statements have to convert its financial statements i
Dong when submit to Government agencies.
 All the items in the financial statements prepared by a
foreign currency (including comparative amounts) should
be converted into Vietnam Dong at the average interbank exchange rate at the balance sheet date.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
6. Audit financial statements prepared by a foreign currency
The financial statements prepared by a foreign currency
must be audited. Local currency financial statements
converted from financial statements prepared by a foreign
currency are not compulsory audited but acknowledgement
of an audit firm regarding to conversion is necessary.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
II - Change in accounting currency
1.
2.
3.
The accounting currency can be changed only if there is a
change to entity's underlying transactions, events and
conditions.
The change in accounting currency can be done only at the
beginning of a new accounting period.
When an accounting currency is changed, the entity has to
inform to tax administrative agency by ten working days
from the gate of change.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
4.
5.
All the items of balance sheet should be translated into a
new accounting currency using the average inter-bank
exchange rate at the date of change.
Presentation of comparative amounts in the financial
statement when accounting currency is changed
 Column "At the beginning" in the balance sheet should
be presented at the average inter-bank exchange rate
at the date of change.
 Column "previous year" of P/L and statement of cash
flows should be presented at the average inter-bank
exchange rate of that previous year.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
III. Accounting policy applied for foreign constructors
1.
Principles of application for accounting policy
 Foreign Constructors base on accounting law and
corporate accounting policy to account for each contract
for tax purpose.
 Foreign constructors applied Vietnamese accounting
system are chosen chart of accounts, accounting books
and vouchers for tax and administrative purpose.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
2.
The following supplementation and revision applied
accounting policy need to be submitted to the MOF for
approval
 Revision to the form and contents of compulsory
accounting vouchers;
 Supplementation and revision to account including\
Account name and number, contents and accounting
method;
 Supplementation and revision to items in the financial
statements or change in preparation and presentation of
financial statements.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
3.
Regulations on preparation, submission and audit of
financial statements
 Foreign constructors have to prepare a trial balance and
other financial statements as Vietnamese accounting
system regulated
 The audit financial statements for tax purpose is
encouraged. The financial statements have to submit to
local tax agency, Business licensing authority and local
statistic department.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
IV.
Supplementation
transactions
and
1.
Accounting for the cost of issuing equity instruments
 Joint stock corporations formed from State owned enterprise
equalization, the cost of issuing shares is accounted in line with
Circular 106/2008/TT-BTC dated November 18th, /2008 of the
MOF.
 In other cases, the cost of issuing shares to public includes any
costs directly attributable to the issuing:
Dr Surplus of share capital
Cr cash and other related accounts
S & S Auditing and Consulting Co.,Ltd
revision
to
business
CIRCULAR 244/2009/TT-BTC
Accounting method for issuing shares from surplus of share
capital, development and investment fund and retained
earnings.
Issuing shares from surplus of shares capital:
Dr Surplus of share capital
Cr share capital.
 Issuing shares from development and investment fund;
Dr Development and investment fund
Cr Share capital.
Cr Surplus of share capital (if any).
2.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC


Issuing shares from retained earnings (dividend paid by
share):
Dr Retained earnings
Cr Share capital.
Cr Surplus of share capital (if any).
Issuing bonus shares from bonus fund:
Dr Bonus fund
Dr Surplus of share capital (if any).
Cr Share capital.
Cr Surplus of share capital (if any).
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
3.
4.
Accounting for decreasing in share capital is in line with
corporate accounting policy (Decision T5/2006/QD-BTC
dated March 20th, 2006 of the MOF)
Accounting for investors who received shares from JVC's
issuing share from surplus of share capital, development
and investment fund and retained earnings.
Only number of share should be disclosed in the note to
financial statements. Share value, cost of investments and
financial income will not be recognized in the P/L.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
5. Supplementation a new account “Other revenue” to reflect
management fees that parent or superior received from
their subsidiaries or subordinates and other revenue.
6. Supplementation a new accounts “unemployment
insurance”. Both Employee and employer have to pay for
unemployment insurance. The amounts paid by employee
should be deducted from their salary. The amounts paid
by employer is recognized to P/L as an expense.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
7.
8.
Supplementation to the content of account "Bonus and welfare
fund": The bonus and welfare fund for of board of management
is included in this account
Supplementation a new account "Science and technology
development fund"
 Recognizing to yearly administration expense (limited not
over than 10% from yearly profit before tax).
 The fund should be rewired and settled after five years for
tax purpose
 Amortization and depreciation of Fixed assets found from
the fund should be deducted from the fund other than
recognize to an expense in P/L
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
9.
10.
Accounting for goods and services used for inter-company
consumption
 Enterprises have to recognize inter-company revenue
at cost of sale or cost of production.
 Simultaneously, the VAT output declaration should
made
Supplementation to Accounting method for the difference
between net book value and revaluation value when the
parent contributes non-monetary assets to its subsidiary:
Recognizing immediately to P/L.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
11.
Supplementation to accounting method for transactions
between a venture and a jointly controlled entity
When a venture contributes or sells assets to Jointly
venture, the venture shall recognize only that portion of
the gain that is attributable to the interests of the other
ventures and defer-the gain or loss that is attributable to
its interest in the consolidated financial statements.
However, the venture should recognize all the gain in the
separated financial statements.
S & S Auditing and Consulting Co.,Ltd
CIRCULAR 244/2009/TT-BTC
12.
Supplementation to accounting method for assets
revaluation when the corporate owned form is changed
 The differences arising from asset revaluation
should be recognized to P/L immediately.
 Corporation whose owned form is changed will not be
regarded as a going concern entity
13.
Supplementation and revision to items of financial
statements
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VAS
IN COMPARISON With
IAS/IFRS
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NON-ISSUED VIETNAMESE ACCOUNTING
STANDARDS







VAS "First time Adoption of IFRS”
VAS "Share-based payment
VAS "Non-current assets held for sale and
discontinued operations"
VAS "Exploration for and evaluation of mineral
resources”
VAS "Financial instruments: Recognition and
Measurement
VAS "Financial instruments: Presentation
VAS "Financial instruments: Disclosures
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NON-ISSUED VIETNAMESE ACCOUNTING
STANDARDS

VAS "Employee benefits"
 VAS "Accounting for Government grants disclosure of
Government assistance”
 VAS "Accounting and reporting by retirement benefit
plans"
 VAS
"Financial
reporting
in
hyperinflationary
economies"
 VAS "Impairment of assets" ._
 VAS "Agriculture"
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OVERVIEW OF DIFFERENCES BETWEEN
VAS AND IAS-IFRS
Overview of
differences between VAS and IAS-IFRS



Quantity of standards : 26 VASs - 37 lASs and IFRSs
Mainly difference: Cost and fair value method
Causes of difference:
 Level of economy;
 Administrative degree;
 Controlled ability;
 Active market.
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INSIGNIFICANT DIFFERENT
COMPARISON WITH IAS/IFRS
VAS
IN
Insignificant different Standards








Standard "Provisions, contingent liabilities and contingent
assets"
Standard "Insurance contract"
Standard "Events after the reporting period"
Standard "Interim financial reporting"
Standard "Earnings per share"
Standard "Operating segments"
Standard "Related party disclosures“
Standard "Accounting policies, changes in accounting
estimates and errors"
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VAS 01: GENERAL STANDARD - FRAMEWORK
Main differences



Accounting Principles and underlying assumptions
 Cost and other methods
 Accrual basis, going concern and substance over form
Measurement of the elements of financial statements
Historical and current cost, present and realizable values
Concepts of capital and capital maintenance
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INVENTORY (VAS 02 - IAS 02)
Main differences




Scope
Cost of inventory
 Cost method
 Retail method
Cost formulas of inventory
 Specific identification cost
 First-in, first-out(FIFO)
 Weighted average cost
Net realizable value
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PROPERTY, PLANT AND EQUIPMENT
(VAS 03 - IAS 16)
Main differences

Scope
 Initial recognition - Elements of cost:
The initial estimate of the costs of dismantling and
removing the asset and restoring to the site on which it is
located should be include in the cost of fixed assets
 Measurement after recognition
Cost and Revaluation models
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INTANGIBLE ASSETS (VAS 04 - 1AS 38)
Main differences
Scope
 Definitions:
Impairment loss
 Initial Recognition and measurement:
Land use right
 Measurement after recognition:
Cost and revaluation models
 Disclosure
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INVESTMENT PROPERTY (VAS 05 - IAS 40)
Main differences
 Initial
recognition
 Measurement after initial recognition
 Cost model
 Fair value model
 Transfers
 Disposals
 Disclosure
 Cost model
 Fair value model
S & S Auditing and Consulting Co.,Ltd
LEASES (VAS 06 - IAS 17)
Main differences



Accounting treatment in the financial statement of
lessees - financial leases
Accounting treatment in the financial statements of
lessees - operating leases
Accounting treatment in the financial statements of
lessons - financial leases
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INVESTMENT IN ASSOCIATES (VAS 07 - IAS 28)
Main differences

Scope
 Separate and consolidate financial statements
 Cost method or in accordance with IAS 39
 Equity method
 Discontinue the use of the equity method
 Transactions between an investor and an associate
 Initial recognition
 Allocation of differences between Net book value and fair
value of net identified assets
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INTERESTS IN JOINT
(VAS 08 - IAS 31)
VENTURES
Main differences

Scope
 Definitions: Proportionate consolidation
 Separated financial statements of a venture
Cost method or in accordance with IAS 39
 Consolidated
financial statements of a venture
Proportionate consolidation or equity method
 Exceptions to proportionate consolidation and equity
method
• Operators of joint ventures
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THE EFFECTS OF CHANGES IN FOREIGN
EXCHANGE RATES (VAS 10 – IAS 21)
Main differences
 Scope
 Except to the extent that relates to IAS 39
 Arising from applying proportionate consolidation
 Functional currency
 Functional currency and accounting currency
 Change in functional currency
 Reporting foreign currency transactions in the fictional
currency (recognition of exchange difference)
 Tax effects of all exchange differences
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BUSINESS COMBINATION (VAS 11 - IFRS 03)
Main differences
Structure of standard
 Exceptions to both recognition and measurement principles
Income taxes; Employee benefits; Indemnification assets
 Exceptions to both recognition and measurement principles
Reacquired rights; Share-based payment awards; Assets
held for sale
 Accounting for goodwill
Impairment test of goodwill or Amortization of goodwill
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VAS14 REVENUE AND OTHER INCOMES IAS 18: REVENUE
Main differences
 Scope
 Other incomes
Examples of Other incomes:
 Gains from fixed assets disposal;
 Tax refunds;
 Compensations received from insurance company;
 Punishment received from customer for contract
violation;
 Recovery from written off bad debts;
 Other incomes...
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CONSTRUCTION CONTRACT (VAS 15 IAS 11)
Main differences


Recognition of contract revenue and expenses
 Stage of completion method
 Progress payments method
 Amount of work completed method
Recognition of expected losses
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BORROWING COSTS (VAS 16 - IAS 23)
Main differences

Scope
 Definitions: Elements of Borrowing costs
The borrowing costs may include the exchange
differences arising from foreign currency borrowings to
the extent that they are regarded as an adjustment to
interest costs
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INCOME TAXES (VAS17 - IAS12)
Main differences










Tax base
Recognition of deferred tax liabilities and assets
Business combinations
Assets carried at fair value
Goodwill
Initial recognition of an asset or liability
Measurement
Deferred tax arising from a business combination
Current and deferred tax arising from share-based payment
transactions
Presentation
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PRESENTATION OF FINANCIAL
STATEMENTS (VAS21 - IAS01)
Main differences



Complete set of financial statements
 Form of statement of comprehensive income for the
period
 Statement of changes in equity for the period
 Statement of financial position as at the beginning of the
earliest comparative period when an entity applies an
accounting policies retrospectively or makes a
retrospective restatement of items in its F/S or when it
reclassifies items in its F/S
Reporting period
Maturity date of assets and liabilities
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STATEMENT OF CASH FLOWS
(VAS 24 - IAS 07)
Main differences

Investing activities
Cash flows from derivatives
Taxes on income
 Investments in subsidiaries, associates and joint ventures
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CONSOLIDATED AND SEPARATE FINANCIAL
STATEMENTS S 25 - IAS 27)
Main differences
• Presentation of consolidated financial state!
• Scope of consolidated financial statements
• Consolidation procedures
• Loss of control
• Accounting for investments in subsidiaries, jointly
controlled entities and associates in separate financial
statements
+ Cost method
+ In accordance with IAS 32
S & S Auditing and Consulting Co.,Ltd

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