Legal answers

Extend the term of capital contribution by property

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On June 17, 2020, the Law on Enterprise 2020 was passed by the National Assembly to replace the Law on Enterprise 2014, effective from January 1, 2021.

One of the typical points in the Law on Enterprise 2020 is the provision on prolonging the capital contribution term of capital with assets contributors/founding shareholders, specifically as follows:

According to Clause 2 Article 48 of the Law on Enterprise 2014: Every member must contribute capital properly in terms of sufficiency and type of assets as agreed within 90 days from the day on which the Certificate of Business registration is issued.

According to Clause 2 Article 47 of the Law on Enterprise 2020: The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration. The time needed to transport or import the contributed assets and for completing ownership transfer procedures will be added to this 90-day period.

This means that: The Law on Enterprise 2020 allows founding members/shareholders, if they contribute capital with assets, it is allowed to subtract the time of transporting, importing assets to contribute capital, performing administrative procedures to transfer ownership of assets when determining the time limit for capital contribution out of the time limit of 90 days from the date of being granted the Certificate of Enterprise Registration.

In terms of advantages: This approach of The Law on Enterprise 2020 has solved a practical problem that is: Contributing capital with assets often requires a longer time.

In terms of disadvantages: Despite progress, this regulation has not clarified some of the following legal issues:

+ Firstly, the subjects are allowed to extend the capital contribution period: The regulations do not specify whether such extended period applies only to members/shareholders contributing capital with assets or also applies to members/Shareholders contribute capital in cash.

+ Secondly, the maximum time limit for capital contribution: The regulations do not give any restriction on the time limit necessary to transport, import, carry out administrative procedures to transfer the ownership of property. This can lead to a large management gap in the issue of capital contribution to the enterprise, members/shareholders of capital contribution may intentionally delay the capital contribution by not doing timely.

In summary, since 2000 up to now, Vietnam has had 04 versions of the Law on Enterprise (the Law on Enterprise 1999; the Law on Enterprise 2005; the Law on Enterprise 2014; the Law on Enterprise 2020). The change can be viewed from many different perspectives, both positive and negative. However, one thing is for sure, the introduction of the Law on Enterprise 2020 more or less will affect the investment and business situation of enterprises in Vietnam.

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Pre-registration contracts must carry out transfer the rights and obligations

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On June 17, 2020, the Law on Enterprise 2020 was passed by the National Assembly to replace the Law on Enterprise 2014, effective from January 1, 2021.

Some of the typical points in the Law on Enterprise 2020 are the provisions related to Pre-registration contracts. As follows:

According to Clause 2, Clause 3 Article 19 of the Law on Enterprise 2014:

If the enterprise establishment is permitted, the enterprise shall keep performing the duties and rights under the concluded contracts, unless otherwise agreed by the parties.
If the enterprise registration is not granted, the person who enters into the contract prescribed in Clause 1 of this Article shall take responsibility, or the founder of the enterprise shall take joint responsibility for the implementation of the contract.

2. According to Clause 2, Clause 3 Article 18 of the Law on Enterprise 2020:

When the Certificate of Enterprise Registration is granted, the enterprise shall continue exercising and performing the rights and obligations under the concluded contracts mentioned in Clause 1 of this Article, and the parties shall transfer the rights and obligations in accordance with the Civil Code, unless prescribed by the contracts.
In case the Certificate of Enterprise Registration is not granted, the persons who conclude the contracts mentioned in Clause 1 of this Article are responsible for their execution. Any other participant in the establishment of the enterprise is also responsible for the execution of these contracts.

3. This means that: The Law on Enterprise 2020 has added:

Responsibilities for founding members or shareholders of a company to transfer contractual rights and obligations to the company in accordance with the Civil Code as soon as the company is established.
Requiring all founding members or shareholders of a company (instead of just the signatories) to be jointly responsible for contracts before the enterprise registration signed in case of the company not established.

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Regulations on the form of payment via bank accounts

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On December 14, 2020, the Government issued Decree 145/2020/ND-CP guiding the Labor Code on working conditions and labor relations. Accordingly, this Decree provides for the form of payment via bank accounts as follows:

Based on the nature of work and production and business conditions, the employer and the employee agree in the labor contracts in the form of time-based, product-based and flat wage payments.

Employee’s salaries under the above forms of payment are paid in cash or through employee’s personal accounts opened at banks. For the payment through the employee’s personal account, the employer must pay the fees associated with the account opening and remittance.

Thus, from the effective date of this Decree, the employer and the employee are not required to agree on fees related to the opening and maintenance of bank accounts, but all related fees in connection with the opening of an account and remittance of wages to the employee, the employer will have to pay the payment if the bank account is selected.

This Decree takes effect from February 1, 2021.

Regulations on the number and participants of dialogue at the workplace

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On December 14, 2020, the Government issued Decree 145/2020/ND-CP guiding the Labor Code on working conditions and labor relations. Accordingly, for dialogue activities at the workplace, this Decree regulates the number and participants as follows:

(1) The Employer Party “Employer”:

Based on production and business conditions, The labor organization and the employer decide the number and participants of the dialogue to ensure at least 03 people, including the legal representative of the employer and the regulations in the grassroots democracy at the workplace.

(2) The Employee Party “Employee”:

Based on production and business conditions, labor organization, structure, number of employees and gender equality factors, organization representing employees at the grassroots level and a group of representatives to discuss participation in the dialogue but must ensure the number as follows:

At least 03 people, if the employer uses less than 50 employees;
At least from 04 people to 08 people, if the employer uses from 50 employees to less than 150 employees;
At least from 09 people to 13 people, if the employer uses from 150 employees to less than 300 employees;
At least from 14 people to 18 people, if the employer uses from 300 employees to less than 500 employees;
At least from 19 to 23 people, if the employer uses from 500 to less than 1,000 employees;
At least 24 people, if the employer uses 1,000 or more employees.

Based on the number of representatives for the dialogue of the employees, the grassroots representative organization and the representative group for the employee’s dialogue determine the number of representatives participating in the dialogue according to the proportion of members of the organization and group yourself on the total number of employees of the employer.

The list of members representing to participate in the dialogue of the two parties is made periodically at least every 2 years and publicly announced at the workplace. During the period between two periods, to determine which members participate in the dialogue, if there is a representative member who cannot continue to participate, the two parties shall consider and decide to add replacement members of the organization or their group and Publicly announced at work.

When conducting a dialogue outside of the above dialogue participants, the two sides agreed to invite all employees or some related employees to join in the dialogue, ensuring the participation of female employee representatives dialog on issues related to the rights and interests of female employee.

This Decree takes effect from February 1, 2021.

Regulations on the time limit for notification before unilateral termination of labor contracts for The enterprise’s executive

Answered

On December 14, 2020, the Government issued Decree 145/2020/ND-CP guiding the Labor Code on labor conditions and labor relations. Accordingly, this Decree provides for the time limit for notification before unilateral termination of labor contracts for The enterprise’s executive.

According to the provisions of this Decree, The enterprise’s executive (as stipulated in the Enterprise Law) is a specific profession. When employees in specific profession unilaterally terminate labor contracts or employers unilaterally terminate labor contracts for these employees, the notice period is as follows:

At least 120 days for an indefinite term or a indefinite-term labor contract of 12 months or more;
At least a quarter of the term for the labor contract less than 12 months.

This Decree takes effect from February 1, 2021.

Legal News No. 18/2020

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The cases of not sanctioning administrative violations of taxes, invoices

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On October 19, 2020, the Government issued Decree 125/2020/ND-CP (“Decree 125/2020/ND-CP“) on sanctioning of administrative violations of taxs and invoices. Here are some noteworthy contents of Decree 125/2020/ND-CP on: The cases of not sanctioning administrative violations of taxes, invoices.

Article 9 of Decree 125/2020/ND-CP prescribes 06 cases of not sanctioning administrative violations of taxes, invoices as follows:

The cases of not sanctioning administrative violations in accordance with the law on handling of administrative violations.
Taxpayers are late for electronic tax procedures and invoices due to technical problems of the information technology system reported on the web portal of tax authorities (in case of violations due to events of force majeure).
Taxpayers commit administrative violations of tax due to compliance with documents guiding and handling decisions of competent tax agencies or state agencies related to the contents of determination of taxpayers’ tax obligations (including guiding documents, handling decisions issued before the effective date of this Decree), except for: When tax inspection and examination at taxpayers’ offices have not discovered errors in declaring and determining payable tax amounts or tax amounts to be exempted, reduced or refunded, but after that the tax administrative violation of the taxpayer is detected.
In case of incorrect declaration, the taxpayer has made additional declarations in the tax declaration dossier and has voluntarily paid the payable tax amount before the tax agency announces its decision on tax examination or inspection at taxpayers ‘offices or before the time tax agencies detect that there is no tax inspection or examination at taxpayers’ offices or before other competent agencies detect them.
Individuals who directly conduct personal income tax finalization are late in submitting personal income tax finalization dossiers but the refundable tax amounts arise; Business households and business individuals have their tax assessed.
No sanction is imposed on the time limit for filing a tax return while a taxpayer is extended to submit such tax declaration.

Decree 125/2020/ND-CP takes effect from December 5, 2020.

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The statute of limitations for sanctioning administrative violations of tax and invoices

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On October 19, 2020, the Government issued Decree 125/2020/ND-CP (“Decree 125/2020/ND-CP“) on sanctioning of administrative violations of taxs and invoices. Here are some noteworthy contents of Decree 125/2020/ND-CP on: The statute of limitations for sanctioning administrative violations of tax and invoices.

Clause 1, Clause 2 Article 8 of Decree 125/2020/ND-CP prescribes The statute of limitations for sanctioning administrative violations of tax and invoices as follows:

Violation	Statute of limitations	The time for calculating the statute of limitations for sanction
About the invoices	01 year	For acts of administrative violations that are being carried out, the statute of limitations is counted from the date the persons competent to perform the public duties detect the violations. For an administrative violation has ended, the statute of limitations is counted from the date the violation ends.
About Tax Procedures	02 years	From the date of violation.
Tax evasion (not to the point of criminal prosecution, false declaration leading to lack of tax payable or increase in exempt, reduced, or refunded tax amounts),	05 years	From the date of violation.

Decree 125/2020/ND-CP takes effect from December 5, 2020.

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The level of fines for the administrative violation of taxes and invoices

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On October 19, 2020, the Government issued Decree 125/2020/ND-CP (“Decree 125/2020/ND-CP“) on sanctioning of administrative violations of taxs and invoices. Here are some noteworthy contents of Decree 125/2020/ND-CP on: The level of fines for the administrative violation of taxes and invoices.

Clause 1, Article 7 of Decree 125/2020/ND-CP prescribes The level of fines for the administrative violation of taxes and invoices as follows:

Subject of violation	Field
Subject of violation	Tax Procedures	Invoices
Organization	Up to 200 million VND	Up to 100 million VND
Individual	Up to 100 million VND	Up to 50 million VND

In addition to the maximum fine for organizations and individuals in the tax procedures and invoices mentioned above, Decree 125/2020/ND-CP also stipulates the fine level in 03 special cases as follows:

For false declarations leading to understatement of payable tax amounts or increase in tax amounts to be exempt, reduced, or refunded: The fine level is 20% of the understated tax amount or the higher tax exemption, reduction or refund in accordance with the law.
For tax evasion: The fine is from 1 to 3 times the evaded tax amount.
For the act of not deducting from the account of the state budget (Penalties for administrative tax violations in the case of commercial banks, guarantors paying tax): The fine is corresponding to the amount not deducted from the state budget account.

Thus, it can be seen that, Decree 125/2020/ND-CP has provided specific and detailed regulations on the fine level for administrative violations of taxes and invoices that were previously scattered or not yet regulated in the circulars of the Ministry of Finance, namely Circular 166/2013/TT-BTC (guidance on sanctioning administrative violations of tax issued by the Minister of Finance); Circular 10/2014/TT-BTC (guidance on sanctioning administrative violations on invoices issued by the Minister of Finance).

Decree 125/2020/ND-CP takes effect from December 5, 2020.

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Cases of taxpayer information disclosure from December 5, 2020

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On October 19, 2020, the Government issued Decree 126/2020/ND-CP guiding the Law on Tax Administration. Accordingly, this Decree specifies cases in which taxpayer information will be publicized from December 5, 2020, including:

Stop working, have not completed the procedure for TIN deactivation, are inactive at the registered address.
Tax evasion, assisting tax evasion, appropriation of tax, tax law violation, and then fleeing the business premises; illegal issuance or use of invoices.
Failure to file a tax return 90 days after the deadline for filing a tax return is required by applicable tax laws.
Taxpayers’ violations of tax law affect the tax rights and obligations of other organizations and individuals.
Failure to comply with the requirements of tax authorities in accordance with the law such as: Refusing to provide information or documents to tax authorities, failing to comply with inspection and inspection decisions and other requests of tax administration agencies according to the provisions of law.
Preventing and preventing tax officers and customs officers from performing their duties.
More than 90 days from the date of expiration of the deadline for paying taxes and other state budget revenues or the expiration of the time limit for compliance with administrative decisions on tax administration without the taxpayer or the guarantor voluntarily executive.
Individuals and organizations that do not comply with administrative decisions on tax administration but have acts of spreading assets, fleeing.
Other information is disclosed in accordance with the law.

Thus, from December 5, 2020, if the taxpayer falls into the above cases, taxpayer’s information will be publicized in the following forms: posted on the website of the tax administration agencies, websites of tax administration agencies at all levels; Publicity on the mass media; Posting up at offices of tax administration agencies; Through citizen reception, press conference, press release, activities of spokespersons of tax administration agencies at all levels in accordance with the law or other forms as prescribed by law.

This Decree takes effect on December 5, 2020.