The Ministry of Finance has issued a number of new corporate income tax regulations. Circular No 123/2012/TT-BTC, issued on July 27, guides the implementation of the Law on Corporate Income Tax and Decree No 124/2008/ND-CP of December 2008. Under the new circular, an enterprise facing changes to corporate tax incentives during a taxable period may (i) continue to apply existing incentives in the current year (less than 12 months), or (ii) apply the standard tax rate in the current year and enjoy new incentives in the subsequent tax year.
In addition, income from the transfer of real estate projects not associated with a transfer of land use rights, and income from the transfer of project implementation rights and rights to explore, exploit and process minerals, must be separately accounted and declared and is subject to a corporate tax rate of 25 per cent. Such income is not entitled to tax incentives nor can it be offset against taxable income or losses in other business operations. Income from a project transfer with attached land use or land lease rights is classified under the circular as income from a real estate transfer.
Also under the circular, enterprises collecting money from customers and unable to determine corresponding expenses must declare and temporarily pay corporate tax equal to 1 per cent of the collected sum. Advance payments on leases of assets can either be allocated across the years for which the rent has been paid or wholly recognised as revenue of the current year. For tools and equipment which are not recognised as fixed assets, asset acquisition costs can be accounted as operational expenses in a given period not to exceed two years.
Enterprises receiving in-kind contributions or asset transfers as a result of corporate division, separation, consolidation, or merger may depreciate those assets and write off the depreciation casts according to the re-evaluated cost of the asset. This does not apply to land use rights, which cannot be depreciated.
In a provision pertaining only to golf course operators, revenue from the sale of pre-paid tickets or membership cards for a number of years shall be divided by the number of years and the proportional sum declared in each year.
The new circular takes effect September 10 and applies to the taxable period of 2012. It replaces Circular No 130/2008/TT-BTC of December 2008, Circular No 177/2009/TT-BTC of September 2009, Circular No 40/2010/TT-BTC of March 2010 and Circular No 18/2011/TT-BTC of February 2011.
New law to govern advertising
The National Assembly last June passed the new Law on Advertising, which replaces the 2001 Ordinance on Advertising. Under the new law, the following categories of goods and services are barred from advertising: (i) tobacco; (ii) alcoholic beverages of 15 proof or more; (iii) milk products replacing mother's milk for children under 24 months old, as well as dietary supplements for children under six months old, feeding bottles and artificial nipples; (iv) prescription medicines; (v) products claiming aphrodisiac properties, (vi) guns and ammunition for hunting or sports, as well as products and goods stimulating violence, and (vii) other goods and services prohibited from advertising as regulated by the Government.
No advertising of goods and services can include false statements or statements that deliberately cause confusion; direct comparison of price, quality, or effectiveness with other products and services of the same type; or words such as "best", "unique", "number one", or other words with similar meaning without legal documents to prove the claim as regulated by the Ministry of Culture, Sports and Tourism.
The Law on Advertising also stipulates that advertisers of medicines must receive a permit. Advertisements of cosmetics, foods and food additives are also subject to various requirements of publishing ingredients and/or compliance with quality standards.
A newspaper may not sell advertisements in excess of 15 per cent of its total page space, while a magazine may not sell in excess of 20 per cent of its total page space. Advertising inserts are not subject to these limitations, but may only be published after notification to relevant authorities at least 30 days prior to the first publishing date of the insert.
Likewise, advertising on radio or television many not exceed 10 per cent of total broadcasting time in a day, except for advertising on channels or programmes dedicated to home shopping. This limit falls to 5 per cent for pay television channels. The law also includes provisions on online and "pop-up" advertising.
For advertisements via SMS and email, there must be prior consent of the recipients. IAdvertising via SMS can only take place between 7am and 10pm, and a single phone number or email address cannot receive more than three SMS or email messages within 24 hours unless otherwise agreed.
Chapter IV of Advertising Law stipulates several matters related to advertisements of foreign organisations and individuals in Viet Nam, foreign investment and co-operation in advertising and representative offices of foreign advertising agencies in Viet Nam.
The Law on Advertising abolishes provisions in the Ordinance on Advertising restricting the operation of foreign marketing agencies, consistent with the nation's WTO commitments. The new law takes effect next January 1. — BIZ CONSULT