Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.
1. Government agrees with 2 per cent VAT reduction proposal
2. Further tax support reflecting efforts to empower business
3. Ministry proposes salary policy reforms after 2023
4. Policies take effect in Vietnam in May 2023
5. Banks with high rate of real estate and consumer loans, corporate bonds to benefit from the SBV’s new regulations
6. Nuts and bolts of new personal data decree
Find more details as below:
1. Government agrees with 2 per cent VAT reduction proposal
Some highlines are as below:
- The Vietnamese government has agreed in principle with the Ministry of Finance’s proposal of reducing value-added tax (VAT) from 10 per cent to 8 per cent which would be submitted to the National Assembly for approval as early as possible.
- In the document sent to the minister of Finance on Monday, deputy prime minister Le Minh Khai asked the Ministry of Finance to coordinate with relevant ministries and agencies to complete the documents for the approval of a resolution about tax and fee reductions in 2023.
- The VAT reduction aimed to stimulate consumption demand in line with the current economic context, thereby, promoting production and business to recover and contribute to the State budget and the economy.
- The reduction would be applied till the end of this year, the ministry said.
- In 2022, the VAT reductions totalled VND44 trillion following Resolution No 43/2022/QH15 dated January 10, 2022.
2. Further tax support reflecting efforts to empower business
Some highlines are as below:
- Under the MoF’s proposal submitted to the prime minister earlier, it suggested a VAT reduction from 10 to 8 per cent for a number of goods and services, in addition to a 20 per cent reduction in the percentage of goods for VAT calculation for business establishments (both business households and individuals) when issuing invoices for all goods and services subject to VAT.
- The government last week also promulgated Decree No.12/2023/ND-CP on extending the deadline for paying VAT, corporate income tax (CIT), personal income tax, and land rental for both enterprises and individuals.
- Decree 12 reflects the government’s continuous efforts to assist the business community currently hit by massive woes, and to achieve its national economic growth of 6.5 per cent this year. The rate was only 3.32 per cent on-year in Q1.
- At the end of January, the government enacted Resolution No.07/NQ-CP on reducing land and water surface rentals for 2022 for those hit by the recent pandemic. The resolution stipulates a 30 per cent reduction in land and water surface rentals in 2022 for organisations, units, businesses, households, and individuals that were directly leasing land from the state under a contract or certificate on land use rights ownership of houses, and other land-attached assets of authorised agencies, in the form of land rental with annual payment.
- Close supervision of the financial sector is critical given continued uncertainties in global financial markets and a slowing domestic economy, including a sluggish real estate sector that constitutes about 20 per cent of financial sector borrowing.
3. Ministry proposes salary policy reforms after 2023
Some highlines are as below:
- The Ministry of Home Affairs has proposed the Government build a plan for salary reforms, in which the lowest wage in the public sector will be increased to the regional minimum wage of employees at enterprises.
- Specifically, the ministry asked related ministries and agencies to report the plan and result of the implementation of salary policy reforms in accordance with the Party Central Committee’s Resolution No. 27 on Salary Policy Reforms for Officials, Public Servants, Armed Forces and Employees at Enterprises, dated May 21, 2018.
- During its fourth session held in November 2022, the 15th National Assembly approved a resolution on the state budget estimates for 2023 which said the overall reform of the salary policy, which was identified in Resolution No. 27, won’t be carried out in 2023.
- Meanwhile, the base salary for cadres, civil servants, and public employees will increase to VND 1.8 million (USD 76.71) per month from VND 1.49 million per month from July 1, 2023. Retirement pensions and social insurance benefits for those covered by the state budget will be raised by 12.5 percent. More financial aid will be provided for those retiring before 1995 and having low pensions, along with revolution contributors. Besides, spending on the social security policies linked with the base salary will go up by 20.8 percent.
4. Policies take effect in Vietnam in May 2023
Some highlines are as below:
- A string of fresh policies on land management, procedures for collection and payment of fines, investment of state capital in enterprises shall come into effect in May.
- Amendments of Law on Land implementation: Decree 10/2023/ND-CP dated April 3, 2023 amends a number Decrees guiding the implementation of the Law on Land. It is expected to remove the bottleneck for the growth of the officetel and condotel markets, which have remained sluggish since the robust period of 2016-2018 due to the inability of buyers and investors to legalise their land ownership. Decree 10 is scheduled to take effect from May 20, 2023.
- Collection and payment of fines: The Ministry of Finance promulgated Circular 18/2023/TT-BTC (Circular 18), dated March 21, 2023 on procedures for collection and payment of fines, handling of differences between fines, receipts for fines and state budget expenditures on activities of admnistrtive penalty law envorcers. Circular 18 is set to come into effect from May 5, 2023 and replaces Circular No. 153/2013/TT-BTC dated October 31, 2013 and Circular No. 105/2014/TT-BTC dated August 7, 2014.
- State capital investment: The Ministry of Finance also issued Circular 16/2023/TT-BTC, dated March 17, 2023, amending Circular 36/2021/TT-BTC guiding the contents of state capital investment in enterprises and the management and use of capital and assets in enterprises in Vietnam. For operating enterprises, the adjustment of charter capital shall comply with the provisions of Article 11 of Decree No. 91/2015/ND-CP, Clause 4, Article 1 of Decree No. 32/2018/ND-CP and Clause 7 Article 2 Decree No. 140/2020/ND-CP of the government.
5. Banks with high rate of real estate and consumer loans, corporate bonds to benefit from the SBV’s new regulations
Some highlines are as below:
- Following the direction of Resolution 33/2023, the State Bank of Vietnam (SBV) has issued more specific policies to support the real estate market through circular 02/2023.
- With Circular 02/2023, the pressure of provisioning will be minimised when the restructured debts are provisioned in two years of 2023 and 2024. The analysis team of VNDirect believed that the Circular will positively influence the investors’ sentiment towards banks with a high proportion of real estate/consumer loans in their credit structure.
- In addition, the corporate bond market will also be partially cleared when Circular 03/2023 has postponed the implementation of Clause 11 Article 4 of Circular 16/2021, which means that banks may continue to redeem corporate bonds (with conditions).
- Currently, the SBV is also collecting comments on the amendments to Circular 41/2016 related to the calculation of risk coefficients. In general, the draft circular encourages the increase of lending to real estate development projects in industrial zones and social housing projects under the government’s support projects, in line with the government’s direction in Resolution 33/NQ-CP (the credit support package of 120 trillion dong).
- According to VNDirect, state-owned banks will benefit if this draft circular is official approved. It can be said that this is a measure to help support credit growth of this group of banks, when the Net Interest Margin (NIM) will fall fairly sharply (in the case of interest rates reversing, lending interest rates will decrease faster than savings interest rates because state-owned banks are still actively lowering lending interest rates to support businesses in borrowing capital).
6. Nuts and bolts of new personal data decree
Some highlines are as below:
- Last month the government in Vietnam finally issued Decree No.13/2023/ND-CP on personal data protection (PDP). The decree will take effect from July; however, micro, small, and medium-sized enterprises as well as startups (excluding data processing companies) are optionally exempted for two years.
- The decree would act as the backbone for PDP in Vietnam, with definitions and rules that seem to align with international standards such as the EU general Data Protection Regulation. It covers the rights and obligations of concerned individuals and entities, applicable measures for data protection, requirements for cross-border data transfers, and the powers and duties of the relevant authorities.
- The subjects under the governance of Decree 13 include Vietnam-based individuals and entities; and foreign entities which are directly involved in or related to data protection activities in Vietnam. The decree broadly defines data processing acts which include collection, recording, analysis, storage, correction, disclosure, and many other related actions.
- Decree 13 places emphasis on the fundamental principles of PDP, which include notable keywords including lawfulness, transparency, accuracy, integrity, and more. These principles appear to closely align with the key principles found in other major data protection regulations.
- For cross-border data transfers, the four prerequisites including the specific data localisation in Vietnam introduced in the draft decree have been removed. Instead, Decree 13 sets out new requirements to prepare and maintain an impact assessment dossier on cross-border personal data transfer; and submit them to the DCHCP within 60 days of the processing of personal data.