Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.
- Finance Ministry turns down auto manufacturers’ tax proposals
- MoIT to counteract rising electricity costs
- New anti-money laundering Law: Reason – Change & Improvement
- Vietnam to impose global minimum tax on foreign companies next year
- New policy to get the best of overseas Vietnamese contributions to the nation
Find more details as below:
1. Finance Ministry turns down auto manufacturers’ tax proposals
Some highlines are as below:
- Proposals by Toyota and Ford about tax incentives have not received support from the Ministry of Finance(MOF)which says there are already many policies to support the domestic automobile assembling and manufacturing.
- MOF has submitted to the government a statement about the draft decree on amending and supplementing some articles of Decree 26/2023 on import and export tariffs.
In the document, the ministry disagreed with the proposal on the required output that automobile manufacturers must satisfy to be eligible for tax incentives. - Under current regulations, to join the program and enjoy the preferential tariff of zero percent on car part imports that serve domestic production, auto manufacturers must show certificates on meeting the requirements on car assembling and manufacturing granted by the Ministry of Industry and Trade (MOIT), as well as requirements stipulated in the decree (on car parts, car models, output, emissions, tax incentive review period and procedures).
- The required minimum output is set with an aim to encourage enterprises to expand their production scale. Automobile manufacturers won’t be able to enjoy preferences stipulated in the program if they don’t meet the requirements on car output during the tax incentive review period.
2. MoIT to counteract rising electricity costs
Some highlines are as below:
- The Ministry of Industry and Trade has suggested a three-month adjustment to the average price of electricity, instead of every six months as currently.
- The ministry (MoIT) in early November suggested that prices be changed as outlined in the draft decision to replace Decision No.24/2017/QD-TTg on the mechanism to change the average retail electricity prices.
- The aim is to alter the projected cost of electricity generation, which is approximately 8.6 cents per kWh and greater than the average retail price of electricity by about 0.7 cents per kWh.
The MoIT believes that the revised mandate does a good job of covering all the important parts of trading electricity in the competitive wholesale market. It also sets the parameters that determine the average retail price of electricity and creates a way for prices to be changed easily. - According to the MoIT, the annual average electricity price adjustment principle is changed at every stage based on changes in objective input parameters. The authority to make adjustments to price increases will essentially remain unchanged.
3. New anti-money laundering Law: Reason – Change & Improvement
Some highlines are as below:
- On November 15, 2022, the National Assembly officially issued a new Anti-Money Laundering Law (AML Law) followed by new Decree 19/2023/ND-CP dated April 28, 2023 and Circular 09/2023/TT-NHNN dated July 28, 2023. Those replaced the 2012 AML Law, and its’ all-related decrees and circulars.
- On the basis of above foundations, the National Assembly officially issued a new Anti-Money Laundering Law on November 15, 2022 (2022 AML Law) followed by new Decree 19/2023/ND-CP dated April 28, 2023 and Circular 09/2023/TT-NHNN dated July 28, 2023. Those replaced the 2012 AML Law, and its’ all-related decrees and circulars.
- The new law inherits the provisions of the old law, whereby the scope regulates measures to prevent, detect, and handle organizations and individuals commiting money laundering acts, responsibilities of agencies, organizations, individiuals in anti-money laundering; international cooperation on anti-money laundering.
- The new point is that the new law extends its scope of regulations to prevent and deter organizations and individuals committing terrorist financing and proliferation of mass of weapon destruction under this law, criminal codes, and regulations on these topics.
4. Vietnam to impose global minimum tax on foreign companies next year
Some highlines are as below:
- The National Assembly Wednesday voted overwhelmingly to impose the global minimum tax on foreign companies from Jan. 1 next year.
- The 15% tax on corporate income was agreed upon by the G7 rich nations in June 2021 to reduce tax competition between countries and prevent multinationals from evading tax. The tax will apply to companies with revenues of at least €750 million (US$800 million) in at least two of the four most recent years.
- The government has estimated that 122 foreign businesses in Vietnam will have to pay the tax, worth an estimated VND14.6 trillion ($603.31 million) next year.
- Since the tax will offset the incentives Vietnam offers foreign investors, lawmakers have called for instituting new ones. They have called on the government to prepare for lawsuits should foreign companies sue for the right to pay the tax in their home country.
- The U.K., Japan, South Korea, and the E.U. also plan to impose the tax next year.
5. New policy to get the best of overseas Vietnamese contributions to the nation
Some highlines are as below:
- Overseas Vietnamese (Viet Kieu) are expected to contribute more and more to the national development and always regarded as an extremely important resources as the nation is striving to accelerate its industrialization and modernization process for the goal of becoming a developed country with fairly high income by 2045.
- The Prime Minister issued Decision 1334/QD-TTg on November 10 to approving the Scheme aimed at bringing into fullest play overseas Vietnamese’s resources to serve the national development in the new situation.
- The Scheme requires a mechanism for creating favorable conditions for overseas Vietnamese to make contributions to the country, and a legal corridor for overseas Vietnamese to enjoy the same legal environment as domestic citizens when carrying out investment, business, scientific and technological research and development, cultural, sports and humanitarian activities in their homeland.
- Overseas Vietnamese communities will continue enjoying the nation’s support to develop and gain better positions in countries and territories where they reside and strengthen their domestic cohesion and exchange with domestic people’s organizations and associations.