Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.
- The Plan for power supply and operation of Vietnam’s power system in 2024
- Government agrees to VAT cut of 2% in 1H 2024
- New decree on government debt instruments on horizon
- Incentives proposed for development of pharmaceutical industry
- Finance ministry mulls raising income threshold for taxing household businesses
Find more details as below:
1. The Plan for power supply and operation of Vietnam’s power system in 2024
Some highlines are as below:
- The Ministry of Industry and Trade (MOIT) has just issued Decision No. 3110/QD-BCT to approve the Plan for Power supply and operation of the national electricity system in 2024.
- The gas output supplied to each power plant is implemented according to the Gas Purchase Contract between the investor of the gas power plant and the gas supplier by the power supply and operation plan of the national power system in 2024 approved by MOIT.
- The Electricity Regulatory Authority is responsible for monitoring the electricity supply situation of the national electricity system, directing A0 to announce information on mobilization plans for the next month and the remaining months of 2024 so the gas power plant investors and gas suppliers can update and have plans to prepare appropriate gas sources.
- The Department of Petroleum and Coal regularly monitors and updates the gas supply situation for power production in 2024. In case any problems arise that affect the gas supply to power plants in 2024, promptly report to the leadership of MOIT to review and direct.
2. Government agrees to VAT cut of 2% in 1H 2024
Some highlines are as below:
- Value-added tax (VAT) rates on most goods and services will be cut by 2 per cent from January 1, under a new Decree from the government, the Government News has reported.
- The 2 per cent reduction will be applicable to products and services subject to a 10 per cent rate, with exceptions for three groups of products and services, as follows.
- Group 1: Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated products, mining products (excluding coal mining), coke coal, refined petroleum, and chemical products. Group 2: Goods and services subject to special consumption taxes. Group 3: Information technology under information technology laws.
- The Decree will be in effect from January 1 to June 30, 2024
3. New decree on government debt instruments on horizon
Some highlines are as below:
- Issuance, registration, depositing, listing, and trading of government debt instruments on the securities market will be regulated.
- Government Decree No. 83/2023/ND-CP, which amends Decree No. 95/2018/ND-CP on the issuance, registration, depositing, listing, and trading of government debt instruments on the securities market, will come into effect on January 15.
- Under the new decree, government bonds can be privately placed for each private investor (buyer) or via a commercial bank or a Vietnam-based foreign bank as an agent that will sell the bonds to buyers and repay them.
- The State Treasury is assigned to submit to the Ministry of Finance for approval a policy on the private placement of government bonds. The policy is to define bond buyers, determine the number of bonds to be issued, the bond terms, the estimated interest rate, the estimated time for issuance, and issuance forms (the State Treasury will directly issue bonds or select a distribution agent).
- Decree No. 83/2023/ND-CP also amends Article 22 of Decree No. 95/2018/ND-CP relating to foreign currency bonds.
4. Incentives proposed for development of pharmaceutical industry
Some highlines are as below:
- The Ministry of Health has released a draft Law Amending the 2016 Law on Pharmacy, providing many attractive incentives for boosting the development of the pharmaceutical industry.
- The draft law covers noteworthy contents such as incentives for investment in drug manufacturing technology transfer, marketing authorization of drugs and medicinal ingredients, management of drug price, drug import and export, and pharmaceutical business of foreign-invested enterprises in Vietnam.
- In order to attract investment and boost domestic manufacture of drugs and medicinal ingredients, the MOH proposes a set of incentives and special incentives for new drugs, brand-name drugs, herbal drugs and traditional drugs produced from domestically available medicinal ingredients, and hi-tech drugs, biotechnology drugs and specialty drugs produced in Vietnam under technology transfer contracts.
- These incentives cover preferential tax and land rental rates, easier credit access, and application of simpler procedures for settlement of administrative procedures related to investment and business, grant of certificates of eligibility for pharmaceutical business and marketing authorization of drugs and medicinal ingredients, among others.
- The MOH also proposes the adoption of a mechanism to promote the research into, and acquisition of, drug manufacturing technologies and attract foreign investment in the manufacture of medicinal ingredients, new drugs, brand-name drugs, specialty drugs, biological drugs and national-branded herbal drugs.
5. Finance ministry mulls raising income threshold for taxing household businesses
Some highlines are as below:
- The Ministry of Finance is considering raising the income threshold for value-added tax for household businesses by 50% to account for inflation.
- Currently they pay VAT, at 8%, if their annual revenues are VND100 million ($4,100) or higher.
- This threshold was fixed 10 years ago, and the consumer price index, which measures inflation, has gone up substantially. So the threshold should be changed to VND150 million, the ministry said.
- There are 5.5 million household businesses in the country that account for 30% of its GDP, according to the General Statistics Office. VAT accounts for more than 20% of the government’s revenues.
- The ministry is also considering abolishing VAT in border areas to boost their economy and making more items duty-free at the border except for cigarettes, alcoholic drinks and fuel.