Legal updates by Dr. Oliver Massmann

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. Taxpayers call for stricter measures to accelerate VAT refunds

Some highlines are as below:

The policy is part of Government efforts to support businesses and people.
The Government cut, extended, or waived taxes, fees and land costs worth about VND89.8 trillion ($3.58 billion) in the first eight months of the year, according to the Ministry of Finance (MoF).
The ministry said tax and customs agencies continued to implement the policies as part of Government measures to support people and businesses.
The MoF had proposed the Government to issue policies on a range of tax and fee reduction and extension in 2024, totaling nearly VND200 trillion ($7.98 billion). These include extensions and reduction of value-added tax (VAT), corporate income tax, personal income tax, excise tax, and land rental fee.
Since the beginning of the year, the reduction of environmental protection tax on fuel has been applied under a resolution adopted by the National Assembly.

2. Government considering tax on multiple properties

Some highlines are as below:

In a report to the Government Office, the Ministry of Construction (MoC) has recommended taxing those who own or use multiple properties to curb speculation and short-term trading for profit.
Speaking at a press conference, Chi said the MoF supports the proposal. “This is a very compelling suggestion. The Ministry acknowledges the importance of this and will study the policy,” said Chi.
The MoC had earlier called on the financial sector to collaborate on drafting tax policies for second homes or unused properties, as property and housing prices have skyrocketed since the start of the year. In some suburban land auctions, winning bids have soared to as high as hundreds of millions of VND per square metre, significantly above starting prices, distorting the healthy development of the market.
Besides land, the condominium market has also experienced steep price increases. Data from the Vietnam Association of Realtors (VARS) shows that in the second quarter, apartment prices in Hanoi and Ho Chi Minh City have surged 58 per cent and 27 per cent respectively since 2019.
Last year, voters in Ho Chi Minh City called for taxes on second homes and higher levies on vacant land or properties that aren’t generating value. At the time, the MoF said it was working on a draft of the Real Estate Tax Law, which would include such measures. Authorities plan to introduce the law in the 2024 legislative agenda, but for now, the proposals remain under consideration.

3. Central bank issues new regulations on USD deposit interest rates

Some highlines are as below:

The State Bank of Vietnam (SBV) has issued a circular on USD deposit interest rates applicable to organizations and individuals at credit institutions and foreign bank branches.
In Circular 46/2024/TT-NHNN of September 30, 2024 that will become effective on November 20, 2024, the rates are not allowed to exceed the maximum decided by the SBV Governor in particular period for deposits of organizations and individuals.
The maximum USD deposit interest rate specified in this circular includes promotional incentives in all forms, applicable to the end-of-term interest payment method and other interest payment methods converted according to the end-of-term interest payment method.
Credit institutions must publicly post USD deposit interest rates at legal transaction locations within their networks and on their websites (if any). They are banned from offering promotional incentives in cash, interest, or other forms that contravene the law, said the circular.
For USD deposit interest rate agreements signed before the effective date of this circular, credit institutions and customers shall continue to implement the deals until the end of the term. In case the agreed term expires and the customer does not come to withdraw the deposit, the credit institution shall apply the deposit interest rate in accordance with this circular.

4. New regulations on foreign indirect investment in Vietnam drafted

Some highlines are as below:

According to the SBV, to achieve the goal of upgrading and developing the Vietnamese stock market, the Prime Minister has assigned the SBV to preside over and coordinate with the Ministry of Finance, the State Securities Commission and relevant agencies to review and propose amendments and supplements to legal regulations. This should simplify procedures and shorten the time of opening indirect investment capital accounts for foreign investors to create favourable conditions for foreign investors when participating in the Vietnamese stock market.
The SBV said, it is necessary to develop a circular to replace Circular 05/2014/TT-NHNN to implement solutions to upgrade the Vietnamese stock market according to the Government’s direction and to meet the requirements of foreign exchange management for foreign indirect investment activities in Vietnam currently.
The amended draft circular will simplify procedures for opening indirect investment accounts of foreign investors, regulate the opening of online indirect investment accounts and allow foreign investors to open many indirect investment accounts corresponding to their granted securities transaction codes.
The balance in indirect investment accounts of a foreign investor cannot be transferred to term deposits and savings deposits.

5. Hanoi announces five more housing projects for foreign ownership

Some highlines are as below:

Foreign organizations and individuals can now own five more housing projects in Hanoi, according to an announcement by the municipal Department of Construction. Among the five projects, four are located in Nam Tu Liem district and the other one in Thanh Xuan district.
Under Government Decree No.95/2024/ND-CP, dated July 24, 2024 and effective on August 1, which provides guidelines for the Law on Housing 2023 (amended), foreign entities and individuals (foreigners) can now own up to 30% of the residential apartments in a building, including mixed-use developments.
For apartment complexes with multiple blocks sharing a common base, foreign ownership is capped at 30% of the units in each block. For standalone houses in designated areas with a specified population, foreigners can own no more than 250 units if only one housing development project exists, but in areas with two or more, they can distribute ownership across all projects and the total must not exceed 250 houses. However, once the 250-house cap is reached in one project, no further purchases can be made within that area.
To extend ownership beyond the initial period, foreigners must submit an application to the provincial People’s Committee at least three months before the expiration date. The committee has 30 days to approve or reject the request, which can grant an additional 50 years of ownership.

Legal updates by Dr. Oliver Massmann | October 2024