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. Vietnam to promulgate policy to carry out global minimum corporate tax
2. Ministry of Industry and Trade proposes draft on cross-border trade
3. Ministry proposes lower tax rate for small, micro-enterprises
4. MoF proposes VAT reduction to 8pct to boost economy
5. Ministry of Construction proposes no time limit for condo ownership
6. Deputy PM approves Geological and Mineral Strategy
Find more details as below:
1. Vietnam to promulgate policy to carry out global minimum corporate tax
Some highlines are as below:
- The government is consulting experience from other countries and strives to promulgate policy to carry out global minimum corporate tax this year, said prime minister Pham Minh Chinh.
- The move aims to facilitate the operations of foreign-funded enterprises in Vietnam and their contributions to the country’s development.
- In August last year, the prime minister established a special working group responsible for carefully studying and putting forward solutions to carry out the global minimum corporate tax.
- The government reduces corporate income tax to 20 percent from 22 percent from January 1, 2016, according to its Decree No. 218/2013/ND-CP.
- Vietnam’s corporate income tax rate is lower compared to 21.16 percent in EU27 countries, 23.57 percent in OECD countries, and 32 percent in the G7.
2. Ministry of Industry and Trade proposes draft on cross-border trade
Some highlines are as below:
- The Ministry of Industry and Trade (MOIT) is seeking public comments on a legal draft amending Decree No. 14 on cross-border commercial activities.
- The draft aims to plug some loopholes that have been exploited by traders to disguise their commercial activities as cross-border individual transactions (CITs).
- Under the draft, the number of times and the amount of tax exemption applied to CITs would be cut down on January 1, 2025. Goods in CITs are required to strictly comply with the quality standards and origin tracking rules imposed by the importing countries as of the date.
- From January 1, 2026, traders who export goods via official channels must report their exit of the country at either border gates or border crossing points approved by bilateral trade agreements.
- The draft also stipulates that from January 1, 2028, only the types of goods that have cleared through customs at approved border gates are eligible for customs clearance at other border gates and border crossing points.
3. Ministry proposes lower tax rate for small, micro-enterprises
Some highlines are as below:
- The Ministry of Finance has proposed corporate income tax rate on small and micro-sized enterprises be lowered than the common rate in an effort to support them to overcome the difficult time and promote their development.
- The Law on Supporting SMEs which was approved and took effect from the beginning of 2018 regulates that SMEs would be given a lower CIT rate than normal. However, there are no specific regulations and SMEs are generally subject to 20 per cent CIT like other companies.
- The reductions of CIT for SMEs were implemented some times before following different decisions in each period. For example, in 2020-21, small enterprises were given a reduction of 30 per cent of CIT as support to help them overcome the difficulty caused by the impacts of the COVID-19 pandemic.
- The ministry proposed to include the amended Law on CIT in the 15th National Assembly’s law and ordinance building programme in 2024 at its seventh meeting.
- The draft would be submitted to the National Assembly for discussion at the 8th meeting in October 2024 and for approval at the 9th meeting in May 2025.
4. MoF proposes VAT reduction to 8pct to boost economy
Some highlines are as below:
- The Ministry of Finance has recently put forward a proposal to the government to bring down value added tax (VAT) from 10 per cent to 8 per cent for a number of goods and services to boost the economy.
- The first one is slashing 2 per cent off the current 10 per cent VAT on a number of goods and services.
- The second one is also slashing 2 per cent off the current 10 per cent VAT but excludes goods and services that were already under the effect of a previous VAT reduction as part of a government’s policy to boost economic recovery after COVID-19.
- The European Chamber of Commerce (EuroCham) said VAT reduction has played a key part in speeding up economic recovery, and has been a boon to businesses and consumers alike.
- The chamber said it has helped with the government’s efforts in keeping inflation in check, boosting consumption and encouraging businesses to invest in expanding their operations. Consumers have also benefited from the lower VAT.
5. Ministry of Construction proposes no time limit for condo ownership
Some highlines are as below:
- The Ministry of Construction has proposed not setting a time limit for condo ownership in the draft of the amended Housing Law, citing concerns over huge impact on society.
- In a written document sent to the government on April 8, the Ministry of Construction, which is in charge of preparing the draft amendments to the law, changed its mind, proposing the government not set a time limit for condo ownership.
- However, the Ministry of Construction said they would supplement and clarify contents relating to the time limit for condo use, requirements for demolishing condo buildings, and responsibilities of relevant parties upon the demolition and reconstruction of condo blocks. This action aims to address outstanding issues and hindrances to upgrading and re-building aging condo buildings.
- In a related development, the Ministry of Construction proposed the government maintain the regulations on allowing foreigners to buy and own homes in Vietnam as stated in the draft; however, they are not eligible to own landed houses.
- The draft is to be submitted to the National Assembly for discussion in May.
6. Deputy PM approves Geological and Mineral Strategy
Some highlines are as below:
- Deputy Prime Minister Trần Hồng Hà has signed Decision No. 334/QD-TTg, approving the Geological and Mineral Strategy to 2030, with a vision towards 2045.
- The main goal of this strategy is to complete the investigation and assessment of strategic and important minerals on the mainland and in coastal waters and islands, as well as detect and investigate minerals in deep sea and offshore areas.
- The strategy also focuses on the strict management, economical and efficient use of mineral resources, investing in mining and mineral processing technology, forming an advanced and modern mining industry that goes in line with environmental protection and a circular, green economy, climate change adaptation and towards carbon neutrality. It is also expected to end fragmented and out-of-date mineral mining and processing establishments that pollute the environment.
- The mining industry will have to comply with the planning, use advanced technology and equipment, suitable to each potential type of mineral, and maximize the recovery of useful ingredients while ensuring environmental protection. For minerals with large and concentrated reserves, mining projects must be conducted while using advanced technology, modern equipment, and sustainable environmental protection.