Legal updates by Dr. Oliver Massmann | December 2021

Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.

Dr. Oliver Massmann is an International Attorney at Law and a Financial Accountant and Auditor, with over 20 years of experience working as a commercial lawyer in Vietnam. He is volunteering as a legal advisor for the GBA from the beginning of the association. Our regards and thank you!

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Legal updates by Dr. Oliver Massmann | December 2021

1.   President’s Office announces two new laws
2.   Registration fees for domestically manufactured and assembled cars to be cut by 50%
3.   Domestic car producers get excise tax payment extension by end of the year
4.   Special investment incentives rolled out to attract more foreign investment flows
5.   Medical equipment to be subject to stricter management
6.   Government urged to reduce VAT to stimulate economy

1.  President’s Office announces two new laws

Some highlines are as below:

• The law on amendments and supplements to several articles of the Law on Execution of Criminal Judgments will take effect on 12 December 2021 while the law on amendments and supplements to several articles and national statistical indicator appendix of Statistics Law will come into force on 1 January 2022.
• The amended Law on Execution of Criminal Judgments has two articles in order to meet requirements and ensure the right roadmap for Viet Nam to realize commitments of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and solve urgent problems arising in practice caused by natural disasters and epidemics.
• The amended Statistics Law adds a number of articles to create a legal basis for the collection and
  calculation of statistical indicators, and to compile Gross Domestic Product (GDP), GRDP
  (Gross Regional Domestic Product) and re-evaluate GDP scale, improving the quality of statistics and international integration.
• The law assigns Minister of Planning and Investment to coordinate with ministries, sectors and localities to send a review of GDP scale once every five years to the Government before submitting it to the National Assembly for approval. The appendix of national statistical indicators issued together with the 2015 Statistics Law has been replaced with a new one.

2. Registration fees for domestically manufactured and assembled cars to be cut by 50%

Here are some remarks:

• According to Decree 103 issued by the Government on November 26, the first-paid registration fee for cars manufactured and assembled locally will be reduced by 50% from 1 December 2021 to 31 May 2022.
• In fact, the policy of reducing registration fees by 50% for domestically assembled cars issued by the Government in 2020 had a positive impact on the Vietnamese automobile market.
• According to data from the Vietnam Automobile Manufacturers’ Association or VAMA, in the second half of 2020, the output of domestically manufactured and assembled cars increased steadily over the months. Especially in November and December 2020, the number of domestically manufactured and assembled cars sold increased sharply by 14.7% and 25% respectively compared to the previous month.

3. Domestic car producers get excise tax payment extension by end of the year

Some points stated as below:

• Local car producers/assemblers could now delay their deadline payment for excise tax in October and November to 30 December at the latest.
• The move was revealed in the recently released government’s Decree No.104, which allows local car producers/assemblers to delay their respective excise tax payment deadline in October and November until 30 December at the latest.
• The decree, set to take effect on 4 December, also covers car branches and dealers under the management of local automakers. It also stipulated that the extension would cease to be valid once the deadline expired.
•  A report from the Vietnam Automobile Manufacturers’ Association (VAMA) noted the Covid-19 pandemic continued to pose negative impacts on the local auto market, with the number of cars sold during the 10-month period at 197,222 units, down 3% against the same period of last year.
• To boost the market, the MoF has also proposed a 50% cut in the registration fee for domestically produced or assembled cars.

4. Special investment incentives rolled out to attract more foreign investment flows

The Prime Minister has recently issued Decision 29/2021/QD-TTg, providing the levels, duration, and conditions for the application of special incentives for investment projects specified in Article 20.2 of the 2020 Investment Law.

• Conditions for application of special incentives
• Incentives on corporate income tax rates.
• Incentives on corporate income tax, land and surface water rentals.
• In a talk with Tuoi Tre Online, Nguyen Van Toan, Vice-Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that the special investment incentive policy is included in the country’s strategy to attract foreign direct investment (FDI). “It is expected to encourage foreign investors with large capital amounts and high technologies to make long-term commitments with Vietnam,” Toan said, adding that it is also hoped to promote the process of technology transfer and increase the spillover effects of FDI.

5. Medical equipment to be subject to stricter management 

Some remarks here:

The Government on 8 November issued Decree 98 on management of medical equipment, which is expected to lead significant changes in the management of medical equipment in the country.

• The new Decree delegates power to specialized units to carry out the checking of technical documents and quality control, and the Ministry of Health, based on checking results, will issue licenses after examining administrative dossiers. It removes conditions for classifying technicians and organizations and simplifying administrative procedures for declaration of eligibility for medical equipment classification.
• Enterprises will no longer have to carry out procedures for licensing, modification and certification of advertisements for their medical equipment, and replaces such procedures by publishing on the Portal for medical equipment management necessary information about advertisements to be made after they are publicized.
• The new regulation sets requirements for declaration of prices of medical equipment and biologicals for testing.
• Under the new Decree, state management agencies may request enterprises to explain medical equipment cost components when necessary.

6. Government urged to reduce VAT to stimulate economy

Some remarks here:

• The world economy is speeding up while Vietnam’s growth is slowing down. Economists believe that the VAT (value added tax) should be reduced to stimulate demand, because it could result in immediate benefits.
• Small and medium sized enterprises in Vietnam account for 98% of total enterprises, making up 40% of GDP every year with five million jobs. They desperately need money and support to maintain operation.
• Reducing taxes: The Government reduced the VAT by 30% for businesses in fields hardest hit by the pandemic (tourism, transportation).
• The World Bank (WB), in its Vietnam’s macroeconomy report in December, also recommended that with the current fiscal space and the difficulties recognized, the Government should consider measures related to budget collections to support domestic demand. This could be a VAT reduction in 2022, which would support private consumption.
• Vietnam’s GDP is predicted to grow by 2% this year, lower than the targeted 6.5%.