Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.
- New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises
- PM approves plan to shift from coal to clean energy
- PM Chính asks credit institutions to stabilise gold market
- Vietnam considers real estate tax reform to limit market speculation
1. New policy proposed to prevent transfer pricing, tax evasion of FDI enterprises
Some highlines are as below:
- The Ministry of Finance has recently proposed changes to policies on foreign direct investment (FDI), including the enhancement of information comparison, to prevent transfer pricing and tax evasion.
- The proposals were a response to the ministry’s report which assessed and analysed 2023 financial statements of 28,918 FDI entities, and were sent to the Prime Minister Phạm Minh Chính and Deputy Prime Minister Hồ Đức Phớc.
- According to that report, the production and business performance as well as profitability of FDI enterprises in 2023 decreased compared to 2022.
- The ministry specifically proposes strengthening information comparison to combat transfer pricing and tax evasion, as well as effectively managing revenue sources arising from production and business activities of FDI enterprises to increase revenues for the State budget.
- The Government should inspect and examine operating FDI projects and strengthen management measures against FDI enterprises that are operating ineffectively or have signs of violations, causing damage to State budget revenue and negative impacts on the socio-economic conditions and the environment.
2. PM approves plan to shift from coal to clean energy
Some highlines are as below:
- Prime Minister Pham Minh Chinh has signed Decision No. 266/QD-TTg, approving the implementation plan for the Global Coal-to-Clean Energy Transition Statement. The plan aligns with Vietnam’s commitment to low-carbon development and achieving net-zero emissions by 2050.
- It aims to mobilise domestic and international resources for power sector development, adopt co-firing technology with clean fuels to gradually reduce emissions from coal-fired plants, phase out outdated and inefficient facilities, and accelerate renewable energy expansion to ensure stable and affordable electricity supply.
- By 2045, Vietnam will develop at least 1,160 MW of clean energy to replace coal power and gradually transition more than 25,000 MW of coal capacity to biomass and ammonia. By 2050, all coal-fired plants will either switch to clean fuels or integrate carbon capture technology, ultimately eliminating coal use in power generation.
- To achieve these goals, the government will implement comprehensive measures on policy, technology, finance, international cooperation, and a just energy transition while ensuring social welfare.
3. PM Chính asks credit institutions to stabilise gold market
Some highlines are as below:
- Under Directive No 03/CT-TTg on February 4, the Prime Minister highlighted key tasks for implementation after the 2025 Lunar New Year holiday, including a special emphasis on stabilising the domestic gold market.
- PM Chính instructed the State Bank of Vietnam (SBV) to take the lead in coordinating efforts to monitor and stabilise the gold market. This includes conducting research and proposing amendments to Decree No 24/2012/ND-CP regulating the management of gold trading activities by the second quarter of 2025.
- In addition, the PM urged the SBV to guide credit institutions to focus on directing credit to productive sectors such as consumption, exports, investment and emerging sectors like the digital economy, green economy and circular economy. The goal is to support traditional growth drivers while encouraging the development of new economic models.
- The directive also emphasises the need for credit institutions to strictly control credit in high-risk sectors and continue efforts to lower lending interest rates.
- Chính also called for the completion of a restructuring plan for credit institutions dealing with bad debts in the 2021–2025 period, with a particular focus on addressing the weaknesses of some institutions, including submitting a restructuring plan for Saigon Commercial Joint Stock Bank (SCB) urgently.
4. Vietnam considers real estate tax reform to limit market speculation
Some highlines are as below:
- In its latest draft proposal submitted to the government, the Ministry of Finance has suggested a new personal income tax framework for real estate transfers, linking tax rates to the duration of property ownership. This approach aims to discourage speculative transactions and stabilize the housing market.
- Resolution No. 06/NQ-TW issued by the Politburo on January 24, 2022, outlines policies for urban planning, management, and development in Vietnam until 2030, with a vision for 2045. It calls for the development of real estate-related tax policies to encourage efficient land and housing use.
- Similarly, Resolution No. 18/NQ-TW issued on June 16, 2022, by the 13th Central Committee of the Communist Party of Vietnam, states that higher taxes should be imposed on individuals who own multiple properties, extensive land holdings, or engage in speculative real estate practices.
- Additionally, Resolution No. 62/2022/QH15 from the National Assembly mandates a review of tax regulations related to real estate transactions. It emphasizes strengthening tax management to prevent revenue loss while ensuring the policies do not hinder businesses or violate property rights.
- To align with these policy directions, the Ministry of Finance is exploring the implementation of a tiered tax structure for personal income tax on real estate transactions based on holding duration. The ministry suggests that specific tax rates should be carefully studied to accurately reflect market conditions while discouraging speculative practices.