Our long-standing GBA board member Dr. Oliver Massmann, Partner at Duane Morris Vietnam LCC, is sharing the most relevant legal updates with you.
- Ministry proposes adding further taxpayers to compulsory social insurance
- New decree issued to help ease pressure on bond issuers
- New resolution introduced to address medical equipment, drug shortage
- Ministry proposes a hike in special consumption tax on cigarettes, beer, spirits
- Planning ministry tells HCMC not to go ahead with tax on 2nd property
Find more details as below:
1. Ministry proposes adding further taxpayers to compulsory social insurance
Some highlines are as below:
- The Ministry of Labor, Invalids and Social Affairs (MoLISA) has proposed to add a group to the list of people paying compulsory social insurance.
- The group includes individual business households, business managers, unpaid managers of cooperatives and part time employees.
- For compulsory social insurance policy, each unpaid business or cooperative manager must pay 25 percent of the salary rate based on whatever they choose to contribute to as the monthly insurance premium.
- For part time employees participating in compulsory social insurance, the employees and employers will contribute 25 percent to social insurance together. The employers have to contribute 17 percent to the sickness, maternity, workplace accident, retirement fund, and survivorship allowance. The employees will contribute 8 percent.
- This will result in additional fees for both the employee and the employer. However, in return, employees and employers both receive benefits from contributing to the social insurance fund, MOLISA said.
2. New decree issued to help ease pressure on bond issuers
Some highlines are as below:
- Decree 08, which came into effect on March 5, allows enterprises to extend the term of bonds by up to two years, whereas it was the contrary in the previous regulations. Enterprises have a duty to negotiate to protect the interest of the investor if a bondholder objects to the change.
- For a domestically offered bond, if issuers are unable to fully and timely pay the principal and interest according to the announced plan, they can negotiate with the bondholder to settle the debts by swapping the bond debt for other assets.
- The newly issued decree also temporarily suspends regulations on categorizing the status of professional stock investors as individuals. To buy private corporate bonds under the old regulations, individual investors needed to hold a securities portfolio of at least VND2 billion (US$84,370), excluding margin loan value, for 180 days.
- Prior to Decree 08, Decree 65, which was issued in mid September 2022, served as a basis for governing bond private placement and trading. Decree 65 is an amended and supplemented version of Decree 153 that was released at the end of 2020 with the expectation of tightening the market following a period of rapid growth in bond issuance and many volatilities being detected.
3. New resolution introduced to address medical equipment, drug shortage
Some highlines are as below:
- Experts have welcomed new plans to address challenges in the procurement and bidding for drugs and medical equipment.
- Resolution No. 30/2023/NQ CP aims to immediately mitigate the bottlenecks in supply and demand, ensuring better, faster and quality services at medical facilities. It will also help identify the responsibilities and obligations of stakeholders in healthcare.
- The resolution stated that bid winning contractors are responsible to provide medical equipment according to the demand of the investor, as well as the technical services performed with these machines which are covered by health insurance.
- The reference for the market price is based on the quotation of suppliers, which can be obtained by publishing the invitation for bid, for a minimum 10 days, to either the e portal of the health ministry, the public service portal on medical equipment management at https://dmec.moh.gov.vn, or others according to the regulations on bidding.
4. Ministry proposes a hike in special consumption tax on cigarettes, beer, spirits
Some highlines are as below:
- The Ministry of Finance has proposed to increase the special consumption tax (SCT) on a number of items harmful to health including tobacco, beer, and alcoholic products to limit imports, production and consumption.
- In addition, the ministry also proposed to add new tobacco products and new equipment and trading in online video game services to be subject to excise tax, according to the online newspaper.
- Meanwhile, tobacco taxes accounted for approximately 38.85 percent of the retail sale price of cigarettes in Vietnam, much lower than 50 80 percent seen in other countries such as Thailand (70 percent), Singapore (69 percent), France (80 percent).
- The World Health Organization and the World Bank have recommended that the proportion of consumption tax should account for 66 75 percent of the retail price of cigarettes.
5. Planning ministry tells HCMC not to go ahead with tax on 2 nd property
Some highlines are as below:
- The Ministry of Planning and Investment has advised HCMC not to tax the second property owned by people as it “does not guarantee fairness in many situations.”
- It said while the proposed tax is meant to increase the city’s revenues and limit speculation, it could hurt people with two small, low priced properties while leaving those with a single large and expensive property untouched.
- In a draft proposal suggesting trial development policies for Ho Chi Minh City, the municipal People’s Committee said the city’s income could be increased by collecting taxes for land use and property ownership on property owners who own more than one piece of real estate.
- Industry insiders have opposed the tax saying a roadmap is needed for its imposition, and a tax payer database should be completed first to clearly identify those who own more than one property.