Legal updates by Dr. Oliver Massmann | February 2023

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. Finance Ministry wants to stay away from fuel pricing role
2. Outstanding policies take effect in Vietnam from February 2023
3. Tax and land-use fee reductions should continue in 2023: MoF
4. Overview on banks’ foreign ownership room
5. E-commerce platforms disapprove of suggestion to pay tax on behalf of sellers
6. Germany officially recognizes new passports from Vietnam

Find more details as below:

1. Finance Ministry wants to stay away from fuel pricing role

Some highlines are as below:

• The Ministry of Finance (MOF) has written to the Ministry of Industry and Trade (MOIT), saying it does not want to carry the ball over fuel pricing regulation.
• In a draft decree amending Decree 95/2021 and Decree 83/2013 on fuel trading and pricing management, the MOIT proposed three options. First, the two ministries would continue to oversee fuel pricing together as at present; second, the MOF would be the sole agency to regulate fuel prices; and third, the MOIT would be responsible for fuel pricing only.
• The MOIT also devised three options for the fuel price stabilisation fund. First, the fund would be maintained as it is; second, the principles of tapping into the fund would be changed in a way that reduces the government’s intervention in fuel prices; and third, the fund would be dissolved.
• However, the MOIT made no mention of an option which should be chosen.

2. Outstanding policies take effect in Vietnam from February 2023

Some highlines are as below:

• Circular 20/2022/TT-NHNN, dated on December 30, 2022 on guiding activities of one-way money transfer abroad from Vietnam and payment and money transfer for other current transactions of institutional residents or individual residents come into effect from February 15, 2023.
• The Ministry of Finance’s Circular 02/2023/TT-BTC regulating the management and use of rice-cultivating land is scheduled to come into effect on February 20. Under the Circular, depending on specific conditions, provinces and cities will decide the support level for rice growers. The Circular also regulates that based on local schemes on land use for rice cultivation in each period, based on actual conditions, district people’s committees will make plans to improve rice-growing land quality and send it to the provincial and municipal people’s committees for approval.
• Circular 75/2022/TT-BTC, issued by the Ministry of Finance, takes effect from February 5. Under the Circular, 50-percent fee reduction shall be applied when people register for permanent residence through the online public service portal.
• Circular 18/2022/TT-BYT of the Ministry of Health, dated December 31, 2022 specifies that people with diseases, including cancer, polio, cirrhosis of the ancient liver, leprosy, severe tuberculosis, and fully-blown Aids, are entitled to get lump-sum social insurance straightaway after they stop working rather than waiting for one more year as previously prescribed. Circular 18 is scheduled to take effect on February 15.

3. Tax and land-use fee reductions should continue in 2023: MoF

Some highlines are as below:

• The Ministry of Finance (MoF) said tax support policies and land-use fee reductions for businesses should be continued throughout 2023 despite shortfalls in state budget collection. However, the ministry’s proposal did not include a value-added tax (VAT) reduction of 2 per cent, which it said has been challenging and complicated to implement.
• In the MoF’s latest proposal to the government, businesses, household businesses and individuals were to continue to enjoy a 30 per cent cut in land-use fees in 2023, on top of an extension on their tax duties.
• A series of measures, including VAT slashed from 10 per cent to 8 per cent and reduction of land-use fees, worth a total of 223 trillion VND last year, have received positive feedback from the business community and boosted economic recovery after the pandemic.
• The government, in an attempt to rein in inflation and boost economic recovery, has cut the environmental tax on fuel from 20 per cent to 10 per cent, a large number of administrative fees and rolled out numerous e-government projects.

4. Overview on banks’ foreign ownership room

Some highlines are as below:

• According to Decree 01/2014/ND-CP, the share ownership rate of a foreign strategic investor must not exceed 20 percent of the charter capital of a Vietnamese credit institution (CI) and the total share ownership rate of all foreign investors at a domestic CI must not exceed 30 percent of the capital. Thus, for stocks of banks that have prospects and potential but no foreign ownership room available, whenever there is a part of ownership room available, foreign investors will perform massive purchases.
• With the EVFTA Agreement, within five years from the effective date of the agreement (August 1st 2020), Vietnam committed to consider allowing two European CIs to own up to 49 percent of the charter capital of two Vietnamese banks.
• According to the new proposal of the State Bank of Vietnam (SBV), CIs receiving compulsory transfer of weak banks may have their foreign ownership rate loosened to up to 49%. The SBV is drafting a Decree amending and supplementing a number of articles of Decree 01/2014/ND-CP of the government on foreign investors buying shares of Vietnamese CIs. The Draft decree amends Clause 2, Article 6 on the form of share purchase of foreign investors.
• For the BIDV and Vietcombank, the government will follow the “Scheme on Restructuring the system of CIs associated with bad debt settlement in the period of 2021 2025″ stated in Decision 689/QD-TTg dated June 8th 2022 of the government and the “Strategy for the development of Vietnam’s banking industry to 2025, with vision to 2030″ stated in Decision 986/QD-TTg dated August 8th 2018 of the prime minister, which clearly specifies the arrangement plan and the expected rate of capital held by the State in the two banks.

5. E-commerce platforms disapprove of suggestion to pay tax on behalf of sellers

Some highlines are as below:

• The Ministry of Finance has called on e-commerce platforms to pay tax on behalf of sellers, but online traders insist the suggestion is impractical. A representative of the Vietnam E-Commerce Association revealed three obstacles in the way of e-commerce platforms that make it impossible to pay tax in sellers’ stead.
• The first obstacle is that e-commerce platforms, in most cases, have little knowledge of all the tax codes and tax rates applicable to sellers’ items. The second obstacle involves the absence of a digital system that enables e-commerce platforms to declare and pay tax on sellers’ behalf and allows tax authorities to check whether a specific transaction generates revenues. The third obstacle centres around the payment method that is preferred by buyers in Vietnam – cash on delivery.
• The RoK has established an independent department in charge of e-commerce tax, tasked with collecting and analysing revenue data declared by e-commerce enterprises and imposing fines on those involved in tax frauds.
• On December 15, 2022, the General Department of Taxation launched a national portal through which e-commerce taxpayers are required to disclose their data to the tax authority. By 13 February, 258 e-commerce platforms, 14,883 organisations, and 53,212 individuals have registered on the portal to comply with the requirement.

6. Germany officially recognizes new passports from Vietnam

Some highlines are as below:

• Germany has officially recognised Vietnamese passports issued from January 1, 2023 and containing information on the holders’ birthplace, the Germany Embassy in Việt Nam has announced.
• The Vietnamese passports issued between July 1, 2022 and December 31, 2022 without stating the place of birth on the identity page will be recognised, provided the birthplace has been added to the appendix.
• More details here>>>