Legal updates by Dr. Oliver Massmann | September 2022

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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. Ministry annuls regulations on auto localization rates
  2. VCCI calls for land law draft revision
  3. New regulations on importing cars and motorcycles for non-commercial purposes
  4. Fixing land use rights for foreigners

Find more details as below:

  1. Ministry annuls regulations on auto localization rates

Some highlines are as below:

  • The Minister of Science and Technology has issued a circular to nullify some documents on methods of determining automobile localization rates.
  • Once it becomes effective on October 1 this year, Circular 11/2022/TT-BKHCN dated August 10 will replace the Minister of Science and Technology’s Decision 28 of October 1, 2004, Decision 05 of May 11, 2005, and Circular 5 of March 12, 2012.
  • Automotive experts said the abolition of these current regulations is in line with the development and change of technological processes of automobile manufacture and assembly in the country and the world to ensure transparency. The abolition will also help ensure conformity with international standards.
  • The removal of those regulations will also help improve the investment climate and allow domestic automobile manufacturers to maintain production in competition with completely-built-up (CBU) cars imported from ASEAN countries with a tax rate of zero percent from 2018.
  1. VCCI calls for land law draft revision

Some highlines are as below:

  • As the Ministry of Justice is gathering comments on a draft amending the Law on Land, the Vietnam Chamber of Commerce and Industry (VCCI) comments that the draft needs revisions to be legally consistent with the Law on Real Estate Business and Law on Housing.
  • Under the draft, land users do not comprise foreign individuals.
  • VCCI said such a regulation would be at odds with the Law on Real Estate Business because the law allows foreign individuals to purchase houses in Vietnam and the sale of a house normally comes with a piece of land. the regulation is legally inconsistent with the Law on Housing since the law grants homeownership to foreign individuals who have received as a gift, purchased or inherited the commercial houses.
  • VCCI also said the regulation, if passed, would lead to an inconvenient situation in which Vietnamese homebuyers would not be able to receive land use right transfers associated with houses once they purchase the houses from foreign individuals.
  • The next legal disparity is that the draft stipulates investors may only sell or lease properties associated with land on the condition that the properties have been legally formed. Meanwhile, the Law on Real Estate Business allows the sale of off-plan buildings, as long as the buildings have land use rights, authority-approved construction dossiers and certificates.
  • VCCI said the inconsistency would likely cause difficulties for firms to observe the legal documents concurrently. The chamber, thus, called for a draft revision to make the legal documents compatible.
  1. New regulations on importing cars and motorcycles for non-commercial purposes

Some highlines are as below:

  • The general Department of Taxation (GDT) recently requested tax departments in centrally-run cities and provinces to enhance tax administration for cars and motorcycles allowed to import or temporarily imported for non-commercial purposes.
  • The GDT has asked tax departments to transfer dossiers to the police or work with authorised agencies to handle those who import and temporarily import or transfer cars and motorbikes for non-commercial purposes.
    The GDT has also required tax departments to assign their representatives who will be in charge of regularly exchanging and coordinating with local customs authorities and customs offices to conduct timely measures on tax management.
  • the Ministry of Finance has just issued Circular No. 45/2022/TT-BTC amending and supplementing several articles in Circular No. 143/2015/TT-BTC regulating customs procedures and managing cars and motorbikes allowed to import or temporarily import for non-commercial purposes.
  • Circular No.45/2022/TT-BT amends regulations on “Conditions for imported and temporarily imported cars and motorbikes.” It takes effect from September 10, 2022.
  • The policy on managing imported or imported cars and motorbikes in the form of gifts, samples, and movable property shall comply with the government and prime minister’s regulations.
  1. Fixing land use rights for foreigners

Some highlines are as below:

  • Adding the provision that foreign individuals would be allowed to use residential land in Vietnam to the revised Law on Land could ensure uniformity and better consistency in the country’s current legal system.
  • In order to ensure the consistency and synchronisation of the legal system, experts say it is necessary to amend the current Law on Land, while adding that foreign individuals who are allowed to own houses in Vietnam according to the Law on Housing can also have ownership as set out in the Law on Land.
  • in a proposal to compile the revised Law on Housing, which is expected to be passed at around the same time as the revised Law on Land, the Ministry of Construction proposed to focus on solving several major groups of policies related to housing ownership.
    After being examined by the National Assembly Economic Committee, and after a range of opinions have been collected from the National Assembly Standing Committee delegates, the amended draft is expected to be submitted to the National Assembly in October during its fourth session.
  • Under the Law on Land, Article 126 regulates those who buy houses associated with LUR may use land for the long term. In addition, under Decree No.99/2015/ND-CP on guidelines for the Law on Housing, Vietnamese citizens are entitled to long-term ownership of the house as the foreign organisation/individual sells the house before the expiration of the ownership period.
  • Relaxed rules will help attract more investment but could possibly raise concerns over land-related misconduct, increased market volatility, or inflated property prices. Due to the protection of national security, the government has made it harder for foreigners to obtain LUR certificates.