On July 28, 2023, the Government issued Resolution No. 115/NQ-CP on the specialized session for lawmaking in July 2023 (“Resolution 115”). During the session, the Government outlined directions for building and amending various legal provisions in legislative documents, including the Asset Auction Law; Special Consumption Tax Law; Value-Added Tax Law; and several important resolutions of the National Assembly. The aim is to overcome difficulties, streamline processes, provide incentives, and support the production and business activities of citizens and enterprises.
Several notable directions for building and amending legal texts outlined in Resolution 115 are as follows:
1. The Law amending and supplementing a number of articles of the Law on Property Auction
a. Improving regulations on the sequence and procedures of auctions to ensure transparency, feasibility, and increased application of scientific and technological advancements, as well as promoting online auctioning;
b. Enhancing provisions related to violations and distinguishing between different levels of violations within the domain of asset auctions;
c. Exploring the auctioning of other specialized assets such as highway exploitation rights, state-owned shares, debt trading, etc., and establishing general regulations for auctioning specialized assets to address cases involving other specialized assets that may arise in practice.
a. Regarding the issue of adding subjects subject to special consumption tax: Currently, the draft law plans to include 'soft drinks, energy drinks, packaged instant tea and coffee produced through industrial production lines, excluding fruit juices, 100% natural fruit and vegetable juices, milk, and dairy products' to the list of subjects subject to special consumption tax. During the meeting, the Government requested that the inclusion of these taxable subjects should be thoroughly researched, assessed, and supported with scientific and practical evidence to enhance persuasiveness and alignment with relevant laws.
b. Developing a hybrid tax calculation method (a percentage-based tax rate and an absolute tax amount) for alcohol and beer in line with the Prime Minister's tax reform strategy until 2030, in accordance with international tax reform trends.
c. Adjusting and increasing the tax rates for alcohol, beer, and tobacco to appropriate levels as part of the direction to reduce the use of health-detrimental products.
d. Requiring extensive consultation, especially from entities affected by the policy.
3. Law on Value-Added Tax (amended)
a. Narrowing the scope of application of preferential policies to ensure coherence and fairness in business activities, specifically regarding (i) subjects exempt from value-added tax; and (ii) categories of goods and services subject to a 5% tax rate;
b. Maintaining the current tax rate provisions;
c. Exploring value-added tax refund policies to provide convenience for businesses and individuals.
4. Resolutions of the National Assembly on piloting a number of mechanisms and policies to remove obstacles specified in a number of Laws related to investment in road traffic construction
Currently, this resolution is being drafted with the following directions: (i) allowing the State to participate in PPP projects with a stake not exceeding 50%, excluding compensation costs, land clearance, support, and resettlement; (ii) permitting provincial People's Committees to decide on investment orientations for expressway projects and enabling the use of local budgets for investment; (iii) Allowing a locality to act as the managing authority for the implementation of regional linkage projects based on consensus among the localities and seeking approval from the Prime Minister. The entire project implementation costs will be covered by the managing locality, except for compensation, land clearance, support, and resettlement costs, which will be divided into component projects, each locality taking responsibility for payment.
The Government emphasizes the following points:
a. Allowing the National Assembly Standing Committee (during the interim period between two National Assembly sessions) to review and decide on the application of pilot mechanisms and policies for similar new projects requiring experimentation and report the results to the nearest National Assembly session;
b. Thoroughly reviewing the list of pilot projects: the Chon Thanh - Gia Nghia project, the Ninh Binh - Nam Đinh - Thai Binh - Hai Phong project;
c. Implementing the pilot phase for a period of 5 years;
d. Reporting to the Prime Minister for consideration and decision before submitting to the National Assembly Standing Committee and the National Assembly.
5. Resolution of the National Assembly on the application of additional corporate income tax under regulations on preventing erosion of the global tax base and draft resolution of the National Assembly on the pilot application of investment support policies in the high-tech sector
Currently, there is no official information available regarding the draft National Assembly Resolution on the pilot application of investment support policies in the high-tech sector.
Regarding the content of the draft National Assembly Resolution on applying supplementary corporate income tax according to regulations to prevent base erosion and profit shifting, this has been posted on the government's official portal. We have identified this as a form of additional income tax applied to multinational corporations to curb cases where investments are made abroad to evade taxes or take advantage of low tax rate incentives. Accordingly, subsidiary companies of multinational corporations engaged in production and business activities in Vietnam, generating profits in Vietnam that exceed a certain threshold in the tax year, and with an effective tax rate in Vietnam lower than the minimum tax rate in the tax year, would be subject to a supplementary minimum domestic corporate income tax. The rate of supplementary tax will be equal to the tax rate (15%) minus the effective tax rate.
The draft resolutions mentioned above will be included in the 2023 National Assembly legislative agenda and allow for streamlined procedures, presented to the National Assembly for approval during a single session (in the 6th session, October 2023).
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