[SEPTEMBER 2021] LEGAL UPDATES

I. RESOLUTION NO. 68/NQ-CP

The policies on supporting the enterprises facing difficulties due to the Covid-19 pandemic

Resolution No. 68/NQ-CP (the “Resolution 68”) dated 01 July 2021 of the Government on detailing the supporting policies for employees and employers facing difficulties due to the Covid-19 pandemic, takes effect as of the issuance date.

The following are the notable features of Resolution 68 regarding the supporting policies for enterprises:

1. Policy on reduction of insurance premiums for occupational accidents and diseases

• Beneficiaries: Employers
• Contents of support: Reduced the premium rate to the occupational accidents and diseases fund to 0% (instead of 0.5%)
• Support periods: From 01 July 2021 to 30 June 2022

2. Policy on suspension of contributions to the retirement and survivorship fund

• Beneficiaries: Employers who have fully paid social insurance premiums or are temporarily suspending contributions to the retirement and survivorship fund until the end of April 2021 but have been affected by the Covid-19 pandemic,resulting in a downsizing of at least 15% employees who have contributed to social insurance compared to the number in April 2021
• Contents of support: Both employers and employees are entitled to a suspension of contributions to the retirement and survivorship fund
• Support periods: Within 06 months from the date of application submission

3. Policy on supporting job retention training for employees

• Beneficiaries: Employers who: (i) have fully paid unemployment insurance premiums for full 12 months or more; (ii) have changed the technological structure; (iii) have revenue in the preceding quarter decreased by 10% or more compared to the same period in 2019 or 2020; and (iv) have a plan for training in order to secure the jobs for employees
• Contents of support: Employers are entitled to the maximum assistance for training, retraining and skill enhancement from the unemployment insurance fund of VND1,500,000/ employee/ month
• Support periods: The maximum support term is 06 months. Applications are submitted from 01 July 2021 to 30 June 2022

4. Loan policy to pay furlough wages

• Beneficiaries: Employers who have no bad debt at any credit institution and foreign bank branch at the time of applying for a loan; and are under contracts with employees paying compulsory social insurance but have been put on furlough for 15 consecutive days or more as prescribed in Clause 3, Article 99 of the Labor Code, from 01 May 2021 to the end of 31 March 2022
• Contents of support: Employers are entitled to borrow a loan from the Bank for Social Policies at the interest rate of 0% and are not required to furnish a loan security to pay furlough wages. The maximum loan amount is equal to the regional minimum wage for the number of employees according to the actual payment period of furlough wages, but not exceeding 03 months.
• Support periods: The loan term is less than 12 months

4. Loan policy to pay production recovery wages

• Beneficiaries: Employers resume the business after suspending operations at the request of the competent authority to prevent and control the Covid-19 pandemic from 01 May 2021 to the end of 31 March 2022; and Employers who are operating in the field of transportation, aviation, tourism, accommodation services, sending Vietnamese employees to work abroad under contracts from 01 May 2021 to the end of 31 March 2022.
• Contents of support: Employers are entitled to borrow a loan from the Bank for Social Policies at the interest rate of 0% and are not required to furnish a loan security to pay wages for employees who are under labour contracts and participating in compulsory social insurance. The maximum loan amount is equal to the regional minimum wage for the number of employees according to the actual payment period of furlough wages, but not exceeding 03 months.
• Support periods: The loan term is less than 12 months

II. DECREE 70/2021/ND-CP

The illegal advertisements shall be handled within 24 hours as requested

Decree No. 70/2021/ND-CP (the “Decree 70”) dated 20 July 2021 of the Government on the amendments and supplements to some Articles of Decree No. 181/2013/ND-CP (the “Decree 181”) dated 14 November 2013 on elaboration of some Articles of the Law on Advertising, takes effect as of 15 September 2021.

Decree 70 was promulgated with some notable features relating to cross-border advertising services as follows:

Recognizing that the regulation regarding “Vietnamese entities must advertise their goods and services on websites of foreign entities providing cross-border advertising services through advertising service providers that have been legally registered in Vietnam” in Decree 181 is no longer applicable in practice and causing difficulties for many entities wishing to provide cross-border advertising services, as well as competent authorities in monitoring and supervising, Decree 70 has abolished such regulation. Instead, Decree 70 allows Vietnamese advertising services users to sign contracts directly with cross-border advertising services providers (such as Google, Facebook, Youtube,…). Additionally, Decree 70 sets out a requirement for Vietnamese and foreign advertising service providers, advertisement distributors and advertisers providing cross-border advertising services in Vietnam must comply with regulations of Vietnamese law.

Another notable feature, in comparison to the previous regulations, is that Decree 70 provides new and specificprocedures for preventing, removing illegal advertising contents and supplements handling measures in case of failing to comply with requests of competent authorities. Particularly, after receiving the request from the Ministry of Information and Communications, within 24 hours, the foreign cross-border advertising service providers shall handle the illegal advertisement as requested. Failing to handle within such time limit without a legitimate reason, the Ministry of Information and Communications shall take measures to restrict the illegal advertisement. Restrictive measures shall only be lifted when all of the illegal advertisement has been handled by the foreign provider as requested by the Ministry of Information and Communications.

Advertising on cross-border platforms is becoming increasingly popular, and many businesses, organizations, and individuals rely on it to sustain and expand their operations, particularly in the current complex epidemic situation. In the context of an increasing number of advertisements with deceptive, objectionable, and illegal content, contrary to public decency which are published daily on cross-border advertising platforms, Decree 70 was issued with amended regulations directly governing some advertising activities, and expected to contribute to a healthier cyber environment by creating equal opportunities for individual, entities with desire to do proper and legitimate advertising services. 

III. CIRCULAR 40/2021/TT-BTC

Shopee, Tiki, Lazada, … shall declares and pays tax on behalf of the individual according to the tax authority’s roadmap

Circular No. 40/2021/TT-BTC (the “Circular 40”) dated 01 June 2021 of the Ministry of Finance providing guidelines on value-added tax (VAT), personal income tax (PIT), and tax administration of household businesses and individual businesses, takes effect as of 01 August 2021.

Accordingly, Circular 40 has supplemented the value-added taxable revenues and personal income taxable revenues applying to household businesses and individuals, as follows:

• Bonuses, sales compensation, promotions, commercial discounts, payment discounts shall besubject to 0.5% PIT and 1% VAT;
• Advertising on digital information products, services shall be subject to 2% PIT and 5% VAT;
• Other activities subjecting to deduction method of 10% VAT shall be subject to 1.5% PIT and 3% VAT.

Furthermore, the issuance of Decree 40 has sparked a wave of public opinion with controversial viewpoints and become a hot topic on the news recently due to the new regulations on the obligation of organizations owning an e-commerce platform (such as Shopee, Tiki, Laazada,…) to declare and pay tax on behalf of individuals. In particular, Decree 40 prescribes that the organization which is the owner of an e-commerce platform shall declare and pay tax on behalf of the individuals. During the period of time of not being able to declare and pay tax on behalf of individuals, organizations that are owners of e-commerce platforms shall provide information about the individuals’ business operation (full name; legal documents; taxpayer identification number; phone number; goods and services provided; the seller’s bank account;…) on their platforms as requested by tax authorities. This regulation is controversial because, in practice, owners of e-commerce platforms do not pay income for sellers but only provide technology infrastructure to connect sellers and buyers in order to facilitate their transactions. Therefore, they are not subject to obligations of declaring, deducting and paying tax on behalf of the sellers.

Another regulation that also receives much attention is the VAT and PIT calculation cases for individuals leasing out their property. In particular, Circular 40 stipulates that “The lessor who earns revenue in fewer than 12 months in the calendar year, the revenue of not exceeding VND100 million/year as the basis for exemption from VAT and PIT shall be the taxable revenue of a calendar year (12 months)”. This regulation has been causing many worries that the lessors who lease out their property for 2 years respectively shall pay taxes even if the revenues are less than VND100 million. However, General Department of Taxation has provided that, individuals leasing out their property who earn revenue in fewer than 12 months in the calendar year (even if he/she has multiple lease contracts), the revenue of not exceeding VND100 million/year as the basis for exemption from VAT and PIT shall be the taxable revenue of a calendar year (12 months); the actual revenue as the basis for calculation of tax payable in the year shall be the revenue proportional to the number of months in which property is leased. Thus, similar to previous regulations, from 01 August 2021, if revenue from leasing property does not exceed VND100 million/year, the lessor is still not obliged to pay taxes. 

In general, Circular 40 only amended and specified the procedures regarding tax administration, regulations relating to tax policy on business operation of individuals are still complying with the current tax law.

IV. CIRCULAR 09/2021/TT-BTNMT

It is no longer necessary to submit identification documents when applying for registration of land

Circular No. 09/2021/TT-BTNMT (the “Circular 09”) dated 30 June 2021 of the Ministry of Natural Resources and Environment on amending some Articles of Circulars elaborating and providing guidelines for Land Law, takes effect as of 01 September 2021.

Circular 09 has the notable features as follows:

Firstly, it is no longer necessary to submit identification documents when applying for registration of land. This regulation is prescribed in Point 5 Article 11 Circular 09, accordingly, in case an application for registration of land/property on land or certificate issuance requires a copy of identity documents, the application receiving authority shall use data from the national population database instead of requesting the applicant to submit the abovementioned documentary proof of identity if the national population database has been shared and connected with other sectors (including land sector).

Secondly, Circular 09 supplements 02 cases of registration of change that are granted with Certificate of land use right, ownership of house and other properties associated with the land, including:

• Land lots split to receive separate Certificates for cases where a Certificate is granted to multiple lots;
• Change to all information on a land lot due to cadastral map formulation; change to land area of a land lot having garden, pond and housing due to residential area redetermination per regulations.

Thirdly, repurposing of land for economic/service activities into non-agricultural business land must require permission. According to past regulations, “repurposing of land for economic/service activities into non-agricultural business land” does not require permission. Nevertheless, pursuant to Circular 09, from 01 September 2021, repurposing of land for economic/service activities into non-agricultural business land (such as head office land, representative office land, warehouse and warehouse yard of entities,…) shall require permission from competent authorities.

Our State has made significant efforts to digitize population data in order to simplify and improve efficiency of national population management. Since competent authorities can easily look-up the information of land users such as permanent address, residence, and identification numbers, submitting these legal documents is unnecessary and inconvenient for citizens when carrying out the procedures. 

With the amendments and additions to Circular 09, inadequacies in land management, complicated administration procedures relating to land registration are gradually overcome, and legal documents that are no longer in line with reality are also abolished, thereby helping consolidate the legal corridor as a ground for competent authorities and citizens to easily apply the regulations to practice.

V. CIRCULAR 55/2021/TT-BCA

From 01 July 2021, citizens are entitled to submit stay notification, temporary absence declaration via electronic applications

Circular No. 55/2021/TT-BCA (the “Circular 55”) dated 15 May 2021 of the Ministry of Public Security on detailing some Articles and measures of Residence Law 2020, takes effect as of 01 July 2021.

Circular 55 superseding Circular No. 35/2014/TT-BCA (the “Circular 35”) dated 09 September 2014 of the Ministry of Public Security on detailing a number of Articles of the Residence Law, and Decree No. 31/2014/ND-CP (the “Decree 31”) dated 18 April 2014 of the Government on detailing a number of Articles and measures for implementation of the Residence Law, has some noteworthy points as follows: 

According to Circular 55, in case a citizen moves to a place of residence located in the same commune-level administrative unit as their place of permanent residence shall visit the registration authority to update information on their current place of residence in the residence database if the new place cannot be registered as place of permanent residence. This regulation was not previously specified in Circular 35 and Decree 31. 

In comparison with previous regulations that citizens submitting stay notification, temporary absence declarationshall visit the commune-level police authorities for registration, Circular 55 has now supplemented 04 more methods by which citizens can easily submit stay notification, temporary absence declaration as follows: 

• Directly at offices of registration authorities or stay notification receipt locations designated by registration authorities;
• Via phone numbers or emails posted or published by registration authorities;
• Via websites of registration authorities or the national public service portal, public service portal of the Ministry of Public Security or public service portal for residence management;
• Via applications on electronic devices.

Pursuant to such regulations, registration authorities shall notify or publish the places, phone numbers, emails and websites of the national public service portal, public service portal of the Ministry of Public Security and public service portal for residence management and names of electronic applications receiving stay notification, temporary absence declaration.

It can be observed that Circular 55 has contributed to the completion of the legal basis for residence registration, aswell as meeting the requirements of residence registration and management via the new methods. Circular 55, along with the completely new regulations, demonstrates the State’s determination to implement the policy of modernizing and simplifying administrative procedures and citizen documents related to population management; ensures publicityand transparency; creates more favorable conditions for citizens to exercise their right to freedom of residence; and enhances the effectiveness of residence management of the State.

VI. DECREE NO. 58/2021/ND-CP

Credit information companies must have charter capital of at least VND30 billion

Decree No. 58/2021/ND-CP (the “Decree 58”) dated 10 June 2021 of the Government on provision of credit information services, takes effect as of 15 August 2021.

Decree 58 prescribes conditions, procedures for issuing, reissuing, revising, and revoking Certificate of eligibility for providing credit information service (the “Certificate”); credit information services of credit information companies and rights, obligations of relevant organizations and individuals, except for credit information affairs of State Bank of Vietnam.

In particular, “credit information” is defined in Decree 58 as data, figures, relevant information of debtors in participating organizations of credit information companies. Consecutively, Decree 58 specifies that credit information companies are allowed to perform credit information services only after the issuance of Certificate by State Bank of Vietnam if satisfying the conditions as follows:

• Having information infrastructure that satisfies the minimum requirements in accordance with the Laws;
• Having charter capital of at least VND30 billion;
• Having enterprise managers and members of Boards of Supervisors that satisfy the requirements of the Laws;
• Having business plans with guarantee that will not conduct other businesses other than credit information services;
• Having at least 15 participating organizations that are credit institutions, and branches of foreign banks (except for policy banks, cooperative banks, people’s credit funds, and microfinance institutions). Participating organizations are under no commitment to provide credit information for other credit information companies;
• Having written agreement on provision of credit information and credit information products between credit information companies and participating organizations.

Notably, credit information companies must initiate the credit information services within 12 months from the date on which its Certificate is issued and send a written notice about such initiation to State Bank of Vietnam within 05 working days from the date of its opening. If it fails to initiate the credit information services within 12 months, credit information companies will have its Certificate of eligibility for providing credit information services revoked.

The Government promulgated Decree 58 on detailing the provisions of Law on Credit Institutions 2010, amended in 2017 in order to strictly manage credit information services apart from the credit information services of National Credit Information Center of Vietnam (CIC) – State Bank of Vietnam. Thereby, Decree 58 has assisted in ensuring transparency of information, providing more options in searching, reviewing, exchanging information and restricting the redundant risks during credit operations.

VII. CIRCULAR NO. 58/2021/TT-BTC

Derivatives and derivative market

On 12 July 2021, the Ministry of Finance promulgated Circular No. 58/2021/TT-BTC (the “Circular 58”) providing guidelines for some Articles of the Decree No. 158/2020/ND-CP (the “Decree 158”) dated 31 December 2020 ofthe Government on derivatives and derivative market, takes effect as of 27 August 2021.

Regarding the conditions to conduct derivative transactions of investors, Circular 58 stipulates that investors are required to open trading accounts at trading members and clearing margin accounts (hereinafter referred to as margin accounts) at clearing members that are designated by trading members. In case investors already have trading accounts for conducting transactions in underlying securities at a trading member, they are allowed to use such accounts to conduct derivative transactions after opening a margin account at the clearing member designated by the trading member. Moreover, before placing trading orders, while holding positions and when exercising contracts, investors must provide margin at the request of clearing members. Investors must ensure position limits on their trading accounts according to Vietnam Securities Depository and Clearing Corporation’s regulations.

Regarding the regime of periodic reports, Circular 58 prescribes as follows:

• On a monthly, quarterly and annual basis: derivative trading organizations, commercial banks and foreign bank branches that are special trading members, settlement banks shall provide the State Securities Commission (SSC) with physical or electronic reports.
• On a biannual basis: clearing members that are commercial banks or foreign bank branches shall provide SSC with physical or electronic reports on their fulfillment of requirements for provision of clearing and settlement for derivative transactions services.

In general, the Ministry of Finance promulgated Circular 58 to provide guidelines on trading, clearing and settlement for derivative transactions, including: stock-index futures contracts, government-bond futures contracts; activities of members of Vietnam Exchange (VNX) and Vietnam Securities Depository and Clearing Corporation (VSDCC). Regulations on professional activities applied to VSDCC in Circular 58 shall be implemented by Vietnam Securities Depository until VSDCC starts to officially operate in accordance with the Law on Securities No. 54/2019/QH14.