9 June 2020
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Introduction
On May 29, 2020, the government of Vietnam issued Resolution No. 84/NQ-CP, which mandates a number of economic relief and recovery measures in light of the COVID-19 pandemic. These measures include, among others, the reduction of certain government fees and charges and the easing of some regulations on foreign employees, trade, and construction. Some highlights of Resolution 84 are discussed below.
Reduction of Government Fees
To alleviate the hardship faced by companies affected by the COVID-19 pandemic, the government will temporarily reduce or suspend some fees and charges, including the following:
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Land rent: 15% reduction of the 2020 rent for land plots leased directly from the state, applicable to renters making annual rent payments who were forced to suspend their operations due to the COVID-19 pandemic.
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Auto industry: 50% reduction of vehicle registration fees until the end of 2020 for cars manufactured or assembled in Vietnam, in order to encourage domestic consumption.
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Water resources: Exemption from the fee for granting the right to exploit water resources in 2020 for companies exploiting water resources for manufacturing and business activities.
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SME loans: 2% reduction of interest rates on loans disbursed to eligible SMEs from the Small and Medium Enterprise Development Fund.
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Tax: Contributions to COVID-19-fighting activities can be deductible expenses when calculating corporate income tax. The government also plans to seek approval for a 30% reduction of corporate income tax for 2020 for small and extra-small enterprises.
Foreign Employees
Foreign experts, company managers, investors, and high-tech workers working in investment and business projects in Vietnam will be allowed to enter Vietnam to maintain the operations of their companies while ensuring compliance with preventative measures against the epidemic. Foreigners entering on this basis are still subject to mandatory quarantine (currently, 14 days) and subsequent monitoring by the local health authority.
Work permits will be renewed for foreign experts, company managers, and technical workers currently working for companies in Vietnam, and new work permits will be issued to foreign experts, company managers, and technical workers who replace those who are unable to enter or will not return to Vietnam.
Manufacturing and Trade
The Ministry of Industry and Trade is tasked with implementing measures to overcome any disruption of the supply of raw materials for manufacturing facilities and businesses; to diversify export markets, facilitate trade promotions, and seek new markets for goods whose delivery has been canceled or delayed due to the pandemic; and to fully utilize the benefits brought about by free trade agreements, especially the EVFTA and CPTPP.
Certificates of origin (C/O) with electronic signatures or electronic seals, or scanned C/Os, will be accepted for submission to the customs authority for customs clearance to reduce difficulties for import/export companies. Furthermore, the HS codes for import and export goods are to be unified with those of other countries, especially the EU.
Personal Protective Equipment
The Ministry of Health is responsible for coordinating with relevant authorities to facilitate production of medical masks, sanitizing products, and other medical supplies to meet the demand for domestic consumption and export; as well as to simplify the evaluation and approval procedures for manufacturing, importing, and exporting personal protection equipment and medical devices.
Construction
The government will propose that the National Assembly allow certain provisions of the amended Law on Construction (currently available for public comments) to be applied as soon as the amended law is passed, including an exemption from construction permits for construction projects that meet certain conditions (e.g., those for which the construction design has been approved), and the transfer of authority to grant construction permits for special-classification projects from the Ministry of Construction to the provincial People’s Committees.
Outlook
In order to implement the measures stated in Resolution 84, the government as well as relevant ministries and local authorities will need to formulate and issue implementing decrees, circulars and official guidance. Thus, it will take some time for all the measures to take effect in practice.
For further information, please contact:
Vinh Quoc Nguyen, Partner, Tilleke & Gibbins
vinh.n@tilleke.com
