In Vietnam, a signed contract is not always an enforceable one. Many foreign investors are surprised to learn that a fully negotiated and executed contract can be declared invalid by a court, simply because it failed to meet specific, overlooked, legal formalities. This critical gap between a contract’s formation (the moment of signing) and its […]
In the beginning of 2023, the Vietnamese government approved and issued several new policies and legal documents. Thus, on doing business in Vietnam, investors are advised to bear in mind and update released regulations on a regular basis. In this article, Viettonkin will provide up-to-date legislations that are in effect soon, along with giving some tips on how to comply with the new laws.
Law on Insurance Business.
On January 1st, 2023, the Law on Insurance Business will go into effect, stipulating several regulations for both insurance enterprises and the participants, unless Clause 3 of Article 86; clause 4 and 5 of Article 94; Article 95; clause 3 and 4 of Article 99; Article 109, 110, 111, 112, 113, 114 and 116 herein shall take effect as of January 1, 2028.
According to Clause 3, Article 99 of this Law, insurance enterprises, reinsurance enterprises and foreign insurance branches in Vietnam are not allowed to borrow capital for investment, or entrust investment in real estate business. At the same time, these enterprises must not do real-estate business, except for several following cases:
- Purchasing shares of real estate enterprises listed on the securities market, fund certificates of public funds;
- Purchasing, investing in, owning real estate used as business offices, locations or treasure vaults with a direct purpose of insurance business;
- Leasing of unused business premises that are owned or used;
- Holding real estate due to the disposal of bonds secured by real estate, recovering loans secured by real property within 03 years from the lien date.
Regarding time limits for consideration of participation in insurance as specified in Article 35, for insurance contracts with a term of more than 01 year, within 21 days from the date of receipt of the insurance contract, the customer (policyholder) has the right to refuse to continue participating in insurance. At that time, the contract is canceled and the customer is refunded the cost, after deducting reasonable costs (if any) as agreed upon in the insurance contract; the insurer shall not be obliged to pay insurance indemnity or coverage in case of occurrence of a policy event.
In addition, there are some cases the clients are not compensated or insured as follows (according to Article 40):
- The insured is deceased within 2 years from the date of payment of the first premium or restoration of the insurance contract’s effect;
- The insured’s death is caused willfully and intentionally by the policyholder or the beneficiary;
- The insured’s permanent injury or impairment is caused willfully and intentionally by the insured himself, the policyholder or the beneficiary;
- The insured’s death is caused by serving the death sentence.
- Notwithstanding the foregoing, in the cases where there are more than one beneficiary, despite the fact that one or more beneficiaries intentionally cause death or permanent injury or impairment for the insured, the insurer or the foreign non-life insurer’s branch shall have the burden of paying insurance indemnity or coverage to the other beneficiaries under contractual terms and conditions.
Law on Amendments to law on Intellectual Property
Among the upcoming official regulations, a new law which amended and supplemented several articles of the Law on Intellectual Property (IP) will be in effect. This amendment and supplement will arouse the interest of the business community. Under the amended and supplemented IP Law, the following notable contents are of significant notice.
Some concepts have been amended and supplemented for more transparency, which includes derivative works, Published work, audio and video recording; Reproduction, royalties, technological measures for rights protection, effective technological measures, rights management information, broadcasting, public communication, confidential inventions, industrial designs, and geographical indications (GIs)
Besides, the amendment and supplement of IP Law provides a stronger legal foundation for denying the application of IP registration dossier on an invention, industrial design, trademark or GIs (Amendments to Clause 1 and addition of Clause 1a after Clause 1 of Article 117). For example, in case the applicants register IP protection for aforementioned IP types with malicious intents, the registration dossier is unaccepted.
Additionally, an important legal basis for the invalidation of a protected trademark is supplemented in the IP law (Amendments to Article 95). When the mark becomes the popular household name of the goods and services which are registered under that mark, the IP protection will be invalid. Plus, if the use of a trademark misleads consumers about the nature, quality and geographical origin of the commodities, the trademark is no longer under the validity of IP protection.
Meanwhile, from January 1, 2023, the submission of copyright registration dossiers can be done through the online public service portal or the postal service. Authors, copyright holders or related rights holders can directly submit or authorized organizations or individuals to submit copyright registration dossiers.
VAT rate will be back to 10% from January 1st, 2023.
According to Resolution No. 43/2022/QH15 and Decree 15/2022/ND-CP, from January 11, 2022, VAT rate has been reduced by 2% to support socio-economic recovery and development. This rate is applicable to all groups of goods and services with 10% VAT rate, remaining 8%. Yet, there are some exclusions, namely telecommunications, information technology, financial activities, banking, securities, insurance, real estate trading, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, and goods and services subject to excise tax
However, this policy will expire on December 31, 2022. Therefore, from January 1, 2023, VAT rate will return to 10%.
The environmental protection tax will be increased on petrol and oil from January 1, 2023
From July 6, 2022, the environmental protection tax reduction policy for gasoline, oil and grease was specified in Resolution 20/2022/UBTVQH15. In particular, Gasoline (except ethanol) decreased from 2,000 VND/liter to the floor level of 1,000 VND/liter. Flight fuel was down from 1,500 VND/liter to the baseline level of 1,000 VND/liter. Diesel oil dropped from 1,000 VND/liter to 500 VND/liter. Mazut oil, lubricant, and grease reduced from 1,000 VND/liter to 300 VND/liter. Kerosene keeps the tax rate of 300 VND/liter.
Yet, the tax rates are applied from the effective date of this Resolution to the end of December 31, 2023. As a result, from January 1, 2023, the environmental protection tax rate for gasoline, oil and grease will return to the original level as prescribed in Section I, Clause 1, Article 1 of Resolution No. 579/2018/UBTVQH14.
The interest rate of commercial banks is applied in 2023 for the outstanding debts of concessional housing loans
According to Decision 2081/QD-NHNN takes effect from January 1, 2023, the interest rate imposed by commercial banks in 2023 on outstanding debts of concessional housing loans granted under the Circular No. 11/2013/TT-NHNN, the Circular No. 32/2014/TT-NHNN and the Circular No. 25/2016/TT-NHNN is 5.0%/ year.
Decision 2081/QD-NHNN replaces Decision No. 1956/QD-NHNN dated December 3, 2021 on interest rates that were applied by commercial banks in 2022 to the outstanding debts of concessional housing loans.
In conclusion …
Legal compliance in Vietnam is a must for both local and foreign businesses. Thus, investors have the obligation to conform to Vietnamese laws, legislations, and regulations, otherwise, there will be sanctions for violations. To avoid unexpected legal challenges, investors are advised to consult top-notch professional experts in the fields for better insights and helpful support. Viettonkin is one of the leading professional firms with more than decades of experience in diverse industries and majors. Our team of well-informed professionals in Vietnamese markets and legal systems are capable of assisting you navigate through the process of establishing a new business in Vietnam. With us by your sides, you can focus on what really matters to you. Let us be your trustworthy partner!
