Policy digest March 2015
The merger of two stock exchanges, categorization of securities companies to attract investors and development of voluntary pension funds are among a series of solutions to be carried out in the coming time to boost the development of the stock market, said Deputy Finance Minister Tran Xuan Ha at a cabinet regular meeting on March 2.

* Environmental protection tax on petrol, oil to triple

The National Assembly Standing Committee on March 3 voted on the Government’s proposal to triple the current environmental protection tax rates on petrol and various petroleum products, except kerosene.

The Minister of Finance said retail prices of petrol in Vietnam were lower than Laos, Cambodia and China, between VND 5,000-6,000 per liter and this had ignited petrol smuggling through Vietnamese border to these countries.

In addition, Vietnam must implement its international commitments to cut import tariffs. The fallen global and domestic oil prices since the beginning of this year have also resulted in a considerable decrease in state budget revenues.

Operating the petrol and oil supply system at PV Oil Nha Be company (Ho Chi Minh City) of the Vietnam Oil Corporation__Photo: Huy Hung/VNA

To implement the tariff reduction schedule and compensate for the state budget’s loss, the Government has proposed to increase environmental protection tax on petrol, jet fuels and oil of all kinds, except kerosene, by three hundred percent.

The tax rate on petrol will be raised from VND 1,000 per liter to VND 3,000 per liter while that on kerosene will be kept at VND 300 per liter.

The new tax rates will be imposed from May 1.

Together with higher environmental protection tax, the import duty on petrol will be slashed from current 35 percent to 20 percent.-

* Almost all goods from Vietnam, Laos to enjoy zero import duty: More than 95 percent of Vietnamese goods exported to Laos will enjoy import duty exemption and vice versa under a new bilateral trade agreement between the two countries.

The Asia-Pacific Department of the Ministry of Industry and Trade said the agreement was signed in Laos on March 3 to replace the 1998 one.

Apart from tariff exemption, both countries discussed tax incentives for a number of special goods imported to Vietnam from Laos and the incentives would be specified in a border trade agreement scheduled for negotiation and signing this year.

The new bilateral trade agreement comprises six chapters and 16 articles that will take effect after the two countries complete the exchange of a diplomatic note to certify each side’s completion of necessary national procedures for the agreement.

It is also expected that a legal framework will be established for further bilateral cooperation in trade in goods and services in the coming time.-

* Compulsory contributions by insurers to be regarded as reasonable expenses: The Ministry of Finance has recently requested tax agencies to treat compulsory contributions by insurance businesses as reasonable expenses when determining taxable incomes.

Accordingly, during the period from January 1, 2015, to the end of 2019, insurance businesses’ direct contributions to the Ministry’s Insurance Management and Supervisory Department will be accounted into deductible expenses when incomes liable to corporate income tax are determined in a tax period.

Such contributions may not be accounted into deductible expenses unless insurance businesses possess money spending and collecting receipts provided by the Insurance Management and Supervisory Department and non-cash payment documents for spending items worth VND 20 million or more (VAT-inclusive).-

* Database launched to monitor foreign investment project implementation

The Ministry of Planning and Investment (MPI) launched on March 1 a national information system for foreign investment.

The system would allow foreign direct investment (FDI) enterprises to give information about their projects online, before they apply for investment certificates. They will also be obliged to use the system to send online reports to the state management agencies.

Provincial-level foreign investment management agencies are required to update data on registration, grant, adjustment and revocation of investment certificates and issuance and revision of relevant legal documents.

The system would provide a database of all FDI projects being carried out in the country. People can search for information on an online portal of the MPI’s Foreign Investment Agency (FIA).

Provincial-level People’s Committees will ask FDI project management units to guide their officers and foreign investors in using the national system.

The system has been built and managed by the ministry, following the Prime Minister Decision No. 48/2009/QD-TTg dated March 31, 2009, approving the plan on information technology application in operation of state agencies during 2009-2010. Its objectives were to standardize and computerize a national database on FDI enterprises and their projects, as well as Vietnam’s offshore investment projects, and update information on FDI-related activities in the country.-

* Nation embarks on substantive tax reforms: Deputy Prime Minister Vu Van Ninh recently said every province or city would strive to implement an e-tax service to cut tax declaration procedural time to 171 hours per year in 2015.

Under his instructions, laid out in a tax review meeting in February, all provincial-level tax departments must continue reviewing and minimizing paperwork to create favorable conditions for taxpayers.

According to Finance Deputy Minister Do Hoang Anh Tuan, before September 30 last year, all businesses made e-tax declarations, and paid taxes online. On the other hand, tax departments are required to soon conduct pilot projects on e-invoices nationwide.

At the same meeting, Deputy Minister Tuan asked the Ho Chi Minh City Tax Department to spur administrative reform by imposing strict regulations that require businesses to implement e-tax services.

By the end of this year, the taxation sector will strive to halve the amount of tax payment procedures businesses need to follow, said Nguyen Thi Cuc, chairwoman of the Vietnam Tax Consultancy Association (VTCA).

The Ho Chi Minh City Tax Department has recently petitioned the General Department of Taxation and Ministry of Finance to expand the network of banks that accept online tax payments.

Prime Minister Directive 24/CT-TTg dated August 5, 2014, on enhancing the management and reforming administrative procedures for taxation and customs, hopes to get 95 percent of enterprises to make their payments online by the end of 2015.

Also under the Directive, all provinces and centrally run cities will start offering e-tax services by late 2015.-

* Solutions to spur stock market development: The merger of two stock exchanges, categorization of securities companies to attract investors and development of voluntary pension funds are among a series of solutions to be carried out in the coming time to boost the development of the stock market, said Deputy Finance Minister Tran Xuan Ha at a cabinet regular meeting on March 2.

According to the Deputy Minister, the first solution is to complete a legal framework for securities and stock exchange activities, including a decree revising Decree No. 58/2012/ND-CP detailing and guiding the implementation of the Law on Securities and the Law Amending and Supplementing a Number of Articles of the Law on Securities. The decree will mention the stock issuance of public companies and the holding rate of foreign investors.

Sounding a gong to open a trading session for PSE stocks at the Hanoi Stock Exchange__Photo: Tuan Anh/VNA

In addition, the Government will soon issue a decree on the organization of the derivatives market on which cabinet members’ opinions have been collected and the Finance Ministry will submit to the Government for promulgation a decree on the development of the voluntary pension fund system to attract more institutional investors and mobilize long-term capital sources.

The second solution is that the Finance Ministry will further restructure the securities market under the Prime Minister’s instruction by merging the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange into the Vietnam Stock Exchange to rearrange the trading system and enhance the administration work and publicity and transparency. It will develop insurance, investment and voluntary pension funds and reshuffle securities companies and fund management companies.

The third solution aims to combine the equitization and divestment of state capital from non-core business lines of enterprises with stock listing and registration on the stock exchanges.

Based on Prime Minister Decision No. 51/2014/QD-TTg, the Ministry has published a document guiding subjects and procedures to implement this solution in order to create a transparent environment for investors.

Under Vietnam’s commitments to the World Trade Organization, foreign investors will be able to own 100 percent of shares of securities or fund management companies. However, listed companies will be categorized into different groups subject to regulations on ban on foreign investment, the Law on Credit Institutions, WTO commitments or planned permission for higher foreign holding rate.

Deputy Minister Ha also touched upon solutions for his ministry, the State Bank of Vietnam and relevant agencies to coordinate in combining fiscal and monetary policies to create a stable macroeconomic environment for the development of the economy, financial market and securities market.-

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