BANKING. New Maximum Interest Rates For Vnd Short Term Loans

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1 BANKING New Maximum Interest Rates For Vnd Short Term Loans On 25 March 2013, the State Bank of Vietnam passed Circular No. 09/2013/TT-NHNN stipulating the maximum interest rates for VND short-term loans imposed by credit institutions and branches of foreign banks on their borrowers, in order to satisfy the demand for capital in some economic sectors and fields ( Circular 09 ). Circular 09 will replace Circular No. 33/2012/TT-NHNN on the same matter. The maximum interest rate of VND short-term loans is now 11% per annum, lowered from 12%. However, people's credit funds and microfinance institutions may fix the maximum interest rate of 12% per annum, lowered from 13%, which is applicable to VND short-term loans. The short-term loans in Vietnam Dong applying the maximum loan interest rates as prescribed above are loans that satisfy the capital demands for: a) Serving the agricultural and rural development as prescribed in the Government's Decree No. 41/2010/ND-CP dated 12 April 2010 on the credit policy serving agricultural and rural development; b) Executing the plans and projects of production and trading of exports as prescribed in the Commercial Law; c) Serving the production and trading of medium and small enterprises prescribed in the Government's Decree No. 56/2009/ND-CP dated 30 June 2009 on supporting the development of medium and small enterprises; d) Developing the ancillary industries as prescribed in the Prime Minister s Decision No. 12/2011/QD-TTg dated 24 February 2011 on the policies on the development of some ancillary industries; and 1 P a g e L E G A L A L E R T - A P R I L

2 e) Serving the production and trading of the high-tech application enterprises as prescribed in the Law on High Technologies and relevant laws. Lowering maximum interest rates for short-term loans is a welcome move by the State Bank of Vietnam. Small and medium enterprises will benefit from this change, allowing them to take out more loans from banks for their purposes. Circular 09 takes effect on 24 March New Maximum Interest Rate For Deposits In Vietnam Dong On 25 March 2013, the State Bank of Vietnam issued Circular No. 08/2013/TT-NHNN stipulating the maximum interest rate for deposits in Vietnam Dong ( VND ) of organizations and individuals in credit institutions and branches of foreign banks ( Circular 08 ) and repealing Circular 32/2012/TT-NHNN regulating the same issues ( Circular 32 ). In particular, Circular 08 promulgates new interest rates for deposits in VND of organizations and individuals (inclusive of promotional expenses in any form) imposed by credit institutions and branches of foreign banks (the Credit Institutions ) as follows: a) For infinite term deposits and deposits with a term of less than 1 month, the applicable interest rate is 2% per year (Circular 32 stipulated the same rate); b) For deposits with a term from 1 month to 12 months, the applicable interest rate is 7.5% per year in Credit Institutions and 8% per year in people s credit fund and microfinance organizations (both increased by 0.5% per year in comparison with the rate provided in Circular 32); and c) For deposits with a term of over 12 months, the applicable interest rate will be based on the capital supply/demand of the market (Circular 32 stipulated the same). The deposits that have been mobilized by the Credit Institutions before the effective date of this Circular 08 will be implemented until it expires. 2 P a g e L E G A L A L E R T - A P R I L

3 The decrease of new interest rates applicable to deposits with a term from 1 month to 12 months will help to decrease the burden of capital mobilization costs for Credit Institutions. However, a 0.5% change is not remarkable as therefore, many financial experts consider this new regulation to be only temporarily applicable in order to survey the reaction of the market. This Circular 08 will take effect from 26 March Trading Of Gold Bullion In Domestic Market On 12 March 2013, the State Bank of Vietnam (SBV) promulgated Circular No. 06/2013/TT- NHNN on the trading of gold bullion in the domestic market ( Circular 06 ). Circular 06 only applies to sales and purchases of gold bullion between the SBV and credit institutions or enterprises granted licenses for trading gold bullion. According to Circular 06, credit institutions or enterprises granted licenses for trading gold bullion must apply to establish trading relations with the SBV. Circular 06 also focuses on the procedures, conditions of purchasing, selling and management of gold bullion between the SBV and credit institutions or enterprises granted licenses for trading gold bullion Circular 06 came into effect on 13 March Process Of Gold Bullion Purchases And Sales The State Bank of Vietnam ( SBV ) has issued Decision No. 563/QD-NHNN on 18 March 2013 promulgating the process of gold bullion purchases and sales ( Decision 563 ). This process specifies the direct purchases or sales of gold bullion and the purchases or sales of gold bullion through bidding between SBV and credit institutions or enterprise as prescribed in Circular No. 06/2013/TT-NHNN on 12 March 2013 of the Governor of SBV guiding the purchase or sale of gold bullion in domestic market of SBV. Accordingly, the process of gold bullion purchase or sale through bidding involves the following steps: First, no later than the next working day which SBV holds bidding, the transaction bureau shall send notifications of bidding to credit institution and enterprises. 3 P a g e L E G A L A L E R T - A P R I L

4 Second, credit institutions and enterprises must transfer an advance deposit into the account of SBV in according to the notification of bidding. Third, SBV shall examine the advance deposit of credit institutions and enterprises on accounts under notification of SBV. Fourth, the transaction bureau shall notify ceiling prices and floor prices for bidding under prices or purchase price and sale price for bidding under volume. Fifth, credit institutions and enterprises shall submit their joining-bid cards. Sixth, the closure and opening of bidding will occur. Seventh, SBV shall synthesize figures of bids, consider the bidding and define results of bidding. Eighth, the transaction bureau may cancel bidding and notify to credit institutions and enterprises joining in bidding if gold price changes exceed the changes of prices in the approved plan on purchase or sale gold bullion. Ninth, SBV shall notify the bidding result. Finally, the credit institutions and enterprises winning the bid must sign a written confirmation on the transaction of gold purchase or sale with SBV. In addition, Decision 563 also stipulates the process of direct gold bullion purchase or sale with nearly identical steps as the process of gold bar purchase or sale through bidding: SBV sends notification of gold bar purchase or sale to credit institutions and enterprises. Credit institutions and enterprises must transfer advance deposit into account of SBV in according to the notification of purchase or sale of gold bullion. SBV examines the advance deposit of credit institutions and enterprises on accounts under notification of SBV and examine personal identification papers of transaction representative of credit institutions and enterprises. 4 P a g e L E G A L A L E R T - A P R I L

5 SBV shall notify in writing the price of purchase or sale of gold bullion. Credit institutions and enterprises shall submit registration for purchase or sale of gold bullion to SBV. SBV shall consider registration for purchase or sale and define the purchase or sale result. If gold price changes exceed the change level of price in the approved plan on purchase or sale of gold bullion, the transaction bureau may stop the purchase or sale transaction and notify to credit institutions and enterprises joining in purchase or sale. SBV shall notify in writing to the transaction representatives of volume of gold bullion which SBV purchases or sells with each credit institution and enterprise. Credit institutions and enterprises joining in purchase or sale must sign a written confirmation on transaction of gold purchase or sale with SBV. Further, attention must be directed to the possibility that gold price changes may exceed the change level of price in the approved plan on purchase or sale of gold bullion, under which the transaction bureau may stop the purchase or sale transaction and notify to credit institutions and enterprises joining in purchase or sale. Decision 563 comes into effect on 18 March Amendments Of The Regulations On Classifying, Testing, Packaging, Delivering Precious Metals And Gemstone On 8 th March 2013, the State Bank Vietnam ( SBV ) issued Circular No. 05/2013/TT-NHNN amending and supplementing some articles under the regulations on classifying, testing, packaging, delivering precious metals and gemstone stipulated in Decision No. 78/2000/QD- NHNN ( Circular 05 ). The first revision is on the object of Circular 05, which now replaces Vietnam Jewel Company, a state-owned enterprise merged with some banks, with gold processing enterprises, new enterprises that are allowed to enter the gold market. As a result of these new members into the market, the definition of Piece Gold has been revised from the general definition of a the piece to be in the form of a piece with number on weight, quality and code of the producers to enterprises and credit institutes allowed to produce or to do business 5 P a g e L E G A L A L E R T - A P R I L

6 with Piece Gold from time to time. The former definition on jewelry gold and fine-art gold is now consolidated as gold product with gold portion more than 8Kara (approximately 33.33%), processed, crafted for the purpose of decoration, jewel. Other kinds of gold are considered as ingredient gold. In addition, Circular 05 supplements regulations on packaging, sealing Piece Gold owned by SBV, and SBV s purchase of Piece Gold from credit institutes and enterprises. Accordingly, Piece Gold is to be stored in a box called a lot, with each lot containing 100 or multiples of 100 (but not exceeding 500) pieces of gold. Boxes are mead from stain steal to sizes suitable with the size of gold inside, covered inside by velvet fabric and the top edge equipped with 2 buttonholes for the purpose of locking, sealing and making lead-seal. When receiving the Piece Gold that SBV buys from enterprises, SBV will conduct on its own or hire other entities to receive gold in the form of pieces that have been sealed by SJC (Saigon Jewelry Company). In the case of importing gold, SBV will receive gold in the form of the producer s package and seal. Circular 05 will take effect from the date of issuance. Special Controls For Credit Institutions The State Bank of Vietnam ( SBV ) has promulgated Circular No. 07/2013/TT-NHNN on 14 March 2013 on special controls for credit institutions ( Circular 07 ). In the case of risks of insolvency or serious violations of the law of the credit institutions which may lead to the risk of unsafe operations of the banking system, SBV will decide to put the credit institutions under the state of special control by way of special monitoring or comprehensive control in consideration of the financial situation, level of risk and violation of the laws of the credit institutions. Accordingly, special monitoring is a form of special control in place by SBV to apply measures to monitor the daily activities of credit institutions. Meanwhile, comprehensive control is a form of special control in place by SBV to apply direct and comprehensive control measures of daily activities of the credit institutions. For the purpose of carrying out the special control, the SBV s Governor has the right to: (i) make a decision on putting the credit institution under the state of special control; 6 P a g e L E G A L A L E R T - A P R I L

7 (ii) determine time limit, extension of the time limit and termination of special control and content of special monitoring and comprehensive control; (iii) make a decision on establishment of a Board in charge in special control (the Board ), send officials to participate in the Board, make proposal to the agencies and organizations concerned to send official to participate in the Board; (iv) request the owners of the credit institutions under special control to increase their charter capital to ensure that the real value of charter capital is not lower than the level of legal capital, thereby ensuring the safe operation ratios as prescribed by law for a specified time limit, or request the owner of the credit institution under special control to develop and submit a restructuring plan to SBV for approval and implementation, or require a merger, consolidation, acquisition with other credit institutions where the credit institutions under special control are incapable or unable to increase their charter capital as requested and during the time limit determined by SBV; (v) directly perform or appoint other credit institutions to participate in capital contribution and share purchase of the credit institutions under special control if these credit institutions do not perform the requirement specified above or when SBV determines that the accumulated loss of the credit institution has exceeded the real value of the charter capital and the reserve funds of credit institutions under special control stated in the last audited financial statements and the termination of the operation of credit institutions under special control may cause instability to the system of credit institutions; (vi) Decide on the components, number and structure of the special control Board in accordance with the form of special control. Such a Board to be established in the case of special control will have the following duties: (i) Directing the Executive Board, member Board, control Board, General Director (Director) or the credit institution s representative; (ii) Directing, inspecting and monitoring the implementation of special monitoring, comprehensive control and solutions stated in the approved plan; 7 P a g e L E G A L A L E R T - A P R I L

8 (iii) Requiring credit institutions under special control to provide a list of all existing assets or hire independent auditing organizations or specialized agencies to assess the financial conditions, valuate assets and determine enterprise value valuation of the credit institutions under special control; (vii) Requiring the credit institutions under special control to invite the debtors and creditors to come for comparison of debt with the credit institutions under special control to determine the possibility of debt collection and repayment. The decision on extension of special control and decision on termination of special control over the credit institutions will be notified to the agencies and organizations specified. The credit institutions special control status will be terminated in cases specified in Clause 1, Article 152 of the Law on Credit Institutions. When the credit institutions special control status is terminated due to failure to restore solvency, SBV send documents to the Court with respect to the termination of application of measures to restore solvency and require those credit institutions to prepare an application to request the Court to conduct procedures for settlement of the request to declare bankruptcy under the bankruptcy law. Circular 07 takes effect on 27 April New Interest Rates Applicable To Refinancing, Re-Discount, Overnight Loans In The Inter-Bank Electronic Payment System, And Loans For Making Up The Capital Deficit In The Clearing Payment Of The State Bank Of Vietnam For Banks On 25 March 2013, the State Bank of Vietnam ( SBV ) rendered Decision No. 643/QD-NHNN ( Decision 643 ) on interest rates, which replaces Decision No.2646/QD-NHNN dated 21 December 2012, particularly providing as follows: 1. Re-financing interest rate 8.0% per annum 2. Rediscount interest rate 6.0% per annum 3. Interest rate applicable to overnight loans 9.0% per annum in the inter-bank electronic payment system and applicable to loans for making up the 8 P a g e L E G A L A L E R T - A P R I L

9 capital deficit in the clearing payment of the SBV for banks Decision 643 came into effect from the 26 March IMPORT EXPORT The Ministry Of Finance Adjusted Import Tax Rates For Used Cars On 15 March 2013, the Ministry of Finance promulgated Circular No. 28/2013/TT-BTC in order to adjust import tax rates for used cars specified under Clause 1, Article 1 of Decision No. 36/2011/QD-TTg of the Prime Minister ( Circular 28 ) According to Circular 28, used cars with 9 seats or less will have the following import rates: - Under 1,000 cc: USS 4,200 - Between 1,000 cc and under 1,500 cc: USD 9,600 Circular 28 came in effect on 29 April Entity Permitted To Evaluate Imported Scraps On 12 March 2013, the Ministry of Natural Resources and Environment ( MONRE ) promulgated Decision No. 284/QD-BTNMT, Decision No. 285/QD-BTNMT, Decision No. 286/QD-BTNMT, Decision No. 287/QD-BTNMT and Decision No. 288/QD-BTNMT (the Decisions ) on appointing organizations that meet the conditions to evaluate imported scraps used for the making of production materials. Accordingly, only the following organizations, including Vinacontrol Group Corporation, SGS Vietnam Ltd, FCC Control and Fumigation Joint Stock Company, Quality Assurance and Testing Center 3 and Vinacontrol Ho Chi Minh City are accredited to implement the evaluation of imported scraps that are used for the making of production materials, conforming to the standards set out by the National Technology Standard of Environment and Regulations and the quality requirements for imported scraps issued by the MONRE. The Decisions will remain in effect for 3 years from the date of signing. 9 P a g e L E G A L A L E R T - A P R I L

10 INFORMATION AND COMMUNICATION TECHNOLOGY Timeline To Integrate Ground Digital Television On the 18 March 2013, the Ministry of Information and Communications passed the Circular no. 07/2013/TT-BTTTT regulating the points of time to integrate the ground digital television recording function applicable to televisions produced and imported for use in Vietnam. This Circular applied to enterprises that produce or import television for use in Vietnam and any relevant organization and individuals. The point of time to integrate the ground digital television recording function is stipulated as followed: 1. All types of television using technology of LCD, PDP, LED, OLED screens and screen technologies in next time that are produced and imported for use in Vietnam must integrate the collecting ground digital television recording function of the standard DVB- T2, standard of image and sound signal codification MPEG-4 in conformity with the National Technical Regulations QCVN 63:2012/BTTTT according to the specific points of time as follows: a) For televisions with the screen size of larger than 32 inch: from April 01, 2014; b) For televisions with the screen size of 32 inch or smaller: from April 01, 2015; 2. It is not required to compulsorily integrate the ground digital television recording function collection in respect to televisions that use CRT screen technology produced and imported for use in Vietnam. Ground digital television recording function is becoming more popular nowadays and can possibly replace current technology. Integrating such function in future televisions will remove the need of a separate device and certainly reduce environmental costs. While television with new technology such as LCD, LED etc. must integrate the ground digital television recording function, CRT televisions are not required to do so. A possible explanation is that the 10 P a g e L E G A L A L E R T - A P R I L

11 government is trying to keep CRT televisions at low price, making them accessible for poorer parts of the country. This Circular takes effect on 01 April 2013 MISC New Regulation On Food Advertisement On 13 March 2013, Circular 08/2013/TT-BYT was issued by the Ministry of Health ( MOH ) to regulate the advertisement of food under the governance of the MOH ( Circular 08 ). Circular 08 promulgates a new legal framework for advertising foods to strictly protect consumers benefit. According to Article 2 of Circular 08, certain foods will be subject to the registration including functional foods, micronutrient-fortified foods, mineral water, bottled water, food additives, food processing aids, and food packing materials during food preparation, production and trading. The certification by MOH is a compulsory condition to implement the advertisement of foods listed above. The most significant regulation under Circular 08 is the prohibited activities in food advertisement listed under Article 3. In particular, advertising foods as having the same effect as medicines, or using articles written by doctors, pharmacists and medical workers claiming that such foods can treat the diseases will be prohibited. Moreover, food advertisements using images, reputation, and documents from health agencies, medical workers or gratitude letters from patients will also be prohibited. This regulation is considered a strict legal framework to better protect consumers from imprecise information by advertisers abusing medical effects for food advertisement. In addition, Circular 08 stipulates new procedures and the authority of the State agency regarding food advertisements including certifying contents of foods listed above and certifying the application for holding seminars on food introductions. Accordingly, Vietnam Food Administration is the competent authority to issue the content certification for advertisement of functional and micronutrient-fortified foods. Particularly, the advertisements of functional foods must be clearly included (in display or through speech) the claim the this product is not 11 P a g e L E G A L A L E R T - A P R I L

12 medicine and does not have the effect as a substitute medicine. Other remaining foods need to be registered with Food Safety and Hygiene Offices before being distributed on mass media. This agency also receives applications for holding seminars for food introduction. The Circular 08 will take effect from 26 April New Applicable Registration Fee From The 1st Of April 2013 The Vietnamese Government has issued Decree No.23/2013/ND-CP ( Decree 23 ) on 25 March 2013 amending and supplementing a number of articles of the Government s Decree No. 45/2011/ND-CP ( Decree 45 ) issued on 17June 2011 on the registration fees. The new provisions broaden the limitation on beneficiaries that are not subject to the registration fee, including (i) warehouse, canteen and indoor-parking areas owned by establishments of production and commerce; and (ii) houses and land inherited or received as a gift between wifehusband, parents-child/children (or post parents post child/children), parents in law- son in law/ daughter in law, grandparents nephew/ niece, sibling and is not effective within the first transaction as stipulated under the Decree 45. In addition, Decree 23 provides us with a range of percentages for first registration fees regarding cars under 10 seats, from 10 to 20% and may reach a maximum of 50%, depending on the actual conditions of each local area. However, cities observing a rate of over 15% must reduce it to 15% until a new decision of the People s Council of the City is released. The above policy is applied for vehicles registered on the certificate of quality and safety qualification and environmental qualification issued by the Vietnam register of shipping. With respect to the second onward registration fee for cars with no more than 10 seats, the percentage of the fee is 2% adopted uniformly within the country. Currently the rate of first registration fee in Ha Noi City is 15% according to Dispatch No. 8575/CT-THNVDT issued by the Taxation Bureau of Ha Noi City. 12 P a g e L E G A L A L E R T - A P R I L

13 Amendments To The Mechanisms And Policies To Support Seed, Livestock And Fisheries Products Damaged By Natural Disasters Or Epidemic On 21 March 2013, the Ministry of Finance issued Circular No. 33/2013/TT-BTC ( Circular 33 ) to amend and supplement Article 2 of Circular 187/2010/TT-BTC dated 22 November 2010 of the Ministry of Finance ( Circular 187 ) on the mechanisms and policies supporting seed, livestock and fisheries products for restoration of areas which are damaged by natural disasters and epidemic. The amendments on the Circular 33 are as follows (in comparison to Circular 187): No. Kinds of support Circular 33 Circular 187 Support for crop losses of 30% or more 1 Net area sown paddy damaged more 2,000,000 VND/ha 1,000,000 VND/ha than 70% 2 Net area sown paddy damaged from 1,000,000 VND/ha 500,000 VND/ha 30-70% 3 Plated pure rice area damaged by 20 million VND/ ha No provision more than 70% 4 Plated pure rice area damaged from 10 million VND/ ha No provision 30-70% 5 Area of hybrid rice affected by more 3,000,000 VND/ ha 3,000,000 VND/ha than 70% 6 Area of hybrid rice affected by 30-1,500,000/ha 1,500,000/ha 70% 7 Area of hybrid rice plated damaged by 30 million VND/ha No provision more than 70%, 8 Area of hybrid rice plated damaged 15 million VND/ha No provision from 30 70% 9 Area of maize and vegetables with 2,000,000 VND/ha 1,000,000 VND/ha more than 70% lost 10 Area of maize and vegetables from 1,000,000 VND/ha 500,000 VND/ha 30-70% lost 11 Area of industrial crops and perennial fruit trees damaged by more than 70% 4,000,000/ ha 2,000,000 VND/ha 13 P a g e L E G A L A L E R T - A P R I L

14 12 Area of industrial crops and perennial fruit trees damaged from 30-70% 2,000,000/ ha 1,000,000 VND/ha Support for livestock and poultry 13 Poultry VND/ poultry 7,000-15,000 VND/ poultry 14 Pigs 750,000 VND/ pig 500,000 VND/pig 15 Cattle, horses 4,000,000 VND/ cattle/ horse 2,000,000 VND/ cattle/ horse 16 Deer, elk, sheep, goats 2,000,000 VND/ deer/ elk/ sheep/ goat 1,000,000 VND/ deer/ elk/ sheep/ goat With regard to support for raising seafood, Circular 33 provides in more details the losses are separated for many kinds of seafood such as fish, shrimp and clams with different supporting amount. Otherwise, it was provided in general in Circular 187 that where the area for growing seafood is damaged by more than 70%, support from VND/ha will be provided, while for damage from 30-70%, support from VND/ ha will be provided. With regard to cages for raising seafood, under Circular 33, cages damaged by more than 70% are supported from and VND/100m 3 cage; while damages from 30-70% are supported from and VND/100m 3 cage. In Circular 187, this was 3,000,000 5,000,000 VND/100m 3 cage and 1,000,000 3,000,000 VND/100m 3 cage respectively. The policy supports crop varieties and livestock breeds and fish fry to recover production losses caused by the disaster and dangerous epidemic from 30 December Circular 33 comes into effect from the date of signing. Management And Use Of Electronic Signatures, Electronic Identification And Services Regarding Certifying Electronic Signatures Of The Ministry Of Transportation On 15 March 2013, the Ministry of Transportation rendered Decision No. 645/QD-BGTVT ( Decision 645 ) attached with regulations regarding management and use of electronic signatures and electronic identification and services regarding certifying electronic signatures of the Ministry of Transportation ( MOT ). 14 P a g e L E G A L A L E R T - A P R I L

15 Particularly, Decision 645 governs departments, organizations and their officers that all belong to the MOT (hereinafter referred to as the Subject ). Electronic signatures are certified by the organization providing services of certifying exclusive electronic signatures under the Government Committee for Cipher. Electronic identifications are granted and withdrawn by an organization providing services of certifying exclusive electronic signatures under the Government Committee for Cipher, in accordance with a procedure as stipulated in Article 7 and 8 of the regulations attached to Decision 645. The Subject will submit its application and requirements at the Department for Cipher 893, 60 Nguyen Chi Thanh, Dong Da, Ha Noi, Vietnam ( address: c893@ca.gov.vn). Decision 645 requests the Subject to accurately and fully provide all information related to electronic identification to manage and use secret locks under management status for the State s secret at Top secret level. Decision 645 also provides standard forms to be applied in the above procedures. This Circular takes effect from the date of signing. Recognition Of Test Chambers On 11 th March 2013, the Minister of Ministry of Information and Communications issued the following decisions to recognize certain test chambers: (i) Decision No. 218/QD-BTTTT to recognize the Test Chamber: UL LLC US0065 Address: 333 Pfingsten Road, Northbrook, IL USA This Decision takes effect until 31 st December (ii) Decision No. 219/QD-BTTTT to recognize the Test Chamber: TUV SUD America, Inc. US0080 Address: 1775 Old Highway 8, NW, Suite 104, New Brighton, MN USA This Decision takes effect until 30 th September P a g e L E G A L A L E R T - A P R I L

16 (iii) Decision No. 220/QD-BTTTT to recognize the Test Chamber: TUV SUD America, Inc. US0102 Address: Mesa Rim Road, San Diego, CA USA This Decision takes effect until 31 st December (iv) Decision No. 221/QD-BTTTT to recognize the Test Chamber: MET Laboratories, Inc. US0129 Address: Western Avenue, Union City, CA USA This Decision takes effect until 30 th April (v) Decision No. 222/QĐ-BTTTT to recognize the Test Chamber: TUV SUD America, Inc. US0163 Address: Oakwood Town Road, Millville, MN USA This Decision takes effect until 31 st March All of these test chambers (which have been appointed and admitted by the Standards Institute and the U.S. National Technology) meet the requirements for the recognition of testing room that were mutually agreed by the parties on the conformity assessment of telecommunications equipment to Vietnam under the Decision No. 172/2003/QD-BBCVT with the scope of recognition provided under this Decision. PHARMACY New Management Method Of Prices For Drugs Payable To The State Budget And Health Insurance On 8 th February 2013, the Ministry of Health issued Circular 06/2013/TT-BYT guiding the pilot implementation of the management of drug prices by the method of maximum wholesale surplus in whole stage (the New Method ) for drugs for which the State budget and health insurance make payment ( Circular 06 ). The application of such method will be experimented within 1 year from the effective date. The New Method is considered a tool or a technical barrier to the bid price of drugs, avoiding the fact that the drugs will be circulated through many intermediaries. In accordance with Article 3.4 of Circular 06, the maximum wholesale surplus in whole stage (the Maximum Surplus ) is the 16 P a g e L E G A L A L E R T - A P R I L

17 allowed maximum difference between the wholesale price of drugs which are supplied to stateowned medical facilities and their original values. In particularly, the difference between the proposed bidding prices of drugs containing piloted molecules in accordance with Circular 06 and the original value for calculation of surplus will not exceed the Maximum Surplus. In addition to this Circular 06, the bidding price will also comply with the provisions of the bidding prices of drugs under Joint Circular No. 01/2012/TTLT-BYT-BTC guiding drug procurement in medical facilities ( Joint Circular 01 ). The Maximum Surplus is determined based on the original price of drugs (i.e., CIF prices for imported drugs and the cost price for the domesticmanufactured drug) plus a certain percentage rate in accordance with the rule that a higher CIF price or cost price will lead to a lower Maximum Surplus. In case where the difference between the winning price, which was determined in accordance with the Joint Circular 01, and the original price exceeds the Maximum Surplus, the Head of the pilot medical unit will negotiate with contractors to ensure that the gap does not exceed the Maximum Surplus. In case the negotiations cannot be reached and such medicines are necessary for use in the medical unit, the Head of the medical unit will report to the Ministry of Health for review to ensure the sufficient supply of drugs for medical needs and treatment. The appendices attached to Circular 06 listed nine medical units that were applied with the New Method. This includes three central hospitals (Bach Mai Hospital, Cho Ray Hospital and Da Nang Hospital), three provincial hospitals (115 People's Hospital in Ho Chi Minh City, Thanh Nhan Hospital in Hanoi and Phu Tho General Hospital) and three Departments of Health (Bac Ninh, Hai Phong and Da Nang provinces). In addition, Circular 06 promulgates 12 molecules applying the New Method. These 12 selected molecules must satisfy the following four principles: (1) having high utility in medical facilities, (2) having won biddings for drugs supply in many hospitals, (3) having considerable difference in price against drugs that have the same molecules, concentration or composition, usage and form, and (4) being contained in drugs that have considerable difference between the sale price and the original price (cost price and CIF price). The Circular 06 will take effect from 1 st April P a g e L E G A L A L E R T - A P R I L

18 REAL ESTATE & HOUSING Conversion of commercial housing project into social housing or service project from 22th of april 2013 to 31st of december The Vietnamese real estate market has faced with many difficulties which have force corporations and enterprises into bankruptcy or their status of capital buried in a non-productive investment/project. Faced this issue, the Ministry of Construction issued Circular No. 02/2013/TT-BXD on 8 March 2013 guiding the adjustment of apartment structures of commercial housing projects and urban center construction investment projects and conversion of commercial housing into social housing or service project ( Circular 02 ). The new provision is deemed a solution to rescue the real estate market from current dramatic decreases. As said, Circular 02 supplies investors with the following notable contents: 1. Circular 02 allows investors to apply for a conversion of commercial housing into social housing or service projects under the following circumstances and conditions: a) Commercial housing projects and urban center construction investment project having been approved by the competent authorities but fails to perform the constructional execution, or have already performed the constructional execution but the apartment structure or the intended use of commercial housing is not consistent with the market needs/demands. b) Investors must ensure that the conversion complies with (a) the principles of adjusting a commercial apartment structure with a large area to small area, namely (i) investors must ensure the safety and convenience for users; (ii) the small apartment after being converted must have sufficient space and minimum usable areas, such as kitchen, toilet, shower, etc.; (iii) the area of the apartment after the conversion is not lower than the minimum standard of commercial housing design in accordance with the law on housing; (b) the principles of conversion of commercial housing project into social housing or service projects and adjustment of commercial housing construction, particularly as (i) the conversion of commercial housing project into social housing project must meet the standards of social housing design and the sale, lease, lease-purchase of these apartments must be in accordance with the beneficiaries as prescribed by the Law 18 P a g e L E G A L A L E R T - A P R I L

19 on Housing; (ii) the conversion of commercial housing apartment into a service project must comply with the minimum standards and the managing, operation and using of the project after the construction are in accordance with the relevant regulations issued by the competent authorities; and (iii) the investors may be refunded by the State or deducted from the financial obligations for which the investors must make payment to the State after the adjustment in case that the fees of land use right are uncharged; and (c) the investors must comply with the Decision on approval for permitting the adjustment of apartment structure or conversion of the intended use of commercial housing of the Chairman of People s Committees of centrally-affiliated provinces or cities (the People s Committee ). c) The adjustment of apartment structure and the conversion of intended use of commercial housing into social housing or service project are only made for the items of construction project and apartment (including high-rise and low-rise ones) for which the investors have not committed any capital contribution contracts and/or sale-purchase contracts with customers. In case the Investors already entered to such contracts, the adjustment and conversion as mentioned above must obtain 100% of acceptance from all of customers who signed the contracts. d) The Department of Construction in each centrally-affiliated province or city is a proposed body that will receive all dossiers relating to those conversions and adjustments. The dossiers will be examined, considered and permitted by the People s Committee. With regard to commercial housing development projects and urban center construction investment projects with a size of 500 apartments or more, before the People s Committee makes any decision on permitting the adjustment of apartment structure or conversion of intended use, it must be agreed upon by the Ministry of Construction. 2. Time duration for investors to apply for adjustment of apartment structure and/or conversion of use of project is from 22 April 2013 to 31 December The maximum duration for examination and acceptance of a normal project may not exceed 30 business days (or 55 business days for projects requiring an opinion from the Department of Construction). 19 P a g e L E G A L A L E R T - A P R I L

20 Circular 02 is considered a solution to improve profits and encourage investors to convert and/or adjust the structure and use of commercial housing. It also gives a huge benefit to beneficiaries/citizens to have a house with an acceptable price at the moment. However, the requirement of obtaining 100% acceptance from all of customers in case in the case aforesaid will cause difficulties to the investors because the percentage is hardly reached. Circular 02 will become effective from 22 April 2013 until 31 December TAX Refund Of Environmetal Protection Tax Imposed On Plastic Packages Of Pre-Packed Goods On 18 March 2013, the Ministry of Finance promulgated Circular No. 30/2013/TT-BTC on the refund of environmental protection tax on plastic packages of pre-packed goods according to the Government s Resolution No. 02/NQ-CP dated 7 January 2013 ( Circular 30 ). Circular 30 allows producers and importers to receive a refund of environmental protection tax that has been paid. Furthermore, Circular 30 will cancel all tax arrears and accrued tax fines (as a result of late payment) incurred from 1 January 2012 until the end of 14 November 2012, which will be applicable to those engaged in plastic packages of pre-packed goods, including: 1. Persons who import packages to pack the products that they produce, process, purchase, or use to provide packaging services. 2. Persons who import or produce packages and sell them to other persons in order to pack the products that the buyers produce, process, purchase or use to provide packaging services. Circular 30 is a solution of the Government to remove the difficulties faced by producers and importer operating in the plastic packaging area. It may help them overcome the current difficult economic situation. Circular 30 will take effect 45 days from the date of signing. 20 P a g e L E G A L A L E R T - A P R I L

21 Procedure For Inspection Of Tax Payment In Customs The Vietnam Customs issued Decision No. 694 /QD-TCHQ on 14 March 2013 attached with the Procedure of Inspecting Tax in the field of Customs ( the Procedure ) ( Decision 694 ), the aim of which is to formalize the tax inspectors of government authorities toward importedexported goods and to administer taxes on entities and individuals. In terms of the scope, the Procedure is applied by the Vietnam Customs and Province Customs when such organizations conduct tax inspections on objects. These objects include customs authorities and taxpayers. A tax inspection will comprise preparation, inspection and closing. At the first step, the inspectors will prepare for the inspection by: (i) collecting and exploring information on the taxpayer from the Customs database, the database of the Finance authorities, and from other relevant organizations and other sources of information; and (ii) assess, analyse and process the information. Assessments will be based on two bases: assessing the violation indication and assessing the operation of the taxpayers. Accordingly, the following will be consider a suspicion: failure to remit enough tax, tax evasion, taking advantage of tax incentives, using illegal documents and modifying documents to decrease eligible tax or increase tax incentive, indicating the incorrect value of goods for investment contribution, and using materials, equipment and machines such that it leads to a loss of tax. After completing the above step, the inspection authority will survey the taxpayer. The purpose of this step is to propose the content of the inspection. In case the custom authorities presume that the taxpayer makes a wrong custom declaration to decrease tax, the custom authorities will require the taxpayer to explain and prove his declaration. If the tax inspectors or the custom authorities does not agree with the view of the taxpayer, they will (i) issue a decision to determine tax remittance and to sanction the violation; or (ii) issue a proposal to the head of the competent authorities to conduct a tax inspection. Based on the collected information and conclusion of the analysis, the customs authorities will make plan the inspection that will be issued by the head of the competent customs authorities. The timeframe of an inspection carried by ministry-level authorities will not be longer than 45 days, which can be extended but not exceeding 70 days, while one carried out by departmentlevel authorities will be no longer than 30 days, which can be extended until 45 days. 21 P a g e L E G A L A L E R T - A P R I L

22 At the stage of conducting inspection, 15 days after the date of issuing the Inspection Decision at the latest, the team leader of the inspectors will declare the inspection objects. While conducting the inspection, the team has right to require the inspection object to provide documents, dossiers, account books and accountant reports related to the inspection. When finishing the inspection, the team leader will draft Tax Inspection Minutes to be sent to the inspection object for his explanation (if any). In case the inspection object does not agree with the contents of the draft, he can reserve his opinion which then must be included in the Tax Inspection Minutes issued later by the team leader. The inspection will be closed by a Inspection Conclusion which is issued within 15 days since the date of Inspection Report a document issued by the team leader 15 days after the date of the Tax Inspection Minutes. This Circular comes into effect from the date of signing. 22 P a g e L E G A L A L E R T - A P R I L