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January 2024 News Summary

1. The latest law on bidding 2023 NO. 22/2023/QH15 applies in 2024


Issued by: National Assembly

Issue date: 23 June, 2023. Effective date: 01 January, 2024


The Law on Bidding 2023 is one of 08 Laws passed at the 5th Session, XV National Assembly on 23 June, 2023 to amend and supplement the following provisions:


08 types of contracts with contractors applicable from 01 January, 2024

Package contract:

  • Fixed unit price contract

  • Adjusted unit price contract

  • Timed contracts

  • Cost-plus-fee contract: (New) Cost-plus-fee contracts are applied to jobs and services that at the time of selection of the contractor there are insufficient grounds to determine the scope of work, the necessary need for elements and input costs to perform the expected works of the contract.

  • Outcome contract: (New) Contracts based on outputs are applied to jobs and services for which payment is based on the results of contract performance accepted in terms of quality, quantity and other factors. The contract must clearly state specific requirements on quantity, output quality, measures to inspect, evaluate, determine the level of satisfaction of output quality, payment deduction, regulations on price adjustment (if any) and other contents for contract performance.

  • Contract as a percentage: (New) A percentage contract can only apply to a construction insurance package where the contract value is accurately determined on the basis of the actual value of the work accepted.

  • Mixed Contracts: (New) A mixed contract is a contract that combines the above types of contracts. A mixed contract must clearly specify the scope of work applicable to each corresponding type of contract and related supplementary and adjusted contents when simultaneously applying multiple types of contracts to a work content or service.


Modification of bid guarantee in bidding dossiers


Accordingly, compared to the provisions of the Law on Bidding 2013, based on the scale and nature of each project, business investment project, specific bidding package, the bid guarantee level in the bidding dossier is amended as follows:

  • From 1% - 1.5% of the bidding package price applied to construction, installation and mixed packages with bidding packages not exceeding VND 20 billion, non-consulting goods and services procurement packages with bidding packages not exceeding VND 10 billion.

  • From 1.5% - 3% of the bidding package price applied to bidding packages that do not fall into the above cases.

  • From 0.5% - 1.5% of the total investment capital of business investment projects applied to investor selection.


Supplementing regulations on incentives in contractor selection


Accordingly, Article 10 of the Law on Bidding 2023 specifies the subjects entitled to incentives in the selection of contractors, including:

  • Goods originating in Vietnam.

  • Environmentally friendly products and services in accordance with the law on environmental protection.

  • Domestic contractors producing goods of Vietnamese origin in accordance with bidding dossiers.

  • The foreign contractor is a joint venture with a domestic contractor in which the domestic contractor undertakes 25% or more of the work value of the bidding package.

  • The domestic contractor participates in the bidding as an independent or codeshare with another domestic contractor when participating in international bidding.

  • The contractor is a micro enterprise or small enterprise in accordance with the law on supporting small and medium-sized enterprises.

  • The contractor is an innovative start-up enterprise in accordance with the law.

  • The contractor employs 25% or more of female employees; the number of employees who are war invalids and people with disabilities is 25% or more; the number of ethnic minority workers is 25% or more.


2. Resolution No. 42/2023/UBTVQH15 about continuing to reduce environmental protection taxes on petrol and oil from 1 January 2024


Issued by: The Standing Committee Of The National Assembly

Issued date: 18 December, 2023. Effective date: 01 January, 2024


The environmental protection tax for gasoline, oil, and lubricants continues to be reduced from 01 January, 2024, to 31 December, 2024, in accordance with the provisions of Resolution 42/2023/UBTVQH15 of the Standing Committee of the National Assembly passed on 18 December, 2023. The specific tax rates are as follows:

This reduction is applied equal to the reduction in 2023, which is a 50% reduction in the environmental protection tax rate on gasoline, diesel oil, fuel oil, lubricants, and grease compared to the ceiling rate in the Tax Bracket. For fuel, the environmental protection tax rate is reduced by 70% compared to the ceiling rate in the Tax Bracket. Particularly, the environmental protection tax on flight fuel is applied according to the floor rate in the Tax Bracket.


It is also stated in the Resolution that, from 01 January, 2025, the environmental protection tax on gasoline, oil, and lubricants will continue to be implemented according to the provisions in Section I, Clause 1, Article 1 of Resolution 579. /2018/UBTVQH14, specifically:


3. Decree No. 94/2023/ND-CP stipulating value adđe tax (VAT) reduction policy


Issued by: The Government. Issued date: 28 December, 2023

Effective date: From 01 January, 2024, to 30 June, 2024


On 28 December, 2023, the Government issued Decree No. 94/2023/ND-CP stipulating the VAT reduction policy according to Resolution No. 110/2023/QH15 dated 29 November, 2023 of the National Assembly. There are some notable contents as follows:


Reduce VAT for groups of goods and services currently subject to a tax rate of 10%, except for the following groups of goods and services:

  • Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products;

  • Goods and services that are subject to special consumption tax;

  • Information technology according to the law on information technology.


Accordingly, the VAT reduction for each type of goods and services is applied uniformly at all stages of import, production, processing, and commercial business.


Particularly for sold coal products (including cases where coal is exploited and then screened and classified according to a closed process before being sold) are subject to VAT reduction.


Notes:

  • Coal products included in Appendix I issued together with this Decree, at any stages other than the stage of exploitation and sale, will not be subject to VAT reduction.

  • Corporations and economic groups that carry out a closed process to sell are also subject to VAT reduction on sold coal products.

  • In cases goods and services listed in Appendixes I, II and III issued with this Decree are not subject to tax or are subject to a tax rate of 5%, they will not be subject to VAT reduction.


The VAT reduction policy this time is not different from the regulations stated in Decree 44/2023/ND-CP for the period from 01 July, 2023 to 31 December, 2023


4. Official dispatch No. 87/TCHQ-TXNK on special consumption tax on hybrid plug-in vehicles (PHEV)


Issued by: General Department of Customs

Issued date: 05 January, 2024


The General Department of Customs received Official Dispatch No. 121/2023/CV-SW dated 15 November, 2023 from Sweden Auto Co., Ltd. on the request to consider special consumption tax (SCT) on Hybrid plug-in cars (PHEV).


Regarding this issue, the General Department of Customs has issued a number of documents clearly regulating this case as follows:


  • Point 4d Clause 2 Article 2 Law No. 106/2016/QH13 amending and supplementing Clause 4 Section I Special Consumption Tax Schedule specified in Article 7 Law on Special Consumption Tax No. 27/2008/QH12:


“Hybrid plug-in vehicles, in which the proportion of gasoline used does not exceed 70% of the energy used” has a special consumption tax rate of “Equally 70% of the applicable tax rate for vehicles of the same type specified in Points 4a, 4b, 4c and 4d of the Tariff prescribed in this Article.”


  • Clause 2, Article 5 of Decree No. 108/2015/ND-CP dated 28 October, 2015 of the Government stipulates:


“Hybrid plug-in vehicles specified in Point 4d of the Special Consumption Tariff are vehicles designed according to the manufacturer's standards with the gasoline mixture ratio not exceeding 70% of the total fuel used

and vehicles that combine an electric motor with a gasoline engine have the percentage of gasoline used according to the manufacturer's standards not exceeding 70% of the energy used compared to the most economical gasoline vehicle with the same fuel consumption and the same cylinder capacity are available on the Vietnamese market.”


  • The Ministry of Finance issued Official Dispatch No. 7109/BTC-CST dated 03 June, 2010 to ministries, branches, Tax Departments and local Customs Departments on the special consumption tax policy for hybrid plug-in vehicles:


“For vehicles running on gasoline combined with electric energy, determining the percentage of gasoline used according to the manufacturer's design standards must not exceed 70% of the energy used compared to the most economical gasoline vehicle, with the same number of seats and the same cylinder capacity are available on the Vietnamese market. Enterprises importing cars and domestic automobile manufacturing and assembling enterprises are responsible for providing customs and tax authorities with the manufacturer's documents on the fuel consumption of each type of vehicle to basis for determining the special sales tax rate and take responsibility for the accuracy of the documents provided.”


Therefore, the Company needs to provide the manufacturer's documents on the fuel consumption of each type of vehicle as a basis for determining the special consumption tax rate.


5. Official dispatch No. 35/TCHQ-TXNK on value added tax on electric milk pumps for post-birth mothers


Issued by: General Department of Customs

Issued Date: 03 January, 2024


The General Department of Customs issued Official Dispatch No. 35/TCHQ-TXNK on instructions for determining VAT rates on electric breast pumps used for postpartum mothers imported by VIETLIFE Services Joint Stock Company during the period from 2018 to 2019 as follows:


In case VIETLIFE Services Joint Stock Company imports medical equipment in the period from 01 January, 2014 to 01 August, 2021, if not specifically named in the following documents:

  • Clause 8, Article 1 of Circular No. 26/2015/TT-BTC dated 27 February, 2015 of the Minister of Finance amending and supplementing Clause 11, Article 10 of Circular No. 219/2013/TT-BTC dated 31 December, 2013 of the Minister of Finance stipulating subjects applying the 5% value added tax rate.

  • Clause 5, Article 4, Circular No. 83/2014/TT-BTC dated 26 June, 2014 of the Minister of Finance guiding the implementation of value added tax according to the List of Vietnamese imported goods.

  • List of medical equipment imported under the license of the Ministry of Health issued together with Circular 24/2011/TT-BYT dated 21 June, 2011 of the Ministry of Health Must have confirmation from the Ministry of Health.


There must be confirmation from the Ministry of Health to apply the 5% VAT rate.


If not stated in the above documents and without confirmation from the Ministry of Health, the value added tax rate of 10% will apply.


Customs authorities will require businesses to declare, amend and supplement VAT at the tax rate of 10%.


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