Issue of February 2022 – Resolution No. 43 on fiscal and monetary policies for supporting socio-economic recovery and development program

Dear Valued Clients,

In order to promptly recover and develop the economy, since January 11, 2022, the National Assembly has adopted a Resolution No. 43/2022/QH 15 (“Resolution 43”) on fiscal and monetary policies for supporting socio-economic recovery and development program containing various notable contents for enterprises. Resolution 43 becomes effective from 11/01/2022 to 01/01/2024. In this Legal Update, the significant updates of such Resolution shall be specified.

Value-added tax (VAT) cuts from 10% to 8% in 2022[1]

1. Reduce 2% of VAT in 2022 for goods and services currently subject to 10% VAT (to 8%), except for the following goods and services: telecommunication, financial activities, banking activities, securities, insurance, trading of real estate, metal, precast metal products, mining products (excluding coal mining), coke mining, refined oil, chemical products, goods and services subject to excise tax[2].

Guidelines: See at Decree 15/2022/ND-CP.

2. Allow donations and sponsors made by enterprises and organizations for COVID-19 epidemic control operation in Vietnam to be included in deductible expenses when calculating taxable corporate income for the tax period of 2022.

Increase development expenditure from state budget[3]

In the development investment part of the fiscal policies, Resolution 43 stipulates that the development expenditure increse from state budget of up to VND 176 thousand billion, focusing in 2022 and 2023, shall include:

1. Regarding medical sector: Allocate up to VND 14,000 billion to invest in new construction, renovation, upgrade, modernization of local health system, preventive medical system, regional centers for disease control, improve epidemic control capacity, produce domestic vaccine and COVID-19 medicine, etc.

2. Regarding support for enterprises, cooperatives, and household businesses:

• • Support interest rate (2%/year) of up to VND 40,000 billion via commercial institution system for important sectors, enterprises, cooperatives, and household businesses capable of repaying debt and recovering; grant loan for renovation of old apartment buildings, construction of social houses, and houses for purchase, rent, and lease
  • Grant Tourism Development Assistance Fund up to VND 300 billion in charter

3. Regarding investment in infrastructure development: Add up to VND 113,55 thousand billion to investment capital from the state budget to develop infrastructure in: traffic, information technology, digitalization, embankment of river banks, beaches, reservoir safety, adaptation to climate change, and remediation of natural disaster consequences, etc.

Support for rent[4]

Resolution 43 also specify other fiscal policies in this measure, such as:

1. Support for rent of workers having labor relations, living in rental apartments, working in industrial parks, export-processing zones, and key economic zones (use approximately VND 6,600 billion from increased central budget income and deceased central budget expenditure in 2021).

2. Increase the limit on sovereign guarantee for domestically issued bonds for VBSP by up to VND 38,4 thousand billion to grant loan in order to settle jobs; students; non-public preschools and primary schools; individuals taking loans for purchase or lease purchase of social houses, constructing new, renovating, or repair houses in accordance with policies on social

Reduce loan interest for debtors being affected by Covid-19[5]

Resolution 43 also states the task of continuing to restructure debt repayment period and maintain debt category, exempt and reduce interest for debtors being affected by COVID-19 epidemic.

At the same time, in 2022 and 2023, Resolution 43 also sets a goal of reduce loan interest by 0,5% – 1%, especially for priority sectors through implementing open market operation, refinancing, direct credit institutions.

Currently, in accordance with Article 1.2 of Circular 14/2021/TT-NHNN, the debts of whose are not capable of full payment by the deadline due to Covid-10 shall be reduced from 23/01/2021 – 30/6/2022 if the outstanding debts of such debts arise before 01/8/2021 from extend credit (except purchases of corporate bonds).

Other policies[6]

Resolution 43 also allows the adoption of other policies to focus on implementing the Program in 2022 and 2023, such as: settling difficulties in regulations on expenditure and management of Science and Technology Development Fund of enterprises; utilize approximately VND 5 thousand billion to renovate technology, incubate technology, incubate science and technology businesses, commercialize science and technology research results; decode technology; purchase equipment, machinery, and materials serving technology renovation, production, and business activities of enterprises.

As usual, we hope you find this Legal Update helpful and look forward to working with you in the upcoming time.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.

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[1] Under Article 3.1.1 of Resolution 43.

[2] Under Article 1.1 of Decree 15.

[3] Under Article 3.1.2 of Resolution 43.

[4] Under Article 3.1.3 of Resolution 43.

[5] Under Article 3.2 of Resolution 43.

[6] Under Article 3.3 of Resolution 43.