The Week in Brief: 7 June 2021
Welcome to the latest edition of our regular legal update from the A&P Vietnam office. This week, we highlight new regulations on the tariff elimination schedule for the UK-Vietnam Free Trade Agreement, a new Decree on environmental impact assessments, and new rules on handling ‘risky’ debt. To learn more about one of these changes, just contact our office for more information.
Tariff Elimination Schedules Published for UK-Vietnam Free Trade Agreement
Following the United Kingdom’s decision to leave the European Union – better known as “Brexit” – the UK government began negotiating free trade agreements with markets around the world. Some of the earliest agreements were with countries who had signed free trade deals with the European Union, since much of the text could be “rolled-over” into a new, bilateral agreement.
In this light, the UK and Vietnam negotiated and signed a free trade agreement which entered into force on 1 January 2021. Like the EU-Vietnam Free Trade Agreement, the UKVFTA will also see a gradual elimination of tariffs and a mutual opening-up of markets.
In order to implement the UKVFTA, the government of Vietnam has now issued Decree No. 53/2021/ND-CP dated 21 May 2021 on Vietnam’s Preferential Export Tariff Schedule and Special Preferential Import Tariff Schedule (“Decree 53”). The Decree covers the 2021-22 period and entered into force with immediate effect. It sets out the conditions for companies to benefit from preferential import and export tariff schedules.
The conditions for preferential export tariffs include: The product must be exported to the UK; there must be evidence that this is the destination of the product in the form of a copied transportation bill, and; there must also be copies of customs declarations and their English or Vietnamese translation.
Exporters must perform their tax duties at the time of customs declaration in accordance with Decree No. 57/2020/ND-CP dated 25 May 2020. The exporter will then have a 12-month window from this date in which to submit the documents described above in order to claim the preferential tariff.
Meanwhile, the conditions for the special preferential import tariff are: The product must be listed in Annex II of Decree 53; it must be imported from the UK or Vietnam (goods imported from free trade zones to the domestic market), and; must meet the Certificate of Origin requirements outlined in the free trade agreement. Eligible products whose customs were declared from 1 January 2021 until before the effective date of Decree 53 can request a refund of the overpaid duties.
For full details of export/import tariffs and duties, please contact our team for more information.
New Regulations on Environmental Impact Assessments
From last month, organisations and individuals must conduct a preliminary assessment of the environmental impact of their projects, if those projects are listed in Annex II, Section 1 of Decree No. 40/2019/ND-CP dated 13 May 2019.
This new requirement has been outlined in a new Decree issued on 21 May 2021. Decree No. 54/2021/ND-CP on preliminary assessment of environmental impact (“Decree 54”) applies to organisations and individuals involved in investment activities, public investment activities, public-private partnerships or construction investment, or issued with an investment registration certificate (“IRC”) – unless the IRC was not required and has been issued at the request of the investor – and which fall under one of the following categories:
- Public investment projects (other than emergency public investment projects of the national target program; component projects of a project whose decisions or investment guidelines, investment preparation tasks, or planning tasks have been issued by competent authorities);
- Public-private partnership (or “PPP”) projects;
- Investment projects subject to approval for their investment policies as prescribed in the Law on Investment, and;
- Investment projects subject to the issuance or IRCs, other than those where an IRC is issued at the request of the investor.
Meanwhile, the preliminary environmental impact assessment should cover the following five aspects:
- It should assess the conformity of the project location with the national environmental protection strategy and planning, and environmental protection content in regional and provincial planning;
- It should highlight and predict major environmental impacts of the project on the basis of scale, production technology, and location;
- It should mark out sensitive environmental factors present in the project location according to the location selection methods (if applicable);
- It should analyze, assess, and select a scheme regarding scale, production technology, technology for waste treatment, the location of the project, and solutions for reducing environmental impact, and;
- It should determine notable major environmental issues and impacts during the assessment.
Decree 54 took immediate effect and nullifies Article 12 of Decree No. 40/2020/ND-CP dated 6 April 2020.
New Rules on the Handling of ‘Risky’ Debts
Starting last month, new regulations have entered into force on the handling of ‘risky debts’. Decision No. 08/2021/QD-TTg, issued on 19 May, amends and supplements a number of articles of the regulation on handling risky debts at the Bank for Social Policies (“BSP”) promulgated alongside Decision No. 50/2010/QD-TTg of the Prime Minister dated 28 July 2010.
Following Decision No. 8, BSPs will now cancel the debt of customers if all the signatories to the loan contract are unable to repay the amount borrowed despite being in the debt-freeze period (including the freezing of additional debts) and if the BSP has tried all other methods but still failed to recover the debt.
Furthermore, in case of (i) borrowers who are declared bankrupt or insolvent in accordance with the law; or (ii) debts owed to the Bank of Agriculture & Rural Development, the Bank of Industry & Trade, or the State Treasury, where BSP has already applied all measures to recover the outstanding debt but has been unsuccessful, the debt will be cancelled.
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