Lawyer in Vietnam Oliver Massmann Legal Update December 2015 1. Decree No. 99/2015/ND-CP issued by Government detailing and guiding the implementation

of a number of articles of Law on Residential Housing (“Decree 99”) Issuance date: 20 October 2015 Effective date: 10 December 2015 Decree 99 is to guide in details the house ownership; housing projects, development of commercial houses, official-duty houses, houses for resettlement; management and use of houses for resettlement, villas, condominiums; sale of old state-owned houses; transactions on residential housing; house ownership in Vietnam of foreign individuals, organizations; etc. In accordance with Decree 99, domestic individuals, organizations, households, overseas Vietnamese, foreign individuals, organizations will be granted house ownership certificates if they fully have: (i) documents proving the lawful construction of houses; and (ii) valid documents proving that they are subjects entitled to own houses in Vietnam (under

separately statutory requirements for each subject). Foreign individuals and organizations are only permitted to own houses (including condominiums, detached houses) in commercial housing construction investment projects, except for areas that need to ensure national defense and security. With respect to ownership term, first buyer will be entitled for fifty (50) year term subject to one extension of not more than fifty (50) years. Secondary buyer will enjoy the remaining terms from the former owners applicable to foreign individuals/organizations; or long term and stable use applicable to Vietnamese individuals/organizations and Vietnamese residing overseas. A foreign organization is entitled to own house with term not exceeding term indicated in investment (registration) certificate and this term will be considered for extension. In case the investment (registration) certificate does not have term then the house ownership certificate will be indicated as “non-fixed term”. In addition, the Law on Residential Housing 2014 provides a list of sources of capital for commercial residential housing projects which excludes all offshore loans (e.g. loans from offshore credit institutions). Such list also limits the sources of capital for commercial residential housing developers. Decree 99 further provides that if the developer fails to comply with the requirements under Law on Residential Housing 2014 on capital mobilization, such capital mobilization will not be enforceable and the developer (i) will be subject to administrative sanctions, and (ii) is required to make compensation to the capital contributor as well. This restriction reduces the ability of real estate developers to raise capital effectively and makes direct influences on the competitiveness of such developers. Residential housing developers must then be well-prepared for financial planning purposes.

2. Decree 118/2015/ND-CP issued by the Government guiding Law on Investment 2014 (“Decree 118”)

Issuance date: 12 November 2015 Effective date: 27 December 2015 M&A New LOI expressly addresses that foreign investors contributing capital or purchasing share/capital in a domestic enterprise are not required to obtain Investment Registration Certificate. A registration of such contribution/purchase to the licensing authority is nevertheless required under either following circumstances: (i) the business lines of the domestic enterprise fall in the conditional sectors applied to the foreign

investors. However, the checklist of conditional sectors applicable for foreign investors – which was proposed in the latest draft Decree -- is no more annexed to the official Decree.

(ii) the shareholding of the foreign investor in such domestic enterprise is 51% or more. Particularly,

registration is only required if the contribution/purchase of foreign investors cause the shareholding of foreign investors to increase (i) from below 51% to 51% or more, or (ii) any percentage if the shareholding of foreign investors are 51% or more.

Also, it is also worth noting there is another negative change in comparison with the latest draft Decree. Namely, "DPI's obligation to initially check the registration application within three (3) working days from the filling date and to get back with the only-once-challenge" has been removed. The official Decree 118 just says that DPI will issue the notification (i.e. approval) to the investor in question within 15 days from the date of receipt of a completely sufficient application. That is to say, the registration application may be subject to a number of challenges by DPI and further delay in the absence of the statutory time-frame. Investment conditions and incentives Decree 118 allows foreign investors who are not a member of WTO and invest into Vietnam to be eligible for the provisions applicable for WTO’s members, unless otherwise regulated by domestic laws and treaties. Putting that aside, towards the service lines announced on National Information Website for foreign investment and non-committed service lines licensed to conduct by investment registration agency (“IRA”) previously, the IRA will consider granting a license for Investors without ministerial-level opinions. Hence, there will be available information sources of investment conditions for the reference of the foreign investors’ own cases hereinafter: - WTO Commitment for Commercial Services of Vietnam; - National Information Website for foreign investment; - Precedents.

Principles of implementation of investment procedure Under Decree 118, the IRA does not have the right to request other dossiers not being specified in the New Law on Investment 2014 and Decree 118. It also clearly specifies that the investors have right to request information of investment list and other relevant information and the competent agencies are obliged to provide such requested information no later than five (5) days from the date of receiving the request in writing. Project transfer According to Decree 118, when a project is terminated, the enterprise conducting this project will still be maintained thanks to the separation between Investment Registration Certificate and Enterprise Registration Certificate. 3. Decree No. 108/2015/ND-CP issued by the Government detailing and guiding the

implementation of some articles of Law on Excise Tax and Law on amending, supplementing some articles of Law on Excise Tax (“Decree 108”)

Issuance date: 28 October 2015 Effective date: 1 January 2016 From 01 January 2016, gasoline of all kinds, naphtha, reformed component and other finished products will not be subject to excise tax. The votive paper being kid toys, teaching aids will also not be subject to this kind of tax. Goods being carried into zones which are permitted to apply the regulations for non-tariff zones having residents and without hard fence will be subject to excise tax. Decree 108 has detailed principles and methods of determining the excise taxable price applicable to each goods group, services group, such as imports (except for gasoline of all kinds), trading in golf, casino, etc. It is also worth noting that from 01 January 2016, taxpayers who already paid excise tax for imported excise tax-liable goods (except for gasoline) will be permitted to deduct that amount at the import stage when determining payable excise tax when selling their goods into inland. 4. Decree No. 114/2015/ND-CP issued by the Government on amending, supplementing Article

21 of Government’s Decree No. 29/2008/ND-CP regulating industrial parks, export processing zones and economic zones (“Decree 114”)

Issuance date: 9 November 2015 Effective date: 25 December 2015 Decree 114 amends, supplements some exclusive provisions applicable to export processing zones and export processing enterprises.

Export processing zones and export processing enterprises are permitted to be entitled to provisions applicable to non-tariff areas, except for the exclusive incentives applicable to non-tariff areas of border economic zones. Moreover, from 25 December 2015, export processing enterprises that are granted permits for goods trading and goods trading-related activities in Vietnam are not required to establish their own branches outside the export processing enterprises, export processing zones to conduct these activities. 5. Decree No. 115/2015/ND-CP issued by the Government detailing a number of articles of Law

on Social insurance with respect to compulsory social insurance (“Decree 115”) Issuance date: 11 November 2015 Effective date: 1 January 2016 From 01 January 2016 to 31 December 2017, the monthly salary on which social insurance premium is based includes salary and salary-based allowances as recorded in the labor contract. From 01 January 2018, the monthly salary on which social insurance premium is based includes salary, salary-based allowances and other added amounts as recorded in the labor contract. Cases of retrospective collection and retrospective payment of monthly salaries which compulsory social insurance premiums are based on comprise of the following circumstances: (i) Adjusting (i.e. increasing or decreasing) the employees’ monthly salary; and (ii) Making supplementary payment for the period of outstanding social insurance premiums of

employees who are working abroad under labor contracts. In addition, Decree 115 also guides in detail a number of regimes of compulsory social insurance entitlements such as: maternity regime for female employees as surrogate mothers and intended mothers; retirement regime; and survivorship allowance regime. 6. Decree No. 122/2015/ND-CP issued by the Government providing for region-based minimum

wage levels in 2016 for employees of enterprises, cooperative union, cooperatives, cooperative groups, farms, households, individuals and agencies and organizations employing laborers under labor contracts (“Decree 122”)

Issuance date: 14 November 2015 Effective date: 1 January 2016 The Government has increased the region-based minimum wage by around 12% in comparison with that in 2015. Accordingly, from 01 January 2016, the region-based minimum wage levels is:

Region-based minimum wage for 2016

VND/month

Region-based minimum wage for 2015

VND/month

Region I 3,500,000 3,100,000

Region II 3,100,000 2,750,000

Region III 2,700,000 2,400,000

Region IV 2,400,000 2,150,000

In addition, a "trained worker" as defined under Article 5.2 of Decree 122 is entitled to receive wage that is at least 7% higher than the minimum wage above. 7. Decree No. 124/2015/ND-CP issued by the Government on amending, supplementing a

number of articles of Government’s Decree No. 185/2013/ND-CP on administrative sanction of violations in trade activities, production of and trading in counterfeit or prohibited goods and protection of consumer’s interests (“Decree 124”)

Issuance date: 19 November 2015 Effective date: 5 January 2016 Decree 124 supplements some entities which are subject to administrative sanction of violations in trade activities, production of and trading in counterfeit or prohibited goods and protection of consumer’s interests, including: representative offices, branches of foreign traders in Vietnam; and representative offices of foreign trade promotion organizations in Vietnam. Many new acts of violations together with relevant sanctions of up to VND20,000,000 are added to the list, including but not limited to: (i) acts of restricting or hindering consumers from unilaterally terminating the already-signed

contracts within ten (10) days from the signing date of contracts in case the business organizations, individuals provide improperly, incompletely information; or

(ii) acts of forcing or requiring the consumers to pay the expenses for termination of the already-signed contracts in case of signing remote-concluded contracts.

Further, violations in the sector of e-commercial operation would be subject to a monetary sanction of up to VND50,000,000. Acts of hoarding and speculation of goods, biding of goods, services and commercial franchise with signs of competition restriction acts are subject to regulations on investigation and settlement of violation in competition sector.