Vietnam’s Support Policy to Recover Economy: Resolution 84
- In a bid to further support businesses and spur economic growth post COVID-19, the government issued Resolution 84 to reduce administration fees for several sectors.
- In addition, the government has proposed reducing corporate income tax for SMEs as well as a cut in environment protection tax on jet fuel for the aviation industry.
- The government is likely to issue further decrees and circulars guiding the implementation of Resolution 84.
As Vietnam comes out of lockdown and attempts to recover its economy, the government on May 29 issued Resolution 84/NQ-CP (Resolution 84) unveiling a number of incentives for businesses affected by the pandemic.
The Resolution includes the reduction of certain fees, as well as the easing of various regulations related to trade, industries, and foreign employees.
Reduction of fees
To help businesses affected by COVID-19, the government will temporarily reduce or suspend some fees and charges. We highlight the major points of Resolution 84 below.
A 15 percent reduction of rent for this year for land plots leased directly from the government. These will be applicable to renters making annual rent payments and those who were forced to suspend operations due to the pandemic.
The government will reduce vehicle registration fees by 50 percent until the end of 2020 for vehicles manufactured or assembled in Vietnam.
Small and medium enterprises (SMEs) loans
A 2 percent reduction of interest rates on loans distributed to eligible SMEs from the Small and Medium Enterprise Development Fund. The SME development fund was created in July 2019 by the government to support SMEs in lending and financing. Eligible SMEs can borrow directly from the fund at preferential interest rates.
Donations to address the COVID-19 pandemic will be deductible for corporate income tax purposes.
Fee exemption for the right to exploit water resources in 2020 for companies exploiting water resources for manufacturing and business activities.
Work permits and foreign staff
The government has asked the Ministry of Labor, Invalids and Social Affairs (MOLISA) to allow foreign experts, company managers, investors, and high-tech workers to be allowed to enter Vietnam while ensuring compliance with preventatives measures against the pandemic. Therefore, foreign travelers are still subject to the mandatory 14-day quarantine and monitoring by health authorities.
MOLISA has stated that work permits will be renewed for foreign experts, managers, and high skilled workers while new work permits will be issued to replace those that are not able to enter Vietnam.
The Ministry of Industry and Trade (MOIT) will facilitate and implement measures to deal with supply chain disruption and take advantage of free trade agreements. Certificates of origin (C/O) with an electronic signature or scanned C/Os will be accepted by customs authorities for clearance to help import and export companies. MOIT will also strive to unify Harmonized System (HS) codes with those of other countries including the EU. This is especially significant considering the recent ratification of the EU-Vietnam Free Trade Agreement (EVFTA).
Further implementing guidelines likely
The government has also proposed to reduce corporate income tax for SMEs by 30 percent while also reducing environment protection tax on aviation fuel by 30 percent to spur the aviation industry.
While these are positive measures, local ministries and authorities will still need to issue implementing decrees and circulars specifying exact details of Resolution 84. Nevertheless, the resolution shows that the government remains committed to help businesses affected by the pandemic and kick start Vietnam’s economy.