Legal News brief July 2022

1. Regional minimum wage increase of 6% as of 01/07/2022

After almost 2 years and a half disrupted by Covid-19, on 12/06/2022, the Decree No. 38/2022/ND-CP was officially approved with 6% increase of regional minimum wage, specifically as follows:

The regional minimum wage is increased by an average of 6% (equivalent to an increase from 180,000 VND – 260,000 VND) compared to the previous minimum wage under the Decree No. 90/2019/ND-CP.
At the same time, Decree No. 38 adds the regional minimum wages by hours and does not regulate the payment of wages at least 7% higher than the regional minimum wage for trained workers. However, according to the Letter No. 2086/BLĐTBXH-TLĐLĐVN dated 17/06/2022, the contents that have been implemented including the salary regime paid to employees who perform jobs or take up positions that require vocational training higher than at least 7% compared to the minimum wage are continued for execution, except for cases otherwise agreed by two parties in accordance with the labor code.

For this adjustment, the labors will be considered for salary increase in case their current salary is lower than that of regional minimum wage. In other words, this regulation will affect both employees and employers in term of increasing the costs of compulsory insurance and trade union dues. In general, this is a long-awaited increase, especially in the context Viet Nam is facing inflation pressure due to fuel hike and the consumer price index is also increase by 2.85% over the last 5 months. The wage increase will partly help to secure the livelihoods of labors.

2. Some new highlights under Decree on industrial zone management

On 28/05/2022, the Government promulgated the Resolution No. 35/2022/NĐ-CP on management of industrial zones and economic zones in replacement of the Decree No. 82/2018/ND-CP. One of the notable new points is that the decree has amended and supplemented many regulations related to planning in alignment with the Law on Planning, policies to tackle down difficulties and beef up the development of industrial zones in terms of housing and utility facilities for labors working in the industrial zones etc…We will take a look at some of highlights that you are interested in as follows:

- Labors are allowed to temporarily reside, stay in the industrial zones

Labors are allowed to temporarily reside, stay in the accommodation facilities in the industrial zones to serve production business activities of enterprises as follows:

+ For Vietnamese experts and labors: temporarily reside, stay as stipulated by the Law on residence.
+ For non-Vietnamese experts and labors: temporarily reside and stay as stipulated by the Law on entry, exit, transit and residence of foreigners in Viet Nam.

Accommodation facilities are constructed on the service land of the industrial zone, ensuring the compliance with the related law provisions, without any disturbance to the business production activities of Enterprises in the industrial zones.
While the former Decree No. 82 did not allow labors to temporarily reside, stay in the industrial zones, only foreigners (including managers, executives, experts) were allowed to temporarily reside in the enterprises in the industrial zones as stipulated by the provincial people’s committees with some certain conditions. The Decree No. 35 expands the subjects who are allowed to temporarily reside, stay in the industrial zones including Vietnamese labors, especially there are more specific regulations on accommodation facilities which are service lands of industrial zones.
Decree No. 35 officially come into effect as of 15/07/2022.

- Further tightening regulations on establishment, operation and inspection of Export Processing Enterprises in Industrial Zones and Economic Zones.

The Decree No. 35 supplements regulations on dossiers, order and procedures for establishment of export processing enterprises. Accordingly, the investors are requested to attach a commitment on the ability to meet the customs inspection and monitoring conditions for investment dossiers when performing the procedures relating to the law provisions.

After completing the construction, the export processing enterprises are requested to obtain a confirmation of satisfaction to customs inspection and monitoring conditions by the customs agency as stipulated by the law on import and export duties before official operation. In case of failure to obtain the confirmation of satisfaction to the customs inspection and monitoring conditions, the enterprises are not entitled to the tax incentives applicable to the non-tariff zones.

- Supplementing regulations on rights and obligations of Enterprises operating in the industrial zones and economic zones

In addition to general rights and obligations as stipulated by the law on investment and enterprise, the two subjects who are the enterprise performing the investment project in the industrial zone, economic zone and the industrial zone developer have the following rights and obligations related to:

- Complying with the regulations on security, order, safety assurance, occupational hygiene, work quality, environmental protection and fire and explosion prevention and fighting
- Cooperating with police forces and State management agencies with construction competence to build up a Plan for fire prevention and fighting, security and order assurance, social safety in the area.
- Reporting to the investment registration agency and State management agencies the investment project implementation status as stipulated by the law on investment.

For more detailed information, please refer to the Decree No. 35. This document comes into effect as of 15/07/2022.

3. Enterprises are requested to use electronic invoices as of 01/07/2022

Pursuant to the Article 59.1 – Decree No. 123/2020/NĐ-CP stipulating the use of electronic invoices as of 01/07/2022, the Decree will come into effect as of 01/07/2022.
As such, before 01/07/2022, the Government encourages agencies, organizations and individuals to satisfy the conditions on IT infrastructure to comply with the regulations on new electronic invoices and documents. However, all of enterprises are requested to switch to the use of electronic invoices to the end of 30/06/2022.

4. Extension of payment deadline of Value Added Tax (VAT) and Corporate Income Tax (CIT)

On 28/05/2022, the Government promulgated the Decree No. 34/2022/NĐ-CP extending the payment deadline of VAT and CIT, valid from four signing date to the end of 31/12/2022.

The extension of tax payment deadline is stipulated as follows:
- Value added tax (except for import VAT)

The incurred VAT payable (including tax amount allocated for provincial-level localities other than where the tax payer is headquartered, the tax amount to be paid each time it is incurred) of the taxable periods from 3/2022 to 5/2022 and Quarter I/2022 are subject to 06-month extension (one-month extension compared to the provisions under Decree No. 52/2021/NĐ-CP).

For the taxable periods of 6/2022 and Quarter II/2022 are subject to 05-month extension; 7/2022 taxable period is extended for 4 months; 8/2022 taxable period is extended for 03 months (similar to the Decree No. 52/2021/ND-CP).
- CIT: Temporarily-paid CIT in the first quarter, second quarter of corporate taxable income 2022 is extended for 3 months (similar to the Decree No. 52/2021/NĐ-CP ).