Resolution 43 sets out the new fiscal and monetary policies to support the Vietnamese program of socio-economic recovery and development. It contains guidance on tax reduction and exemption, steered public investment in various sectors, and monetary measures. It will have an impact on businesses and individuals.
Resolution No. 43/2022/QH15 (Resolution 43) is aimed at introducing new fiscal and monetary policies to support the Vietnamese program of socio-economic recovery and development. The Vietnamese National Assembly (NA) approved Resolution 43 with a strong majority of the votes. Resolution 43 is the consolidated product of other preparatory documents1 and comments by members of the NA.
In the aftermath of Vietnam's strict COVID lockdowns that were lifted in the final quarter of 2021, the core objective is to maintain macroeconomic stability, resilience, and adaptability of the Vietnamese economy. Resolution 43 forms an important pillar of this strategy, acknowledging that recovery policies must address urgent problems in a timely, feasible, and effective manner. At the same time, Resolution 43 stresses the importance of transparency and fairness in the application of the included measures.
Resolution 43 introduces various measures to support the recovery and development of domestic production and other business activities. The goal is to achieve a GDP growth of 6.5% to 7% in the period from 2021 to 2025 and to keep the unemployment rate in urban areas beneath 4%.
1. Fiscal and Monetary Policies
Resolution 43 relies on several core measures that are designed to immediately alleviate the struggles of commercial enterprises and stimulate domestic consumption.
1.1 Tax Exemption and Reduction
There will be a 2% rebate in Value Added Tax (VAT) during 2022 that is applicable to goods and services that are usually subject to 10% VAT. A range of special products and services are not included in this scope (e.g., the telecom sector, information technology, financial activities, banking, securities, insurance, real estate, metal, etc.).
Corporate Income Tax (CIT) can now be offset against expenditures that were made for COVID-19 prevention and control activities in Vietnam as part of the deductible expenses for the tax period 2022.
1.2 Steered Public Investment
As a part of the stimulus package introduced by Resolution 43, the State budget allocates an extra VND 176 trillion (~ USD 7.7 billion) to domestic investment, primarily in 2022 and 2023. The most important benefactors are:
Medical Sector: a maximum amount of VND 14 trillion (~USD 620 million) is committed for investment into the construction, reconstruction, renovation, and modernization of health and medical facilities and their respective workforce;
Social Security, Labour, and Employment: a maximum amount of VND 5 trillion (~USD 220 million) will be released to the Vietnam Bank for Social Policies to provide preferential loans under the program. This includes sponsoring interests in excess of 6% per year investment into job training, vocational education, job creation, and social welfare.
Enterprises, Cooperatives, and Household Businesses: VND 40 trillion (~USD 1.76 billion) are committed to sponsoring interests at 2% per year via commercial banks for a number of important sectors to aid their recovery.
Tourism: VND 0.3 trillion (~USD 13.2 million) will be given to fund the charter capital of the Vietnam Tourism Development Assistance Fund.
Infrastructure: an additional VND 113.55 trillion (~USD 5 billion) will be poured into infrastructure development in transportation, information technology, digitalisation, prevention and control of landslides, water security, adapting to climate change, and the consequences of natural disasters.
Housing: approximately VND 6.6 trillion (~USD 2.9 million) will go to support employees working in industrial zones, export processing zones, and primary economy areas.
Government guarantee for domestic bonds: Vietnamese bonds that have been issued by the Vietnam Bank for Social Policies will be guaranteed by the government up to a maximum of VND 38.4 trillion (~USD 1.7 million) for providing loans to support educational establishments, pupils and students.
To support the overall economy, Vietnam has also committed to stabilising the debt market with the below measures rooted in Resolution 43:
To conduct open market operations aimed at refinancing and directing credit institutions to reduce lending interest rates by 0.5% to 1% in 2022 and 2023.
To continue to reschedule loan repayment terms, maintaining the same debt groups, exempting and reducing loan interest for customers affected by the COVID-19 epidemic.
To use a maximum amount of VND 46 trillion (~USD 20.3 million) to import vaccines, precision medicine, and medical equipment and supplies for COVID-19 prevention.
To continue to refinance the Vietnam Bank for Social Policies to provide loans to employers to pay wages for suspension of work and restore production.
1 Statement No. 02/TTr-CP dated 2 January 2022 of the Government, Verification Report No. 604/BC-UBKT15 dated 3 January 2022 of the Committee of Economy, and Report No. 106/BC-UBTVQH15 dated 11 January 2022 of the Standing Committee of the National Assembly.
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Source: CCIPV / Leif Schneider / Huyen Pham / ACSV Legal