After more than eight years of discussion and negotiation, the Regional Comprehensive Economic Partnership (RCEP) was finally signed on November 15, 2020, covering 10 countries of ASEAN and another five countries with whom ASEAN has pre-existing free trade agreements: Australia, China, Japan, Korea and New Zealand. The RCEP, along with other free trade agreements that Vietnam is a part of, is expected to cement Vietnam’s status as an attractive investment destination.
The past week spotlight
Vietnam inks world’s largest trade pact RCEP
Prime Minister Nguyen Xuan Phuc (L) and Minister of Industry and Trade Tran Tuan Anh at the RCEP signing ceremony in Hanoi on November 15, 2020. Photo by VnExpress/Giang Huy.
The Regional Comprehensive Economic Partnership (RCEP) was signed by leaders of 15 Asia Pacific countries that make up 29 percent of global GDP.
The pact was signed online by leaders of 10 ASEAN member states as well as Australia, China, Japan, New Zealand and South Korea as part of the 37th ASEAN Summit chaired by Vietnam in Hanoi.
The free trade agreement (FTA) will give the Vietnamese economy advantageous access to another one-third of the world’s population, generating export growth opportunities in markets which together account for 29 percent of the world’s GDP, or about $26 trillion.
Let’s look at some other related financial and business news during the past week:
1. Vietnam to change tax, customs policy to encourage automobile industry
Developing an automobile industry is a part of the strategy to turn Vietnam into a modern and industrialized country by 2030. More preferences for the industry will be offered in the time to come.
Resolution 23-NQ/TW dated March 23, 2018 of the Party Politburo sets the goal that Vietnam would complete the task of industrialization and modernization, basically becoming a modern industrial country, and included in the ASEAN top 3.
Vietnam to change tax, customs policy to encourage automobile industry
To reach the goal, the resolution pointed out that priority should be given to some mechanical industries such as automobile, agricultural machines, construction equipment, industrial equipment, electrical equipment, and medical equipment.
2. Decree to prevent transfer pricing could inadvertently harm Vietnamese companies
On November 5, 2020, the government issued Decree 132 on guiding tax administration for enterprises engaging in related party transactions.
Decree to prevent transfer pricing could inadvertently harm Vietnamese companies
Replacing Decree 20 dated February 24, 2017, the decree 132 includes new changes: the maximum loan interest deductibility has been raised from 20 percent in the old decree to 30 percent of EBITDA (earnings before interest, taxes, depreciation, and amortization), while subjects of the exemption from the cap have been expanded.
4. Germany identifies support to ASEAN sustainable energy
The government of Germany has boosted its support to the sustainable energy programs in ASEAN through newly-launched outlook which provides in-depth analysis for the member states.
In a latest move, the sixth ASEAN Energy Outlook (AEO6), the region’s primary official source of energy information, analysis, and projections, was launched on November 19 by the ASEAN Center for Energy (ACE)’s Executive Director Dr. Nuki Agya Utama and Vietnam’s Prime Minister Nguyen Xuan Phuc.
The publication highlights deep and cohesive insights about the energy landscape, supply and consumption trends thanks to national, regional, and global perspectives.
It also underlines impacts on socio-economic development and the environment as well as efforts to enhance energy connectivity and market integration in the region to achieve energy security, accessibility, affordability, and sustainability for all.
5. Vietnam trade surplus hits US$19.5 billion in Jan-Oct
Vietnam reported an estimated trade surplus of US$2.94 billion in October, further expanding the trade surplus to US$19.5 billion in the January–October period, the General Statistics Office (GSO) has said in a monthly report.
In October, Vietnam exported goods worth an estimated US$27.26 billion, up 0.4% inter-monthly, while imports are estimated to have increased by 0.5% to US$24.32 billion.
Overall, Vietnam's trade turnover is likely to have reached US$440.09 billion in the January–October period, up 2.7% year-on-year, of which its export value amounted to US$229.79 billion, up 5% year-on-year, and imports are estimated at US$210.3 billion, up 0.3%.
6. Vietnam’s digital economy to reach $14 billion this year
Vietnam’s digital economy is expected to reach 14 billion USD in 2020, a year-on-year increase of 16 percent, and will likely reach 52 billion USD in 2025, re-accelerating to nearly 29 percent in compound annual growth rate.
According to a report from Google, Temasek and Bain & Company, in Vietnam, with its various stages of social distancing, users turned to the internet for solutions to their sudden challenges. A significant number tried new digital services: 41 percent of all digital service consumers were new (higher than the SEA average), with 94 percent of these new consumers intending to continue their behaviour post-pandemic.
Hanoi - Tax declared from e-commerce activities had been increasing, reported the General Department of Taxation.
Specifically, the total amount of tax paid by Vietnamese organisations that had signed online advertising contracts with foreign organisations and paid on behalf of those firms reached 46.86 billion VND (2 million USD) in 2016.
That amount increased to 90.48 billion VND in 2017, 151.77 billion VND in 2018 and more than 1 trillion VND last year. In the first nine months of this year, the tax paid hit 745.6 billion VND.
Hanoi – Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh attended the 31st Asia-Pacific Economic Cooperation (APEC) Ministerial Meeting held via videoconference on November 16 evening under the chair of Malaysian Minister of International Trade and Industry Mohamed Azmin Ali.
During the first session on improving trade and investment, foreign and economic ministers of APEC economies appreciated the efforts to control the COVID-19 pandemic, maintain cooperation, ensure the flows of essential goods and services, and boost regional economic linkages.
On 29 September 2021, the Ministry of Finance issued Circular 80/2021/TT-BTC (“Circular 80”) guiding the implementation of a number of articles of the Law on Tax Administration and Decree 126/2020/ND-CP (“Decree 126”).
On 17 September 2021, the Ministry of Finance issued Circular 78/2021/TT-BTC (“Circular 78”) guiding the implementation of a number of articles of the Law on Tax Administration and the Government’s Decree 123/2020/ND-CP (“Decree 123”) on invoices and documents.