New laws coming into effect on 1 January 2017
09:46 05/01/2017
There are seven new laws come into effect as from 1 January 2017 including Civil Code, Press Law, Law on State Budget, Law on Fees and Charges, Law on Accounting, Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law, and Law of Pharmacy. The main contents of these laws will be introduced in this article.
1. Civil Code
On 24 November 2015, the National Assembly passed the new Civil Code, a leading code governing all civil relations in the society, which will take effective and replace the current one on 1 January 2017.
Civil Code 2015 comprises 27 chapters and 689 articles. It defines 8 fundamental principles of civil law, creating a “legal corridor” to ensure that the civil rights of all citizens and legal entities as recognized by the Constitution and Law are respected, protected, and fulfilled.
These rights, however, are restricted in line with the law in necessary cases for reasons of national defense or security, social order and safety, social morality and community well-being.
Institutionalizing the Party’s Resolutions and the 2013 Constitution, the Code adds general principles on the establishment, exercise and protection of civil rights. Accordingly, individuals and legal persons may freely and voluntarily undertake or agree to the establishment, exercise, and termination of civil rights and obligations, but not against or exceeding fundamental principles of the civil law.
The 2015 Code creates a more comprehensive and specific legal mechanism to defend civil rights through competent authorities. The violation of and disputes relating to civil rights will dealt with in accordance with the law in the court or via arbitration.
Notably, the Code recognizes gender reassignments (sex change operations), which has been lauded as a progressive move, reflecting legislators’ efforts to keep up with international practices.
The change on civil transactions is also notable. Civil transactions which are not in compliance with form, e.g. not notarized when it is required so, may not invalid if one party or both parties have implemented at least two thirds of their obligations under the relevant transaction. Though, identification of such “two thirds” may require further guidance from competent authorities.
2. Press Law
The Law devotes Chapter II’s four articles to defining citizens’ rights to freedom of press and freedom of speech in the press.
Apart from entities eligible to establish press agencies under the current law, some other entities have been added, including tertiary education institutions, which are eligible to establish science journals.
To protect information sources and journalists’ professional activities, as compared with the current law, the 2016 Law states that press agencies and journalists may only reveal information sources when requested in writing by the procurator general of a People’s Procuracy or the Chief Justice of a court at provincial or higher levels for the investigation and trial of very serious criminal offenses.
To heighten the role and civic responsibilities of journalists, in addition to provisions on journalists’ rights and obligations, the Law says that the Vietnam Journalists Association must issue and implement regulations on professional ethics of journalists.
New stricter stipulations on publishing corrections are also included as a means to protect the lawful rights and interests of agencies, organizations and individuals.
3. Law on State Budget
The new Law on State Budget, passed by the National Assembly on 25 June 2015, comprises 7 Chapters and 77 Articles.
This Law deals with the planning, implementation, audit, statement, and supervision of state budget; responsibilities and entitlements of agencies, organizations, units, and individuals relevant to state budget.
According to Article 7 of the Law setting out rules for state budget balancing, revenues from taxes, fees, charges, and other revenues must be transferred to state budget balance without association with any particular obligatory expenditure. If revenue must be associated with a particular obligatory expenditure, such expenditure shall be covered by the corresponding revenue in the budget estimate. The establishment of policies on collection of budget revenues must ensure midterm and long-term balance of budget as well as adherence to international integration agreements.
State budget is considered balanced if total revenue from taxes, fees, and charges is higher than total recurrent expenditure and the saving for development investment is increasing; If budget deficit still exist, the amount of deficit must be smaller than the expenditure on development investment in order to aim for balanced budget. The government shall propose special cases to the National Assembly for consideration. Budget surplus, if any, shall be sued to repay principal and interest of loans taken by the state.
State budget shall be managed in a uniform, democratic, efficient, prudent, transparent, and fair manner with decentralization of management, associated with entitlements and responsibilities of regulatory agencies at various levels. All budget expenditures and revenues must be estimated and aggregated with state budget.
Budget expenditures may only be realized after the budget estimate is approved by a competent authority; the standard, and expenditure limits imposed by competent authorities must be complied with. State budgets at various levels, budget estimate units and budget-using units must not execute obligatory expenditures before having financial sources and budget estimate, which will lead to debts on fundamental construction and funding for recurrent expenditures (Article 8).
4. Law on Fees and Charges
The Law on Fees and Charges, passed by the National Assembly in November 2015, comprises 25 Articles into 6 Chapters.
It states that 17 public service charges, including those for irrigation, road use tolls, port and station charges, vehicle inspection and securities operation, etc., which the State does not need to strictly manage will be shift to State-regulated pricing mechanism. The new mechanism aims to encourage participation of non-state service providers so as to reduce service costs and improve service quality.
This Law takes effect from 1 January 2017. The following regulations shall be amended or annulled:
a) Clause 3, Article 75 of the Law on Inland Waterway Navigation No. 23/2004/QH11 which was amended and supplemented according to the Law No. 48/2014/QH13;
b) Point a, Clause 2, Article 74 of the Law on Railway No. 35/2005/QH11;
c) Phrases admission fee in Articles 101 and 105 of the Law on Education No. 38/2005/QH11 which was amended and supplemented according to the Law No. 44/2009/QH12, Articles 64, 65 of the Law on Higher Education No. 08/2012/QH1, Articles 28 and 29 of the Law on Vocational Education No. 74/2014/QH13;
d) Clause 4, Article 18 of the Law on Health insurance No. 25/2008/QH12 which was amended or supplemented according to the Law No. 46/2014/QH13;
dd) Article 25 and Clause 3, Article 15 of the Law on Independent audit No. 67/2011/QH12;
e) Chapter IV – A on license tax as prescribed in the Standing committee of the National Assembly’s Resolution No. 200/NQ-TVQH dated 18 January 1966 defining trade and industry tax on cooperatives, cooperative organizations and individual business households amended and supplemented according to Ordinance No. 10-LCT/HDNN7 dated 26 February 1983 amending and supplementing a number of articles of trade and industry tax, Ordinance dated 17 November 1987 amending and supplementing a number of articles on trade and industry tax and regulations on commodity tax, Ordinance dated 3 March 1989.
5. Law on Accounting
The revised Accounting Law, with 74 articles and six chapters, was adopted by the National Assembly on 20 November 2015 with a majority of votes. New Law takes effect from 1 Jan 2017 and replaces Accounting Law No.03/2003/QH11. Accordingly, there are supplemented points worth noting as follows:
- Monetary items denominated in foreign currencies, assets or liabilities which have frequent volatility and financial instruments as required by accounting standards must be assessed and recorded at fair value at the end of the financial reporting period;
- The Provincial People's Committees shall decide on the accounting examination of accounting units in the localities under their management; examination time must not exceed 10 days;
- The contents of internal control and internal audit for the first time are specified in the Accounting Law;
- There is a whole chapter giving detailed regulations on accounting services business (from Article 57 to Article 70).
Notably, in accordance with the Law on Accounting 2015, assets and liabilities are initially recognized at cost. Subsequent to initial recognition, those assets and liabilities whose values frequently fluctuate following market prices and can be reliably measured shall be stated at fair value at the end of the financial reporting period. This is a fundamental difference from the Law on Accounting 2003 which provides that assets are stated at cost and an accounting entity is not allowed to revalue its assets unless otherwise stipulated by other laws and regulations.
The Law on Accounting 2015 defines fair value as the value determined in line with market price, which would be received from selling an asset or paid to transfer a liability at the measurement dates.
The Law on Accounting 2015 also provides categories of assets and liabilities that are measured and recognized at fair value at the end of the financial reporting period including: financial instruments that are required by accounting standards to be measured and recognized at fair value; monetary items denominated in foreign currencies translated at actual exchange rates; and other assets and liabilities whose values fluctuate regularly, which are required to be re-measured at fair value in accordance with accounting standards. According to the Law on Accounting 2015, revaluation of assets and liabilities at fair value must be supported by a verifiable basis. Where there is no basis to determine fair value reliably, the assets and liabilities shall be recognized at cost. The Law on Accounting 2015 also provides that the Ministry of Finance shall specifically stipulate which assets and liabilities are measured and recognized at fair value and the accounting methods of recognition and measurement at fair value.
6. Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law
The Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law was adopted at the 2nd session of the 14th National Assembly.
The Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law abolished 20 conditional business lines to provide favorable conditions for people and businesses. It added 15 others that meet new requirements of State management of investment and business activities.
The law will become effective on 1 January 2017, except for regulations on the business of disguised devices and software to record sounds and images and those on the production, assembly and import of automobiles, which will come into effect on 1 July 2017.
7. Law of Pharmacy
The Law on Pharmacy, with 116 Articles arranged in 14 Chapters, introduces drug price management principles in line with market mechanisms, respecting the businesses’ right of self-valuation, which is expected to ensure transparency. The government will only intervene to stabilize the prices of essential medicines during abnormal price fluctuations that may have adverse socio-economic impacts.
The Law also contains provisions that prioritize domestically-produced medicines in procurements using State capital, for health insurance, and for diagnostic and treatment fees collected by public health agencies.
The Ministry of Health will also be given more responsibilities for developing drug production, both western and traditional herbal medicines.
The new law also eliminates the need for five-year clinical trials before circulation of a drug, if the producer provides sufficient clinical data on safety and efficiency and the drug has been circulated at least in one country. This will help patients gain faster access to new drugs./.
On 24 November 2015, the National Assembly passed the new Civil Code, a leading code governing all civil relations in the society, which will take effective and replace the current one on 1 January 2017.
Civil Code 2015 comprises 27 chapters and 689 articles. It defines 8 fundamental principles of civil law, creating a “legal corridor” to ensure that the civil rights of all citizens and legal entities as recognized by the Constitution and Law are respected, protected, and fulfilled.
These rights, however, are restricted in line with the law in necessary cases for reasons of national defense or security, social order and safety, social morality and community well-being.
Institutionalizing the Party’s Resolutions and the 2013 Constitution, the Code adds general principles on the establishment, exercise and protection of civil rights. Accordingly, individuals and legal persons may freely and voluntarily undertake or agree to the establishment, exercise, and termination of civil rights and obligations, but not against or exceeding fundamental principles of the civil law.
The 2015 Code creates a more comprehensive and specific legal mechanism to defend civil rights through competent authorities. The violation of and disputes relating to civil rights will dealt with in accordance with the law in the court or via arbitration.
Notably, the Code recognizes gender reassignments (sex change operations), which has been lauded as a progressive move, reflecting legislators’ efforts to keep up with international practices.
The change on civil transactions is also notable. Civil transactions which are not in compliance with form, e.g. not notarized when it is required so, may not invalid if one party or both parties have implemented at least two thirds of their obligations under the relevant transaction. Though, identification of such “two thirds” may require further guidance from competent authorities.
2. Press Law
The Law devotes Chapter II’s four articles to defining citizens’ rights to freedom of press and freedom of speech in the press.
Apart from entities eligible to establish press agencies under the current law, some other entities have been added, including tertiary education institutions, which are eligible to establish science journals.
To protect information sources and journalists’ professional activities, as compared with the current law, the 2016 Law states that press agencies and journalists may only reveal information sources when requested in writing by the procurator general of a People’s Procuracy or the Chief Justice of a court at provincial or higher levels for the investigation and trial of very serious criminal offenses.
To heighten the role and civic responsibilities of journalists, in addition to provisions on journalists’ rights and obligations, the Law says that the Vietnam Journalists Association must issue and implement regulations on professional ethics of journalists.
New stricter stipulations on publishing corrections are also included as a means to protect the lawful rights and interests of agencies, organizations and individuals.
3. Law on State Budget
The new Law on State Budget, passed by the National Assembly on 25 June 2015, comprises 7 Chapters and 77 Articles.
This Law deals with the planning, implementation, audit, statement, and supervision of state budget; responsibilities and entitlements of agencies, organizations, units, and individuals relevant to state budget.
According to Article 7 of the Law setting out rules for state budget balancing, revenues from taxes, fees, charges, and other revenues must be transferred to state budget balance without association with any particular obligatory expenditure. If revenue must be associated with a particular obligatory expenditure, such expenditure shall be covered by the corresponding revenue in the budget estimate. The establishment of policies on collection of budget revenues must ensure midterm and long-term balance of budget as well as adherence to international integration agreements.
State budget is considered balanced if total revenue from taxes, fees, and charges is higher than total recurrent expenditure and the saving for development investment is increasing; If budget deficit still exist, the amount of deficit must be smaller than the expenditure on development investment in order to aim for balanced budget. The government shall propose special cases to the National Assembly for consideration. Budget surplus, if any, shall be sued to repay principal and interest of loans taken by the state.
State budget shall be managed in a uniform, democratic, efficient, prudent, transparent, and fair manner with decentralization of management, associated with entitlements and responsibilities of regulatory agencies at various levels. All budget expenditures and revenues must be estimated and aggregated with state budget.
Budget expenditures may only be realized after the budget estimate is approved by a competent authority; the standard, and expenditure limits imposed by competent authorities must be complied with. State budgets at various levels, budget estimate units and budget-using units must not execute obligatory expenditures before having financial sources and budget estimate, which will lead to debts on fundamental construction and funding for recurrent expenditures (Article 8).
4. Law on Fees and Charges
The Law on Fees and Charges, passed by the National Assembly in November 2015, comprises 25 Articles into 6 Chapters.
It states that 17 public service charges, including those for irrigation, road use tolls, port and station charges, vehicle inspection and securities operation, etc., which the State does not need to strictly manage will be shift to State-regulated pricing mechanism. The new mechanism aims to encourage participation of non-state service providers so as to reduce service costs and improve service quality.
This Law takes effect from 1 January 2017. The following regulations shall be amended or annulled:
a) Clause 3, Article 75 of the Law on Inland Waterway Navigation No. 23/2004/QH11 which was amended and supplemented according to the Law No. 48/2014/QH13;
b) Point a, Clause 2, Article 74 of the Law on Railway No. 35/2005/QH11;
c) Phrases admission fee in Articles 101 and 105 of the Law on Education No. 38/2005/QH11 which was amended and supplemented according to the Law No. 44/2009/QH12, Articles 64, 65 of the Law on Higher Education No. 08/2012/QH1, Articles 28 and 29 of the Law on Vocational Education No. 74/2014/QH13;
d) Clause 4, Article 18 of the Law on Health insurance No. 25/2008/QH12 which was amended or supplemented according to the Law No. 46/2014/QH13;
dd) Article 25 and Clause 3, Article 15 of the Law on Independent audit No. 67/2011/QH12;
e) Chapter IV – A on license tax as prescribed in the Standing committee of the National Assembly’s Resolution No. 200/NQ-TVQH dated 18 January 1966 defining trade and industry tax on cooperatives, cooperative organizations and individual business households amended and supplemented according to Ordinance No. 10-LCT/HDNN7 dated 26 February 1983 amending and supplementing a number of articles of trade and industry tax, Ordinance dated 17 November 1987 amending and supplementing a number of articles on trade and industry tax and regulations on commodity tax, Ordinance dated 3 March 1989.
5. Law on Accounting
The revised Accounting Law, with 74 articles and six chapters, was adopted by the National Assembly on 20 November 2015 with a majority of votes. New Law takes effect from 1 Jan 2017 and replaces Accounting Law No.03/2003/QH11. Accordingly, there are supplemented points worth noting as follows:
- Monetary items denominated in foreign currencies, assets or liabilities which have frequent volatility and financial instruments as required by accounting standards must be assessed and recorded at fair value at the end of the financial reporting period;
- The Provincial People's Committees shall decide on the accounting examination of accounting units in the localities under their management; examination time must not exceed 10 days;
- The contents of internal control and internal audit for the first time are specified in the Accounting Law;
- There is a whole chapter giving detailed regulations on accounting services business (from Article 57 to Article 70).
Notably, in accordance with the Law on Accounting 2015, assets and liabilities are initially recognized at cost. Subsequent to initial recognition, those assets and liabilities whose values frequently fluctuate following market prices and can be reliably measured shall be stated at fair value at the end of the financial reporting period. This is a fundamental difference from the Law on Accounting 2003 which provides that assets are stated at cost and an accounting entity is not allowed to revalue its assets unless otherwise stipulated by other laws and regulations.
The Law on Accounting 2015 defines fair value as the value determined in line with market price, which would be received from selling an asset or paid to transfer a liability at the measurement dates.
The Law on Accounting 2015 also provides categories of assets and liabilities that are measured and recognized at fair value at the end of the financial reporting period including: financial instruments that are required by accounting standards to be measured and recognized at fair value; monetary items denominated in foreign currencies translated at actual exchange rates; and other assets and liabilities whose values fluctuate regularly, which are required to be re-measured at fair value in accordance with accounting standards. According to the Law on Accounting 2015, revaluation of assets and liabilities at fair value must be supported by a verifiable basis. Where there is no basis to determine fair value reliably, the assets and liabilities shall be recognized at cost. The Law on Accounting 2015 also provides that the Ministry of Finance shall specifically stipulate which assets and liabilities are measured and recognized at fair value and the accounting methods of recognition and measurement at fair value.
6. Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law
The Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law was adopted at the 2nd session of the 14th National Assembly.
The Law on Amendments and Supplements to Article 6 and Appendix 4 on the list of conditional business lines of the Investment Law abolished 20 conditional business lines to provide favorable conditions for people and businesses. It added 15 others that meet new requirements of State management of investment and business activities.
The law will become effective on 1 January 2017, except for regulations on the business of disguised devices and software to record sounds and images and those on the production, assembly and import of automobiles, which will come into effect on 1 July 2017.
7. Law of Pharmacy
The Law on Pharmacy, with 116 Articles arranged in 14 Chapters, introduces drug price management principles in line with market mechanisms, respecting the businesses’ right of self-valuation, which is expected to ensure transparency. The government will only intervene to stabilize the prices of essential medicines during abnormal price fluctuations that may have adverse socio-economic impacts.
The Law also contains provisions that prioritize domestically-produced medicines in procurements using State capital, for health insurance, and for diagnostic and treatment fees collected by public health agencies.
The Ministry of Health will also be given more responsibilities for developing drug production, both western and traditional herbal medicines.
The new law also eliminates the need for five-year clinical trials before circulation of a drug, if the producer provides sufficient clinical data on safety and efficiency and the drug has been circulated at least in one country. This will help patients gain faster access to new drugs./.