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The Government issued Decree No 71/2010/ND-CP on June 23, pursuant to the Law on Housing.

Decree 71 contains detailed provisions on financing of residential construction, including loan agreements with credit organisations or investment funds, or bond issues, contracts for capital contribution or investment co-operation with organisations or individuals, business co-operation contracts with real estate enterprises, and advance down payment provisions in housing purchase contracts.

A project owner defined as a Level I project owner may sign capital contribution agreements or business co-operation contracts with project owner of Level II for the purposes of transferring land or technical infrastructure.

Investors under capital contribution or business co-operation contracts may receive profits in cash or shares or receive completed residential units as agreed with the project owners. However, in-kind distribution shall apply to only investors eligible to own homes in Viet Nam and may not constitute more than 20 per cent of the total units in a project.

Decree 71 also provides that a project owner can only raise capital from organisations and individuals once the project has been approved, construction has broken ground, and a notice sent to the Department of Construction that investors were being sought.

Decree 71 takes effect on August 8, 2010, and replaces Decree No 90/2006/ND-CP.

National Assembly passes Law on Credit Institutions

The National Assembly passed the new Law on Credit Institutions on June 16, including a number of new provisions aimed at ensuring the safe and effective operation of the nation’s banking system.

The new law gives specific restrictions on ownership ratios in credit institutions. Accordingly, an individual shareholder in a credit institution is not allowed to hold a stake of more than 5 per cent, and no organisation shareholder can hold an interest greater than 15 per cent.

In a credit institution organised as a limited liability company, each member must be a legal entity as prescribed by the law of Viet Nam, and the maximum capital ownership of any member and its affiliates would not be allowed to exceed 50 per cent of capital charter.

The law no longer requires commercial banks to maintain a compulsory reserve ratio of 20 per cent of total deposits, but the State Bank of Viet Nam is empowered to set such a rate from time to time.

The law prohibits credit institutions from financing enterprises engaged in the securities business which are under the primary control of such credit institutions.

Taking effect next January 1, and replacing the 1997 law and its amendments, the new law also governs the functions, powers and organisations of bank inspectors and the oversight powers of the State Bank of Viet Nam.

Lawmakers approve new Law on Land Use Taxation

The National Assembly passed the Law on Land Use Taxation on June 17. Under the new law, the following kinds of land use rights would be subject to taxation: (i) urban and rural residential land use rights; (ii) land used for non-agricultural production, such as industrial parks, production facilities and mines; and (iii) other non-agricultural land uses for business or religious purposes, including cemeteries.

This new law specifies methods of tax calculation and provides for progressive tax rates beginning at a minimum of 0.03 per cent and rising to a maximum of 0.15 per cent.

The law will take effect on January 1, 2012, and will replace the 1994 Ordinance on Housing and Land Use Taxation and its amendments.

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