Decree 175 replaces Decree 15 on the management of construction projects in Vietnam

Decree 175 replaces Decree 15 on the management of construction projects in Vietnam

On December 30, 2024, the Government of Vietnam issued Decree 175/2024/ND-CP detailing some regulations and measures for implementing the Construction Law 2014 concerning the management of construction activities. This Decree replaces Decree 15/2021/ND-CP dated March 3, 2021, from the Government of Vietnam, which previously detailed some aspects of construction investment project management.

Below are some new points in Decree 175 replacing Decree 15 concerning the management of construction projects:

(1) Strong Decentralization of Construction Activity Management Authority

Decree 175/2024/ND-CP implements Conclusion No. 97-KL/TW from the 10th Central Committee Meeting, emphasizing more decentralization and the principle: "local decisions, local action, local responsibility." Accordingly:

- Issuance of construction activity certificates and practicing certificates:

+ The full authority for issuing certificates of construction activity and class 1 practice certificates is transferred to the local level.

+ The requirement for practice certificates in some fields that are no longer necessary is eliminated.

- Authority for appraising feasibility study reports for construction investments, designs following basic design, and inspection of acceptance testing work:

+ Local authorities are responsible for appraisal and inspection of acceptance.

+ Ministries managing specialized fields only appraise structures of special classes, complex structures, or those without standard regulations or standards.

- Reduction of administrative procedures:

+ Increase the project investment level that only requires an Economic - Technical Report from 15 billion to 20 billion VND.

+ Add maintenance projects, subgroup C upkeep, to the list requiring only an Economic - Technical Report, without appraisal from the state management agency.

+ Minimize instances of design adjustments requiring project adjustment.

(2) Simplification of Administrative Procedures

Decree 175/2024/ND-CP streamlines required documentation for administrative procedures; maximally omits unnecessary papers, thus shortening the time for administrative procedures. Additionally:

- Exempts the need to provide documents already available in the national database on construction and land activities.

- Eliminates overlapping management content between investment process stages.

- Combines certain fields of practice certificates that do not demand specialized expertise, such as project management and construction supervision.

- Extends the validity of practice certificates from 5 years to 10 years.

(3) Promoting Digital Transformation and Technology Application in Construction

Specifically, Decree 175/2024/ND-CP integrates information technology and digital transformation in construction management, encouraging the adoption of Building Information Modeling (BIM) systems to optimize permit and approval processes. Digitizing construction data reduces paperwork and enhances transparency.

Consequently, the construction management database system offers an opportunity to accelerate digitalization in the construction industry.

(4) Resolving Bottlenecks and Aligning with Related Legal Systems

Decree 175/2024/ND-CP clearly stipulates types of planning or equivalent legal documents used as the basis for project development while also serving as the foundation for construction permits, addressing current projects stemming from various planning under specialized law and the status of unsynchronized local planning.

The decree supplements regulations on underground works and basements in alignment with the Urban and Rural Planning Law, resolving information gaps about basements at planning levels.

It specifies the documentation, content, and criteria for appraising feasibility study reports for construction and post-basic design implementation, aligning with the Investment Law, Housing Law, forestry law, and fire protection regulations. Implementation must be clear and transparent to shorten project preparation and design time, enhancing efficiency in evaluation.

A comprehensive documentation system for legitimate land use documents as a basis for construction permits aligns with newly issued land laws and decrees.

Decree 175 replaces Decree 15 on the management of construction projects in Vietnam (Image from Internet)

Vietnam: How shall a taxpayer that has operational investment projects eligible for VAT refund prepare tax declaration dossier?

According to point d, clause 2, Article 7 of Decree 126/2020/ND-CP, regulations on VAT tax declaration dossiers are as follows:

Tax Declaration Dossier

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2. The tax declaration dossier corresponds to each type of tax, taxpayer, suits the tax calculation method, tax period (month, quarter, year, each occurrence, or settlement). In the case of the same type of tax where the taxpayer has multiple business activities, a common tax declaration dossier should be used, except for the following cases:

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c) Taxpayers who collect on behalf of state agencies must prepare a separate VAT declaration dossier for this collection activity.

d) Taxpayers with investment projects eligible for VAT refunds must prepare a separate VAT declaration dossier for each investment project; at the same time, they must offset the input VAT of goods and services used for each investment project with the output VAT (if any) of ongoing business activities within the same tax period.

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Therefore, businesses with ongoing activities and investment projects eligible for VAT refunds must prepare separate VAT declaration dossiers for each investment project.

Simultaneously, they must offset the input VAT of goods and services for each investment project with the output VAT (if any) of ongoing business activities within the same tax period.

What are cases where VAT refunds for investment projects are not allowed in Vietnam from July 1, 2025?

Based on point b, clause 2, Article 15 of the Value Added Tax Law 2024 (effective from July 1, 2025), regulations on VAT refunds are as follows:

Value Added Tax Refund

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2. Regulations on investment-related tax refunds are as follows:

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b) Business establishments are not allowed VAT refunds but can transfer uncredited VAT amounts of investment projects to the next period under the following cases:

b1) Investment projects do not meet the registered equity at the time of tax refund dossier submission; business in conditional investment sectors without meeting legal business conditions or failing to maintain sufficient business conditions during operation, except for investment projects during the investment stage, under investment law, specialized law without requiring the competent state agency's license for conditional investment sectors, or investment projects under investment law, specialized law without requiring a conditional business license;

b2) Investment projects exploit natural resources, minerals (excluding oil and gas exploration, development regulated by point a of this clause) and investment projects producing products where extracted resources and minerals are processed into different products as stipulated in clause 23 of Article 5 of this Law.

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Thus, pursuant to the above regulation, from July 1, 2025, businesses will not be eligible for VAT refunds on investment projects but may only transfer uncredited VAT to the next period for the following cases:

- Investment projects that have not met the registered capital contributions at the time of tax refund dossier submission; business in conditional sectors without meeting legal conditions, or failing to maintain sufficient conditions during their operation, excluding investment projects in the investment stage, which under investment law and specialized law, do not require a conditional business license from the state agency.

- Investment projects that exploit natural resources, minerals (excluding exploration, development projects of oil and gas as regulated by point a, clause 2, Article 15 of the Value Added Tax Law 2024) and investment projects producing products processed from extracted resources and minerals.