Lawyer in Vietnam Oliver Massmann SOLAR ROOFTOP PROJECT KEY DRIVERS

1. What are the key factors that are driving and restraining the ROOFTOP SOLAR POWER projects market in Vietnam?
In our view, following factors influence investors’ decision in investing in Rooftop Solar Power (RSP) projects in Vietnam:
• Low FIT: the proposed draft law suggests that ‘when electricity generated is higher than electricity consumed, the difference shall be purchased by the purchaser at the connection point, with the electricity tariff is 3150 VND/kWh (excluding value added tax, equivalent of 15 USDcents/kWh). Electricity tariff shall be adjusted according to the fluctuations of the exchange rate between VND/USD’.
• Lack of information on solar power: As a RSP project investment costs are relatively high, investors seek necessary information to support their investment decision. Nevertheless, there is no complete survey or complete source of information on solar energy that investors may access.
• Legal framework: The legal framework for solar power plants are under development. The MOIT is now working on a new draft decree to deal with difficulties that investors may face including application for tax incentives, import of equipment, convenient funding plans, etc.
• Other considerations such as investment costs, technology, etc.

2. Questions regarding cumulative installed capacity:
i. As of December 2013, the cumulative installed capacity for solar PV was 4 MW. What is your estimate of cumulative installed capacity till end of 2015?
The Vietnamese solar PV market is still very small with only around 4.5 MWp installed capacity at the end of 2014. Vietnam is expected to increase to around 7 MWp until 2020 and 1,500 MWp until 2030 with a respective share in renewable power generation capacity of 1.2% (by 2020) and 12.8% (by 2030). I do not have the exact number of cumulative installed capacity in 2015 but I estimate that it should have reached 5MWp.
ii. In your opinion, rooftop solar power installation accounted for how many percent of total solar PV installations? ( 2%?, 5%?)
We do not have access to any official source of latest information on specific numbers of RSP installations and total solar PV installations. Nevertheless, as noted in our answer to your Question 3 above, Vietnam has roughly 15,000 small scale PV off-grid applications, by the end of 2014. Based on such records, the rough percentage of installations of rooftop solar power installations would be 40% of the total solar PV installations (i.e. 6,000 RSP installations for solar home systems and small size PV systems for public use vs. 9,000 ground mounted PV installations for BTS, telecommunication use, public lightening systems and solar signal lights).
iii. What is the expected growth rate from 2016-2020? Is the growth rate of the industry moving in the right direction to achieve the proposed target? (if any?)
It is expected to achieve around 7 MWp until 2020 (growth rate 40% compared to 2016). Yes, the growth rate is moving in the right direction.

3. We are trying to identify the key end-users for ROOFTOP SOLAR POWER systems. What is the percentage (approx.) installed capacity among each of them: Residential, Commercial (Buildings) and Others (Car parking facilities, etc.
We do not have specific figures of RSP system’s installed capacity but according to a recent report of solar power in general, by the end of 2014, roughly 15,000 small scale PV off-grid applications with a total capacity of 3,600 kWp, the vast majority being <200 Wp of size only a few with more than 1kWp, were installed in Viet Nam. Of those, around 5,000 are solar home systems (SHS) with a size of 20-200Wp, 2,100 are telecommunication and BTS systems (300-4,000 Wp) and more than 1,000 are small size PV systems for public use such as in community centers, schools or medical centers (up to 3,000 Wp), which are deployed in rural and mountainous areas or on islands. Furthermore, around 5,000 solar signal lights (20-100 Wp) and 2,000 public lighting systems (50-250 Wp) were installed alongside streets and highways throughout the country.

4. Questions regarding cost:
i. What is the installation cost involved per kWp among different end-user segments in your country? (Residential, Commercial, Community) How is it likely to change in the future?
Residential/Community: $2,500 to 3,000 per kWp
Commercial: $4,500 per kWp
The installation costs can be reduced in future thank to increasing use of locally made products in solar power system and commitments to support including investment costs of the Government of Vietnam.
ii. What is the percentage break-up of installation costs among the various components in a ROOFTOP SOLAR POWER system? (Module, Charge controller, battery, inverter etc.)
Let take an example of a PV at the capacity of 1KWp/2KVA, the percentage of components costs exclusive of costs paid to installation of works by workers will be as follows:
Components Unit Price (USD)
Solar Panel 12 1,636
Battery 6 819
Inverter 1 410
Controller 2 367
3,232

5. What kind of solar panels are largely in demand for ROOFTOP SOLAR POWER systems (Monocrystalline/polycrystalline panels, thin film technologies)? Why? What is the average price range ($/Watt p) for these solar panels in Vietnam?
Monocrystalline/polycrystalline panels are popular in Vietnam as off-grid installed capacity in Viet Nam is dominated by smaller applications such as Solar Home Systems (SHS). Depending the quality and the brand name, the price is different. The average price is 3-5USD/Watt p.

6. How do you hear about new projects and could you please provide me with more examples of key recent projects? How these projects are funded? (banks, financial institutions, government, self-funded)
Basic information of big projects is usually published on the internet. Recently, Vietnam is going to build the first solar power project in Quang Nam with the installed capacity of 120 MW per year, invested by a domestic company Indochina Energy Industry Company Limited.

7. How many system integrators or installers are involved in installing ROOFTOP SOLAR POWER systems? Are there more local players or MNCs? What is the role of system integrator in such contracts? Who are the top 5 system integrators in Vietnam?
We assume that not more than 20 companies, most of them are local and produces components in solar cells/panels and related electronic devices (e.g. – controllers), act as integrators and/or installers. Major players including Hung Gia (Installation), Vtechco (Installation), Vu Phong (Installation), Nam Thai Ha JSC (Solar Materials Incorporated), Red Sun Solar (Solar Cells), Viet Linh AST (solar system), NICS Integration System (Installation).
We do not have specific market shares figures of biggest players in the market but are able to involve a professional market research company to do this job on your behalf.

8. Who are the top 5 competitors/ which brands of solar modules are highly popular in the ROOFTOP SOLAR POWER market?
The rooftop solar power market in Vietnam is still developing and there are not so many competitors yet. The popular names of Rooftop Solar Power Market are Red sun solar, Viet Vmicro JS, Panasonic, Megasun, IREX.

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Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

THANK YOU !

Lawyer in Vietnam Oliver Massmann EXPATS WITH DEGREES AND 3 YEARS EXPERIENCE DON’T NEED WORK PERMITS ANYMORE !

Foreigners with bachelor’s degrees and at least three years of experience working in their respective fields are no longer required to obtain work permits in Vietnam, according to a decree approved by Prime Minister Nguyen Tan Dung, IF they work in Vietnam for less than 30 days and less than 90 days in total in a year (Decree No. 11/2016/ND-CP).

The decree contains implementation guidelines for some items related to the management of foreign employees under the Law on Employment.

Under the new decree which was released recently, the following foreign employees are exempted from work permit:
1. Capital contributing member or owner of a limited liability company;
2. Member of the board of management of a shareholding company;
3. Head of a representative office or of a project of an international organization or non-governmental organization in Vietnam;
4. Entering Vietnam for a period under three (3) months in order to offer services;
5. Entering Vietnam for a period under three (3) months in order to resolve an incident [breakdown] or technically or technologically complex situation arising and affecting, or with the risk of affecting production or business with which Vietnamese experts or foreign experts currently in Vietnam are unable to deal;
6. A foreign lawyer issued with a certificate to practice law in Vietnam in accordance with the law on lawyers;
7. A student studying in Vietnam is permitted to work in Vietnam, but the employer must provide seven (7) days advance notice to the provincial State administrative authority for labour;
8. Intra-corporate transferee and within the scope of the eleven (11) services on the List of Commitments on Services of Vietnam with WTO namely business services; information services; construction services; distribution services; education services; environment services; financial services; medical health services; tourism services; culture and entertainment services; and transportation services;
9. Coming to Vietnam to provide expert and technical consultancy services or to undertake other tasks servicing the work of research, formulation, evaluation, monitoring and assessment, management and implementation of a program or project using official development aid (ODA);
10. Being issued with an operational licence in the information and press [sector] in Vietnam by the Ministry of Foreign Affairs;
11. Being appointed by a foreign agency or organization to come to Vietnam to teach or to conduct research in an international school managed by a foreign diplomatic office or organization in Vietnam, or certified by the Ministry of Education and Training to come to Vietnam to lecture or conduct research in an educational and training establishment in Vietnam;
12. Volunteers with certification from a foreign diplomatic office or international organization in Vietnam;
13. Coming to Vietnam to work as an expert, manager, executive director or technician for a working period under thirty (30) days and for a total cumulative period not exceeding ninety (90) days in any one (1) year;
14. Coming to Vietnam to implement an international agreement signed by a central or provincial level agency or organization in accordance with law;
15. A student currently studying at a school or training establishment overseas and who has an agreement on practical training at an agency, organization or enterprise in Vietnam;
16. Relations of members of a foreign representative agency in Vietnam who are working, after the Ministry of Foreign Affairs has so permitted, except where an international treaty of which Vietnam is a member contains some other provision; and
17. A person with service passport working for a State agency, political organization or socio-political organization.

The local Department of Labour, War Invalids and Social Affairs will be the in-charge authority to certify foreign employees to be exempted from work permit upon request by the employers within at least seven (7) working days from the work commencement of the foreign employees (except for employees under points (4)-(5) and (13) above.

The Decree will be in full effect from 01 April 2016.

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Please contact Oliver Massmann under omassmann@duanemorris.com in case you have questions on the above. Oliver Massmann is General Director of Duane Morris Vietnam LLC.

Rechtsanwalt in Vietnam Oliver Massmann Steuerrecht Transferpreis Fusionen Übernahmen

Problembeschreibung

In einer Übernahme ist der Verrechnungspreis im Prinzip verhandelbar. Wenn jedoch der vereinbarte Preis weniger ist als der Nennwert der Stammeinlage des Verkäufers zum Stammkapital (Eigenkapital) kann die Genehmigungsbehörde das Geschaeft ablehnen und sich weigern, die Übernahme zu genehmigen. Die Übernahme kann in der Folge auch von der Steuerbehörde untersucht werden, die wiederum den Transferpreis überprüft, um sicherzustellen, dass er den “Marktpreis” oder den ‘Buchwert’ vom Eigenkapital widerspiegelt. Wenn die Steuerbehörde zu dem Schluss kommt, dass der Marktpreis oder Buchwert nicht angemessen reflektiert worden ist, kann sie einen anderen Verrechnungspreis festlegen, den sie für die Steuerverwaltungszwecke geeignet hält. Ausnahmen können für ein lokales Unternehmen gemacht werden, welche erhebliche Verluste erlitten haben. Aus unserer Sicht ist es wichtig, dass das Gesetz klarstellt, dass die Genehmigungsbehörde keine “Überprüfung” der Verrechnungspreise vornehmen kann, denn das ist „per se“ eine rein kommerzielle Angelegenheit. Dies kann nur die Steuerbehörde für Steuerzwecke tun. Es sollte klar sein, dass ein Transferpreis bestimmt nicht den Marktpreis oder Buchwert zu reflektieren hat. Dies kann kein Grund für die Genehmigungsbehörde sein, um die Übertragung zu blockieren, und die Zustimmung zum Verkauf verweigern.

Darüber hinaus schaffem unklare Steuerverbindlichkeiten immer Bedenken fuer die Anleger. Das sollte deshalb durch verbesserte Gesetze klar und eindeutig geregelt sein. Im Allgemeinen unterliegt jede Zuordnung von Kapital dem regulären Kapitalgewinnsteuersatz (dh 22% Körperschaftssteuer der Gewinn aus einer solchen Zuordnung abgeleitet), während der Verkauf von Vermögenswerten der Mehrwertsteuer unterliegt (MWST) (bei einer Standard-10 % Rate), jedenfalls in den meisten Fällen. Die Einkommensteuer der einzelnen Anbieter kann mit verschiedenen Steuersätzen zwischen 5% und 20% für Investitionen und Kapitalzuweisung abhängig von der Art des zu versteuernden Einkommens und dem Steuerzahler angesetzt werden. Der Gewinn aus dem Aktientransfer in eine Aktiengesellschaft kann auch mit 0,1% des Bruttoverkaufserlös der Steuer unterliegen.

Vietnamesische Steuervorschriften sind nicht klar und eindeutig in Bezug auf die Kapitalertragsteuer (falls vorhanden) für eine Offshore-Akquisition (das heißt Transfer zwischen Offshore-Verkäufer und Käufer der Beteiligung an einer Offshore-Zielgesellschaft, die Kapitaleinlage in einem vietnamesischen Unternehmen hält). Die vietnamesische Oberfinanzdirektion ( “GTD”) war der Ansicht, dass keine Kapitalertragsteuer Vietnams anwendbar ist, wenn die folgenden Voraussetzungen erfüllt sind: (i) der Erwerb liegt völlig ausserhalb Vietnam‘s „Offshore“, (ii) das Kapital des Offshore-Ziels und in der Onshore-Tochter bleibt intakt, (iii) das Offshore-Ziel und die Onshore-Tochtergesellschaft erhalten keine Erträge aus der Übernahme und (iv) das Anlagezertifikat der Onshore-Tochter ändert sich nicht. Zum Beispiel: Runderlass 2268 / TCT-CS der Steuerbehoerde vom 28. Juni 2012. Dies ist allerdings im Zusammenhang mit einer aktuellen Entwicklung im vietnamesischen Steuerrecht (insbesondere das Dekret 12/2015 / ND-CP Wirkung zum 1. Januar 2015) zu sehen Die Steuerbehoerde hat in einigen ihrer Erlasse kürzlich vertreten (zum Beispiel Dienstbrief 1595 / TCT-DNL des GTD vom 24. April 2015) dass Offshore-Akquisitionen auch der Wertzuwachssteuer in Vietnam unterliegen. Daraus resultiert wieder eine unklare Regelung und es ergeben sich weitere Fragen, wie diese Anwendung der vietnamesischen Kapitalertragssteuer in der Praxis umgesetzt wird.

Mögliche Gewinne / Bedenken für Vietnam
Eindeutige Regelungen zur Kapitalertragsteuer sind wichtig für die Planung der Struktur einer Fusion oder Uebernahme. Dieser Mangel an Klarheit darüber, ob Steuern anwendbar sind, wie sie anwendbar sind, und / oder die Steuersätze schafft Unklarheit bei finanziellen Verpflichtungen für Investoren.
In der Praxis sind aufgrund dieser Unklarheiten die Transaktionen in Vietnam sind oft für längere Zeit „eingefroren“. Dies wirkt sehr negativ auf den geplanten Zeitrahmen von Transaktionen aus. Es wird dann oft das Angebot zuurueckgenommen und die Transaktion gestoppt.
Darüber hinaus führen die mehrdeutigen steuer rechtlichen Rahmenbedingungen und das alleinige Ermessen der Steuerbehörden in Bezug auf die Hoehe der Steuerschulden der Parteien zu Schwierigkeiten bei der Bestimmung und nicht einschaetzbaren Risiken (zBsp. Steuerrückstände oder der Vorwurf der Steuerhinterziehung). Diese Risiken koennten alle verhindert werden:

Empfehlungen und Vorschlaege zu Loesungen:
1. Die Auslegung der Verrechnungspreise muss harmonisiert werden.
2. Es muss Eindeutigkeit und Klarheit bei Berrechnung von Steuerschulden von Fusionen und Uebernahmen geschaffen werden.
3. Das Ermessen der Behoerde muss definiert werden und es muss ein eindeutiger Ermessensrahmen festgelegt werden
Bitte zögern Sie nicht, Oliver Massmann unter omassmann@duanemorris.com zu kontaktieren, wenn Sie Fragen haben. Oliver Massmann ist der Generaldirektor von Duane Morris Vietnam LLC.
VIELEN DANK!

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