Vietnam updates inc. Internal Audits, Tax Refunds and Special Collections from the Deceased …

Phuoc & Partners Legal Newsletter – February 2019
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Part 1 – Concerns

The Authors Le Quang Vy Le Quang Vy has many years of experience on intellectual property and entertainment. He is in charge of the Intellectual property and civil litigation practice. vy.le@phuoc-partners.com Tel: +84 (28) 3744 9977 Nguyen Thi Hang Before joining P&P from 2016, Ms. Hang had 05 years of experience as a Legal Assistant handling many legal cases including: real estate, bank credit, providing advice for internal issues of corporation. hang.nguyen@phuoc-partners.com Tel: +84 (28) 3744 9977

LEGAL ISSUES SURROUNDING THE COLLECTION OF A DECEASED PERSON’S SPERM

By Le Quang Vy & Nguyen Thi Hang

The case where Ms. Vong Ngoc Huyen requested the receipt of her biological son’s sperm that is being stored at Tu Du hospital for her daughter-in-law’s in-vitro fertilization has raised multiple legal issues such as: may sperm be considered an asset? Does sperm belong to moral rights and can be inherited?

Law practice in a few countries

In this day and age, the fact that a wife can use her dead husband’s sperm for in-vitro fertilization and childbirth is no longer strange. Accordingly, the laws of many countries have had to catch to govern this issue, with differing results. In the United States of America, the country of freedom, wife can receive sperm from her dead husband to become pregnant, whilst the United Kingdom it is mostly the reverse.

The American Reproductive Health Association believes that sperm collection from the deceased is only approved if the requester is a spouse or partner of a deceased person and requires a memorial time before sperm can be used. Sperm collection may be done before or after the husband dies, and for the case of sperm collection after the husband’s death, the association also allows for, if a doctor or hospital is not comfortable doing this process, the transfer of dead bodies to other hospitals for other doctors to collect the sperm. The United Kingdom however does not allow any sperm collection from the dead except with their prior written permission. In cases where sperm has been removed before death, the sperm cannot be stored for more than 10 years without any written approval for extension.

In Queensland, Australia there was a case where a woman was denied the right to collect and preserve sperm after her husband died. The reason for some countries not to allow the storage and use of the deceased’s sperm for conception is because they believe that doing so will not guarantee the interests of the child at birth and the said action is only aimed at the interests and needs of “adults” without proper attention to how it will affect any child. This in itself affects the human rights of the child to be born.

How does Vietnamese law govern these issues?

At the moment, Ms. Huyen wants to take back her son’s sperm for in-vitro fertilization of her daughter-in-law (her son and daughter-in-law only celebrated their wedding ceremony without having yet registered their marriage). Is Ms. Huyen’s request is in accordance with the law? In reference to Decree 10/2015/ND-CP stipulating the childbirth by means of in-vitro fertilization and the surrogacy for humanitarian purposes, “sperm” is defined as the male gamete, and sperm storage must be carried out as part of medical examination and treatment establishments that have performed in-vitro fertilization in order to store and preserve sperm for the implementation of in-vitro fertilization techniques. The person requesting storage will then sign a civil contract with the storage service provider (except for a donation) and pay a storage fee. In cases where a sperm depositor becomes deceased and the sperm storage establishment receives a notice attached to a copy of the legal death certificate from the depositor’s family, such depositor’s sperm must be destroyed, except for the case where such depositor’s spouse makes an application for further storage and maintains payment of the storage and preservation fee.

The wife may then use this sperm. Thus, Vietnamese law has made progress in the regulation on the use of the dead’s sperm. For Ms. Huyen’s case, although her son and her daughter-in-law actually celebrated a wedding, they had not yet been registered for marriage. Therefore, pursuant to the Law on Marriage and Family, they are not recognized by law as husband and wife. Therefore, Ms. Huyen’s daughter-in-law will not be eligible to decide on the continued storage and use of her late husband’s sperm. As regulated by law, Ms. Huyen falls out of the subjects who have the right to decide the storage and use of her son’s sperm at Tu Du Hospital.

Are sperm considered an asset to become the legacy of a deceased husband?

Article 612 of the 2015 Civil Code states that any estate includes the dead’s personal property and that which is in common possession with others. Article 105 of this Code also provides any property includes “objects, money, valuable papers and property rights”, which are movable or real property.

Like many countries in the world, the Vietnamese civil law divides assets into two categories: movable property and real property. As aforesaid, Decree 10/2015 defines sperm as men’s gametes, so are sperm considered an asset as stipulated by the Civil Code? If a person’s right to assets encompasses his obligations and rights (object related rights, man related rights, cognitive rights), then sperm will indicate an asset’s unrelated right because the asset’s unrelated rights belongs to the human essence, aiming to satisfy the spiritual needs beyond an economic nature. However, if it is assumed that sperm do not belong to the moral rights, this is inaccurate because moral rights are not transferrable – not allowed to buy, sell, give, or inherit (except for cases where any

heirs have the right to protect the honour, dignity, prestige and integrity of the deceased’s works). Meanwhile, the law does not ban men from giving their sperm or a man has the right to leave his will giving sperm for his wife’s use.

Thus, from the perspective of legal science, sperm is not an asset, but may be viewed as a non-asset based interest whereby the subject is entitled to give or leave it in an inheritance will. However, because this is a type of rather special right concerning morality and humanity, the law needs to meet both the scientific and humane criteria.

In these days of science rapidly developing, the law is struggling to keep pace. In order to resolve the cases that happen in practice like Ms. Huyen’s said case, the law cannot be idle on these said issues. As society becomes disrupted, the law equally needs to update to provide consistency.

In our thinking, it is time for legislators to start talking about “the rights to sperm inheritance”.

Part 2 – Remarkable Regulations

NEW DECREE ON INTERNAL AUDIT

As of 22 January 2019, the Government enacted Decree No. 05/2019/ND-CP providing for internal audits in state authorities, public non- business organizations and enterprises (“Decree 05”). Decree 05 will take effect as from 01 April 2019 with some key points as follows:

Enterprises which are required to conduct internal audits

Pursuant to Decree 05, enterprises which are required to conduct internal audits include: listed companies; enterprises in which the State owns over 50% charter capital and which are parent companies operating in the model of parent company – subsidiary; state-owned enterprises which are parent companies operating in the model of parent company – subsidiary.

Enterprises other than the above which are encouraged to conduct internal audits.

Enterprises are allowed to outsource internal audits

If an enterprise falls into those which must conduct internal audits but does not have enough

human resources to conduct internal audits, it may outsource this operation to an independent audit organization qualified for providing auditing services as prescribed by law; concurrently ensure the basic principles of internal audits and the requirements to ensure compliance with them.

Many stringent regulations on internal audits

Decree 05 contains many particular regulations that enterprises must comply with when they conduct internal audits. Specifically, the regulation on principles and requirements to ensure compliance with the basic principles of internal audits; standards on capabilities and professional ethics required of internal audit personnel; auditing regulations and procedures; annual internal audit plans; role and responsibilities of the internal audit department and relevant parties.

NEW DECREE CONCERNING SCIENTIFIC AND TECHNOLOGICAL ENTERPRISES

As of 01 February 2019, the Government enacted Decree No. 13/2019/ND-CP (“Decree 13”) detailing and guiding Article 58 of the Law on Science and Technology regarding the development of scientific and technological enterprises. Decree 13 also supersedes Decrees No. 80/2007/ND-CP, 96/2010/ND-CP (amended and supplemented by Decrees No. 115/2005/ND-CP and 80/2007/ND-CP) and

Article 20 of Decree No. 95/2014/ND-CP. Accordingly Decree 13 features some key points as follows:

Specifically providing for the issuance, re-issuance, replacement, revocation and invalidation of Certificates of scientific and technological enterprises

Regarding the authority to issue Certificates of scientific and technological enterprises (“CSTE”), Decree 13, in addition to the Department of Science and Technology, grants this authority to the Agency of market, and scientific and technological enterprise development under the Ministry of Science and Technology in some cases as follows:

• Scientific and technological outcomes produced by special scientific and technological tasks; important for socio- economic development, national defence and security throughout the country; playing an important role in enhancing scientific and technological potentials of the country; solving scientific and technological issues involving many business lines, many fields, many regions, environment and health in particular; information technology – telecommunication infrastructure;
• Enterprises established by  conversion from a public scientific and technological organization which has registered its scientific and technological operations at the Ministry of Science and Technology;
• The Department of Science  and  Technology is not technically qualified to assess scientific and technological outcomes, and requests the agency of market, and scientific and technological enterprise development to consider issuing the Certificate of scientific and technological enterprises;
• Enterprises which have branches and production and business premises located in many provinces and cities under the central authority, and request the agency of market, and scientific and technological enterprise development in writing to issue the Certificate of scientific and technological enterprises.

In addition, Decree 13 also details the conditions, documents, and procedures for issuing, re- issuing, revoking and invalidating CSTEs.

Many preferential and supporting policies for scientific and technological enterprises

Scientific and technological enterprises (“STE”) are exempt from corporate income tax (“CIT”) for 04 years and enjoy a CIT reduction by 50% for the following 09 years. However, STEs will not be entitled to this incentive in the financial year when they cannot meet the condition on revenue from the products formed by scientific and technological outcomes, which must account for at least 30% of the aggregate revenue. Besides CIT, STEs are also entitled to the incentives on import and export duties regarding the operations of scientific research, technological development, and business and production activities. Furthermore, STEs are also entitled to a reduction of land and water surface leasing fees, as exempt from registration fees in registering house ownership as prescribed by law.

In addition, STEs which carry out scientific and technological duties, apply scientific and technological outcomes, produce and trade in the products formed by scientific and technological outcomes will be sponsored, receive loans with preferential interest rates or interest rate assistance, or be provided with guarantees for borrowing capital by the National Technology Innovation Fund, the scientific and technological development funds of ministries, ministerial- level agencies, governmental agencies, provinces and cities under the central authority.

Decree 13 comes into effect as from 20 March 2019.

AMENDING AND SUPPLEMENTING REGULATIONS ON NON-TAXABLE OBJECTS, PROCEDURES FOR SPECIAL CONSUMPTION TAX REFUND AND WITHHOLDING

As of 01 February 2019, the Government enacted Decree No. 14/2019/ND-CP (“Decree 14”) amending and supplementing Decree No. 108/2015/ND-CP dated 28 October 2015

detailing and guiding some articles of the Law on special consumption tax and the Law amending and supplementing some articles of the Law on special consumption tax (“Decree 108”). Accordingly, Decree 14 features some key points as follows:

Expanding the scope of objects not subject to special consumption tax

In addition to the objects not subject to special consumption tax as prescribed in Decree 108, some other objects such as airplanes used for the purposes of: pesticide spraying, fire fighting, video recording and photography, map making, national defence and security, are also included in the objects not subject to special consumption tax.

Amending and supplementing the procedures, documents, order and authority for giving refunds of special consumption tax

Decree 14 amends and supplements some regulations on the procedures, documents, order and authority for giving refunds of special consumption tax, specifically:

• The procedures, documents, order and authority for giving refunds to special consumption tax imposed on the products which are raw materials imported for producing and processing exports will be in accordance with the regulation on refunds of import duties in Article 36 of Decree No. 134/2016/ND-CP dated 01 September 2016 by the Government, which details some articles and the implementation of the Law on import and export duties and its amending and supplementing documents (if any);
• The procedures, documents, order and authority for giving refunds of special consumption tax imposed on the products which are temporarily imported for re- export will be in accordance with the regulation on refunds of import duties in Article 34 of Decree No. 134/2016/ND-CP dated 01 September 2016 by the Government, which details some articles and the implementation of the Law on import and export duties and its amending and supplementing documents (if any); and
• In addition, if the import declaration contains import duties, and special consumption tax is requested for refund, the documents for import duty refund are also the ones for special consumption tax refund.

Withholding tax for bio gasoline as special consumption goods

While preserving some basic points on tax withholding for the objects subject to special consumption tax, Decree 14 supplements and clarifies the regulation on tax withholding for bio-gasoline as an object subject to special consumption tax. Particularly:

• The amount of special consumption tax on bio-gasoline deducted in the tax declaration period will rely on the paid amount of special consumption tax on a unit of gasoline purchased in the immediately preceding tax declaration period to produce bio-gasoline.
• For enterprises which are licensed to produce bio-gasoline, the tax declaration and payment, and the withholding of special consumption tax will be performed at the local tax agency where enterprises’ headquarters are located.

The remaining amount of special consumption tax not yet deducted for the gasoline used for producing bio-gasoline (including the tax amount not yet deducted arising in the tax declaration period of January 2016) will be offset against the payable special consumption tax for other goods and services arising the period.

After the offset, if there is special consumption tax not yet deduced completely for the gasoline used for producing bio-gasoline, it will be deducted in the next period or refunded.

• Decree 14 provides details for the documents, order and authority for giving refunds of special consumption tax with respect to bio-gasoline producing and blending facilities.

Furthermore, Decree 14 also supplements the conditions for withholding special consumption tax in the situations below:

• The cases where raw materials subject to special consumption tax are imported for producing goods subject to special consumption tax, and goods subject to special consumption tax are imported; and
• The cases where raw materials are purchased directly from domestic producers.

Decree 14 enters into force as from 20 March 2019.

Part 3 – Recent Legal Update

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The contents of this update do not constitute legal advice and do not necessarily reflect the opinions of our firm or any of our attorneys or consultants. The newsletter provides general information, which may or may not be correct, complete or current at the time of reading. The content is not intended to be used as a substitute for specific legal advice or opinions. Please seek appropriate legal advice or other professional counselling for any specific issues you may have. We, Phuoc & Partners, expressly disclaim all liability relating to actions taken or not taken based on any or all contents of the newsletter.

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