Professional Documents
Culture Documents
VIETNAM
INVESTMENT GUIDE
2016
DISCLAIMER:
The information provided in this booklet has been researched with the
utmost diligence, however laws and regulations are subject to change
and we shall not be held liable for any information provided. The
information provided herein also does not constitute or substitute
individual legal advice; we suggested that you seek individual legal
advice prior to embarking on any investment decision.
3
TABLE OF CONTENTS
LIST OF ABBREVIATIONS
No Abbreviation Interpretation
imports upon entry into force, with the remainder being liberalised over a
subsequent 10-year period. The EU customs duties will be liberalised over
a 7-year period, with the exception of agricultural products which will still
be subject to certain tariff rate quotas. EU duties on textiles will be lifted
mostly at the back-end, and textiles would be subject to strict rules of
origin. Vietnam will also eliminate almost all of its export duties. The FTA
will also create new market access opportunities in services and
investment: Vietnam has agreed to liberalise trade in financial services,
telecommunications, transport, and postal and courier services. On
investment, Vietnam will open its market to the EU, for instance by
removing or easing limitations on the manufacturing of food products and
beverages, as well as in the non-food sectors. Implementation and actual
entry into force is likely to take until mid-2017.
Trans Pacific Partnership Agreement: In October 2015, Vietnam has
concluded the Trans Pacific Partnership (TPP) Agreement that will
liberalize trade in 12 countries that represent 40 percent of the world
economy (excluding China). The common principle of the TPP is that all of
the import tariffs will be cut to zero (except for some sensitive sectors).
However, the TPP is pending approval from legislative bodies of its
members, including Australia, Brunei, Canada, Chile, Japan, Malaysia,
Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam.
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number. Shareholders are liable for debts and other property obligations
of the enterprise only within their amounts of capital contributed to the
enterprise. Shareholders may freely assign their shares to other persons,
except where there are contractual holding obligations or other specific
legal requirements. A JSC has legal entity status from the date of grant of
the enterprise registration certificate. A JSC may issue all types of shares
to raise funds and a JSC also has the right to issue bonds, convertible
bonds and others types of bonds in accordance with the law and the
company charter.
Charter Capital: The Charter capital of a JSC at the time of registration for
enterprise establishment is the total par value of the shares of different
types already registered for purchase and recorded in the company
charter. Shareholders shall make full payment for the shares they have
registered to purchase within 90 days since the date the enterprise
registration certificate is granted, unless a shorter period is provided in
the company charter or the share purchase registration contract. The
Board of Directors shall supervise and urge the full and timely payment
for the shares registered for purchase by shareholders.
Types of shares: A JSC must have ordinary shares. In addition to ordinary
shares, a JSC may have preference shares. The following applies:
- Each share of the same type must entitle its holder to the same
rights, obligations and interests.
- Ordinary shares may not be converted into preference shares.
Preference shares may be converted into ordinary shares pursuant
to a resolution of the General Meeting of Shareholders.
- Preference shares must be of the following four types: i) Voting
preference shares; ii) Dividend preference shares; iii) Redeemable
preference shares or iv) Other preference shares provided in the
company charter.
- Only organizations authorized by the Government and founding
shareholders have the right to hold voting preference shares. The
voting preference of founding shareholders must be valid for only 3
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attorney); or
- do anything which is not specifically permitted under the
representative office legislation.
Establishment requirements: A foreign company can set up a RO under
the following conditions:
- It must have obtained a certificate of incorporation in the relevant
foreign country where its head office is situated;
- The ROs parent company must have been in operation for at least
one year prior to application for a RO license; and
- The proposed operating activities of the RO are not be prohibited
by the laws of Vietnam.
License term: The license term for a RO is 5 years and can be extended.
The RO must begin to operate and submit an operation notice together
with other required documents to the competent authority within 45
days from the licensing date.
Powers of the chief representative: The chief representative of the RO
can sign contracts relating to the operation of the RO such as an office
lease, employment contracts, bank account forms for the RO and
purchasing necessary facilities for the operation of the RO, without any
authorization from the foreign business entity. There is no requirement
that the chief representative should be permanently resident in Vietnam.
A chief representative can only sign contracts, amend or supplement
contracts which have already been signed if the parent company
authorizes him to do so and the parent company must provide a written
power of attorney in respect of each transaction of signing a contract or
of amending and supplementing a contract which has already been
signed. A chief representative is not permitted to hold concurrently the
following positions: i) head of a branch in Vietnam; or ii) legal
representative of the parent foreign company who is able to sign
contracts without written power of attorney from such foreign business
entity; or iii) legal representative of a company established pursuant to
the laws of Vietnam.
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the debts of the BCC. However, foreign investors can establish executive
offices in Vietnam to perform the BCC. BCC Executive Offices shall have
a BCC seal, can open accounts, recruit personnel, sign contracts and
conduct business activities.
2.8 Public-Private Partnerships (PPPs):
Decree 15/2015/ND-CP (Decree 15), effective since April 2015, provides
a clear and consistent framework for all kinds of PPP projects and related
contracts in Vietnam. Compared to the old - fragmented - regulation of
different types of PPP contracts, Decree 15 is a major improvement for
foreign investors considering PPP projects in Vietnam. Decree 15 governs
both traditional PPP contracts and new, additional project contracts.
Decree 15 governs seven (7) traditional types of PPP contracts: i) Build
Operate Transfer (BOT); ii) Build Transfer Operate (BTO); iii) Build
Transfer (BT); iv) Build Own Operate (BOO); v) Build Transfer Lease
(BTL); vi) Build Lease Transfer (BLT) and vii) Operate Management (O
& M) contracts. Decree 15 also provides a legal framework for unsolicited
projects in which investors may propose suitable projects to the
appropriate public body / agency for consideration.
Decree 15 clarifies in detail the process for getting PPP projects approved,
with important steps such as the project proposal and feasibility studies
explained. Decree 15 also determines clearly the public/private sector
investment capital ratio, with investors equity capital contributions to be
at least 15% of the total investment capital, up to the threshold of 1500
billion VND, and at least 10% of the portion of any additional investment
capital exceeding those 1500 billion. Decree 15 further addresses tax
incentives, the right to mortgage project assets, the rights to land use, the
rules relating to the purchase of foreign currency, rights to utilize public
services and rights relating to ownership of assets.
Decree 15 finally sets out clearly where project contracts can be governed
by foreign law, namely contracts involving a foreign party and
government agency guarantee contracts. Disputes can be settled through
negotiation, conciliation, by arbitration or by the courts of Vietnam.
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3. INVESTMENT LICENSING
Vietnams Law on Investment (LOI) and Law on Enterprises (LOE),
both effective since July 1st 2015, introduce a new principle of freedom
of business, and provide both domestic Vietnamese and foreign-invested
companies with greater flexibility, both in the scope of their permitted
activities and their internal organizational structure. Under the LOI,
investors are now allowed to do any business investment that is not
explicitly prohibited or conditional. The LOI clarifies the requirements,
conditions and limitations for investment projects in Vietnam. The LOE
governs the establishment, management organization, reorganization and
dissolution of, and activities related to, enterprises, including limited
liability companies, joint stock companies, partnerships and private
enterprises. The LOE now provides a modernized governance framework
consistent with international practice, and aims at further simplifying the
rules on company formation, business registration and corporate
governance, thereby making it easier for both domestic and foreign-
owned companies to operate in Vietnam. Under the LOE, companies can
now freely choose the number of business activities and business lines
they would like to engage in, and adjust easily the scope of their business
in case operations change.
3.1 Prohibited and conditional business sectors:
The LOI sets out six (6) prohibited business lines and lists in its Appendix 4
267 conditional business lines. Even though 267 certainly sounds like a
lot, the new LOI can be regarded an improvement in that it now
summarizes and defines in its Annex 4 comprehensively all conditional
business lines, with no other additional requirements being set out in
other specialized legal documents.
Prohibited: Prohibited business lines are business lines that may harm
national security and -defense, social safety and -order, community
health, Vietnamese historical traditions, culture and customs and/or
damage or destroy natural resources and the environment. Specifically,
the Law on Investment 2014 points out six (6) prohibited business lines: i)
Trading in drugs; ii) Trading in chemicals and minerals; iii) Trading in
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project, the foreign investor may carry out additional investment projects
by either using the already established legal entity or by setting up a new
legal entity for the additional investment project.
Decree 118/2015/ND-CP detailing and guiding a number of provisions of the
Law on Investment (Decree 118), effective since 27 December 2015
contains detailed provisions regarding the issuance and amendment of IRC
and ERC. Specifically, Decree 118 provides a co-ordination mechanism for
the investment registration authority and the business registration
authority: Under its Article 24, foreign investors are permitted to submit
both investment registration and business registration dossier to one
agency - the investment registration authority - which shall afterwards
transfer the business registration dossier to the competent authority.
Moreover, the registration authorities are allowed to notify to the investors
regarding the shortcomings of the whole dossier once only. The provision
potentially prevents the practice that the investors have to amend the
dossier over and over.
Decree 118 is further supposed to simplify the investment procedure
regarding the purchase of shares, capital, and contribution of capital. In
particular, foreign investors are not required to obtain an IRC if the
investment is conducted via purchase of share, capital, and contribution of
capital. In this case, Decree 118 only obligates the economic organization
whom foreign investor invested into to adjust the list of members,
shareholders at the competent authority, except for the two following
circumstances where the purchase of shares, capital, contribution of capital
need to be registered by the investors: (i) the target company is operating in
a conditional business line for foreign investors; and (ii) the investment
result in a consequence that the foreign investor holds at least 51% of the
economic organizations charter capital.
3.3 Investment Incentives:
Investment incentives, in the form of corporate income tax (CIT) and
import tax exemptions, are granted to new investment projects based on
certain encouraged sectors, encouraged locations and the size of the
project. Business expansion projects, including those licensed or
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implemented during 2009 to 2013 which were not entitled to any CIT
incentives previously, and which now meet certain criteria, are also
entitled to CIT incentives. New investment projects and business
expansion projects do not include projects established as a result of
certain acquisitions or reorganizations. Tax incentives which are available
for investment in encouraged sectors only apply for income which directly
relates to the incentivized activities, and not to other income (e.g.
financial / interest income). Where an investment project meets various
requirements for enjoying CIT incentives, investors can choose the most
favorable incentives. Encouraged investment projects include:
- Encouraged sectors: Education, health care, sport/culture, high
technology, environmental protection, scientific research,
infrastructural development, processing of agricultural and aquatic
products, software production and renewable energy.
- Encouraged locations: Qualifying economic and high-tech zones,
certain industrial zones and difficult socio-economic areas.
Specifically, investment projects carried out in rural areas that
employ at least 500 employees.
- Large manufacturing projects: excluding those subject to special
sales tax or in the mining and natural resources sectors, with a total
investment capital of VND 6,000 billion or more, disbursed within 3
years of being licensed can also qualify for CIT incentives if the
investment projects meet at least one of the following criteria: i)
minimum revenue of VND 10,000 billion per year, starting from the
fourth year of operation at the latest; ii) More than 3,000 staff by
the fourth year of operation the latest.
- Projects with a total investment capital of at least VND 12,000
billion, disbursed within five years of being licensed, however
excluding those subject to special sales tax or in the mining or
natural resources sectors.
Further, new investment projects engaged in the production of industrial
products prioritized for development will be entitled to CIT incentives if
they belong to either of the following groups: i) Products supporting the
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to the tax exemption or reduction period for new projects in the same
area or sector qualifying for CIT incentives.
Import tax exemptions: Investment projects in sectors subject to special
investment incentives or being implemented in areas with difficult
socioeconomic conditions are entitled to receive import tax exemptions
on imported goods that constitute fixed assets and exemptions for a
period of five years from the start of production on imported materials
and components not produced in Vietnam. The same is true for
investment projects investing in hotels, resorts, amusement parks, clinics,
offices, apartments and houses (except for commercial centers, technical
services, supermarkets and golf courses). Investment projects investing
into culture, finance, banking, and insurance, audit and consulting
services, are also exempt from paying import tax for imported goods that
constitute fixed assets, but only for the first time. Projects enjoying these
exemptions cannot enjoy other import tax exemptions.
3.4 Investment Registration Procedure and Authorities:
To receive an IRC, an investor must carry out a registration procedure
based on the size and type of the project. The Law on Investment
categorizes investment projects into three types:
- Type I (small scale) Provincial Peoples Committee: The
provincial Peoples Committees have authority to decide (i)
projects to which the State allocates or leases out land without
auction, tendering or transfer (among these types of projects, those
which are implemented in an industrial zone, export processing
zone, high-tech zone or economic zone in conformity with the
approved master plan are not required to be submitted to the
provincial peoples committee for its decision on the investment
policy), ii) Projects that will require conversion of the land use
purpose, iii) Projects using technology in the list of technologies the
transfer of which is restricted in accordance with the law on
technology transfer.
- Type II (medium scale) Prime Minister: The Prime Minister has
authority to decide on Investment Projects regardless of the
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4. TAXATION
4.1 Corporate Income Tax (CIT):
CIT is levied on the taxable income of all organizations doing business in
Vietnam, including foreign invested companies, and branches and
affiliates of offshore companies licensed to operate in Vietnam. Since
January 2016, the standard CIT rate is 20%. Only enterprises operating in
the oil and gas industry will remain being subject to CIT rates ranging from
32% to 50%.
Calculation of taxable income: CIT payable is assessable income
multiplied by the CIT rate. The assessable income within any one tax
period is equal to the taxable income minus tax exempt income and
losses carried forward. The taxable income (or taxable profits) includes
business- and other income. In particular, taxable income is turnover
minus deductible expenses plus other income (including income received
from outside of Vietnam). Taxpayers are required to prepare an annual
CIT return which includes a section for making adjustments between
accounting profits and taxable profits. Taxpayers may carry forward tax
losses fully and consecutively for a maximum of five years. Losses arising
from incentivized activities can be offset against profits from non-
incentivized activities, and vice versa. Losses from the transfer of real
estate and the transfer of investment projects can be offset against
profits from other business activities.
Non-deductible expenses: Expenses which relate to revenue generation,
are properly supported by suitable documentation (including bank
transfer vouchers where the invoice value is VND 20 million or above) and
not specifically identified as being non-deductible are tax deductible.
Non-deductible expenses include:
- Employee remuneration expenses which are not actually paid, or
are not stated in a labour contract or collective labour agreement;
- Staff welfare payments exceeding a cap of one months average
salary and voluntary contributions to health insurance schemes or
pension funds exceeding VND 1 million per month per person;
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CIT payments account for less than 80% of the final CIT liability, any
shortfall in excess of 20% is subject to late payment interest (currently as
high as 18% per annum), applying from the deadline for payment of the
Quarter 4 CIT liability. Final CIT returns are filed annually. The annual CIT
return must be filed and submitted not later than 90 days from the fiscal
year end. The outstanding tax payable must be paid at the same time.
The standard tax year is the calendar year. Companies are required to
notify the tax authorities in cases where they use a tax year (i.e. fiscal
year) other than the calendar year.
Capital assignment (profit) tax: Profits resulting from the sale of capital
contributions or shares in a Vietnamese company are generally subject to
20% CIT. This is generally referred to as capital assignment (profit) tax or
capital gains tax, even though this is not a separate tax as such. The
taxable gain is determined as the excess of the sale proceeds less cost (or
the initial value of contributed charter capital for the first transfer) less
transfer expenses. Where the seller is a foreign entity, a Vietnamese
purchaser is required to withhold the tax due from the payment to the
vendor and account for this to the tax authorities. Where the purchaser is
also a foreign entity, the Vietnamese enterprise in which the interest is
transferred is responsible for the CIT administration. Where the seller is a
foreign or Vietnamese individual resident in Vietnam, the profit resulting
from the sale is taxed according to the general rules of personal income
tax (PIT).
The return and payment of the capital assignment tax, be it as CIT or PIT,
is required within 10 days from the date of official approval of the sale by
the competent authority or, where approval is not required, 10 days from
the date the parties reach contractual agreement on the sale. The tax
authority has the right to adjust the purchase price where it is not in line
with the market price or - where such market price does not exist or is
hard to determine - significantly below the companys book value.
Transfers of securities (bonds, shares of public joint stock companies, etc.)
by a foreign entity are subject to CIT on a deemed basis at 0.1% of the
total sales proceeds. Gains derived by a resident entity from the transfer
of securities are however taxed at 20%.
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0 5,000,000 5%
80,000,001 + 35%
PIT Tax Declarations and Payment: Individuals with taxable income must
obtain a tax code, and submit their tax registration file to their employer
who will subsequently submit this to the local tax office. Those who have
non-employment income are required to directly submit their tax
registration file to the district tax office of the locality where they reside.
Regarding tax declarations, the following applies:
- Employment income: For employment income, tax has to be
declared and paid provisionally on a monthly basis by the 20th day
of the following month or on a quarterly basis by the 30th day
following the reporting quarter. The amounts paid are reconciled to
the total tax liability at the year-end. An annual final tax return
must be submitted and any additional tax must be paid within 90
days of the year end. Expatriate employees are also required to
carry out a PIT finalization on termination of their Vietnamese
assignments before exiting Vietnam. Tax refunds due to excess tax
payments are only available to those who have a tax code.
- Non-employment income: The individual is required to declare and
pay PIT in relation to each type of taxable non-employment
income. The PIT regulations require income to be declared and tax
paid on a regular basis, often each time income is received.
Typically, individuals or groups of individuals deriving income from
business activities are required to file tax declarations on a
quarterly basis. If an individual has both business income and
employment income, only business income is required to be
reported in that declaration.
- Overseas income: A resident individual receiving employment
income paid from overseas must also file tax declarations. For
resident individuals deriving income arising from overseas,
employment income and business income are declared in
accordance with the rules stated above. Other types of income
(capital investment, capital transfer, transfer of real property,
royalties, franchising, winnings, inheritances and gifts) must be
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declared within ten (10) days after the date the income arises or is
received.
The Vietnamese tax year is the calendar year. However, where in the
calendar year of first arrival an individual is present in Vietnam for less
than 183 days, his/her first tax year is the 12-month period from the date
of arrival. Subsequently, the tax year is the calendar year.
4.3 Foreign Contractor Withholding Tax (FCWT):
The FCWT applies to certain payments made to foreign parties, including
interest, royalties, service fees, lease, insurance, transportation, transfers
of securities and goods supplied within Vietnam or associated with
services rendered in Vietnam. The FCWT is a combination of CIT and
Value Added Tax (VAT), and sometimes also includes PIT for payments
made to foreign individuals.
Dividends, Interest and Royalties: No FCWT or remittance tax is imposed
on profits paid to foreign shareholders. However, a withholding tax of 5%
applies to interest paid on loans from foreign entities. Interest paid on
bonds and certificates of deposit issued to foreign entities is also subject
to a 5% withholding tax. Sales of bonds and certificates of deposits are
subject to a deemed tax of 0.1% of the gross sales proceeds. A 10%
royalty withholding tax applies in the case of payments made to a foreign
party for transfers of industrial property rights. However, if the transfer of
patents, technical know-how or technology processes is used as part of
the capital contribution of a foreign-invested enterprise, there is no tax
related to the transfer.
Foreign Contractors: The FCWT applies in case of payments to foreign
contractors, i.e. in cases where a Vietnamese party (including foreign
owned companies) contracts with a foreign entity that does not have a
licensed presence in Vietnam. This FCWT generally applies to payments
received by the foreign contractor from Vietnam, except for the pure
supply of goods and services performed and consumed outside Vietnam
and various other services performed wholly outside Vietnam. However,
certain distribution arrangements where foreign entities are directly or
indirectly involved in the distribution of goods or provision of services in
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Vietnam are subject to FCWT, for example where the foreign entity
retains ownership of the goods, bears distribution, advertising or
marketing costs, is responsible for the quality of goods or services, making
pricing decisions, and/or authorizes Vietnamese entities to carry out part
of the distribution of goods or provision of services in Vietnam.
The following FCWT rates apply:
Interest Exempt 5%
Insurance Exempt 5%
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paid value of imported goods. The importer must pay VAT to the customs
authorities at the same time they pay import duties. For imported
services, VAT is levied via the FCWT mechanism. VAT payable is calculated
as the output VAT charged to customers less the input VAT suffered on
purchases of goods and services. The following VAT rates apply:
raw materials are entitled to claim a credit for the SST amount paid on
raw materials imported or purchased from domestic manufacturers.
The following SST rates apply:
Products/ services SST rate (%)
Cigar/Cigarettes
From 1 January 2016 to 31 December 2018 70
From 1 January 2019 75
Spirit/Wine
Spirit/Wine with ABV 20
55
From 1 January 2016 to 31 December 2016
60
From 1 January 2017 to 31 December 2017
65
From 1 January 2018 b)
Spirit/Wine with ABV < 20
From 1 January 2016 to 31 December 2017 30
From 1 January 2018 35
Beer
55
From 1 January 2016 to 31 December 2016
60
From 1 January 2017 to 31 December 2017
65
From 1 January 2018
Automobiles less than 24 seats 10 60
Motorcycle of cylinder capacity above 125% 20
Airplanes, boats 30
Petrol 7 10
Air-conditioners (not more than 90,000BTU) 10
Playing Cards 40
Votive Paper 70
Discotheques 40
Massage, karaoke 30
Casinos, jackpot games, 35
Entertainment with betting 30
Golf 20
Lottery 15
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violations may not only lead to severe penalties for the company in
question, but also result in criminal convictions and possible
imprisonment of the acting managers (regardless of whether or not the
manager in charge was aware of the violation).
Elements of a Basic Compliance (Anti-Corruption) Program: The
establishment of at least a basic compliance program reduces liability
risks for the company and its management. A "minimal" compliance and
integrity program in Vietnam should have the following elements:
- "Code of Conduct" / "Tone from the Top": Essential for each
compliance program is the existence and the global
implementation of a so called "Code of Conduct" (CoC), laying
out the ground values and rules for the company and all of its
employees. Most importantly, any CoC must be introduced by
the top management, and entail a clear commitment towards a
zero tolerance policy. The CoC also forms the core of the
companys corporate culture: It is made for situations where
employees must pay particular attention to responsible action,
and therefore the CoCs rules must be concrete, concise and
binding for all employees.
- Implementation of local compliance policies: As the CoC is a
fundamental document for each company, it cannot (and should
not) go into all details. Therefore, the CoC should be locally
implemented in more detail through company policies, covering
at least the following areas: Anti-corruption; dealing with
consultants and intermediaries; compliance with antitrust laws;
donations and sponsorship activities; gifts, entertainment and
invitations; data protection; prevention of money laundering
and terrorist financing; export control; economic crimes.
- Compliance Hotline, Helpdesk and regular trainings: Even after
carefully reading the companys CoC and corporate policies, an
individual employee may still not be certain about how to act in
a particular conflict situation. To help such employees, and more
importantly to make the CoC a living document, companies
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which the company has grounds to discipline its employees. ILRs must
contain at least the following:
- Working hours and rest time,
- Order at the workplace,
- Labor safety and hygiene at the workplace,
- Protection of assets and business and technology secrets and
intellectual property of the employer,
- Acts of violation of the labor rule of the employee and the forms of
labor discipline and material responsibility.
Before issuing the ILR, the Employer must consult the representative
organization of the labor collective/union. The ILRs must then be notified
to all employees and workers, and their main contents must be posted
within the company. ILRs become will be effective 15 days after the date
the provincial-level state management agency of labor receives
Employers registration dossier. In the absence of registered ILRs,
companies operating in Vietnam will find it very difficult to discipline and
particularly to dismiss employees, even in seemingly clear cases of labor
law violations.
6.3 Probationary period:
Employer and Employee may agree on a probation period. If such
probation is agreed, a probation contract may be concluded. The
permissible maximum probation duration varies as follows: i) 60 days for
work that demands a college education or similar; ii) 30 days for work
that demands vocational training / intermediate education, and for
technical workers; and iii) Six working days for other kinds of work. The
Employees salary during the probation period must be at least 85% of the
official later salary. If the probation is successfully passed, the Employer
must conclude the labor contract with the Employee. During the
probation period, each party is entitled to terminate the probation
without prior notice and without compensation if the probation fails to
satisfy the requirements agreed by both parties.
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6.7 Retrenchment:
A company may retrench its employees where there is an organizational
restructuring or technological change, including i) partial or complete
changes of machinery or equipment or replacement by advanced
technological process in order to achieve increased capacity; ii) changes
of product lines or structure of products leading to a reduction in the
number of employees required; or iii) merger or dissolution of a number
of departments within the company. Where one of the above
circumstances arises, which results in the redundancy of an employee
who has worked for the company for 12 months or more, the Labor Code
requires the company to retrain the affected employee and to assign
him/her to a new job that may be available at the company. If no new job
is available, the company may terminate the employment of the
redundant employee and the employee is entitled to retrenchment
allowance equivalent to one month's salary for each year employment,
with at least two months guaranteed.
6.8 Wages, overtime payments, and statutory minimum wages:
The Labor Code requires foreign-invested enterprises to denominate and
pay wages to Vietnamese employees in VND. Salaries for foreigners may
be denominated and paid either in VND or foreign currency. The
Government decides and publishes a minimum wage which varies,
depending on geographical regions and types of work. In particular,
foreign invested companies must not pay salaries to their employees
lower than the statutory minimum wage levels applicable to untrained
laborers. Overtime on a normal working day (six days of the week and
non-public holidays) must be at least one and half times the normal
hourly rate. On non-working days (1 day a week) overtime pay is at least
twice the normal hourly pay, while overtime on public holidays and paid
annual leave is three times the normal pay rate. Overtime may not exceed
4 hours a day or 16 hours a week, up to 200 hours in a year or 300 hours a
year in special circumstances.
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7. WORK PERMITS
7.1 General requirements:
All foreign nationals who wish to work in Vietnam for three (3) months or
more must obtain a work permit. Unless a work permit is not required or
an exemption applies, any employer in Vietnam and the foreign national
only enter legally into an employment contract after a work permit has
been issued by the DOLISA. A foreigner intending to work in Vietnam
must meet all of the following conditions: i) Have full legal capacity for
civil acts, ii) have good health appropriate for working in Vietnam, iii) be a
managing person, executive director, expert or technician, and iv) have
not been convicted of a crime or been prosecuted for criminal
responsibility under the law of Vietnam and of the foreign country.
7.2 The approval of demand:
Prior to hiring foreign employees, employers must file an annual report of
demand on their use of foreign workers to the local Labor Department for
approval by the Peoples Committee. As a pre-requirement to recruit a
new foreign worker, the employer must get approval from the local
Peoples Committee, and an application for a work permit cannot be
processed until gaining this approval. After the approval of demand from
the Labor Department via the Peoples Committee, the foreigner can
enter Vietnam on a single entry visa by using a previously prepared visa
authorization letter or on a multiple-entry visa obtained a Vietnamese
embassy or consulate.
7.3 Cases in which no work permit is required:
Since April 1st, 2016, foreign nationals who wish to work in Vietnam for a
shorter time period are not required to apply for a work permit in the
following cases:
- Experts, managing persons, executive directors or technicians who
will work in Vietnam less than 30 days and not more than 90 days
within 1 year;
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entire lease period. In practical terms, there are limits to the value of the
entitlement to mortgage LURs due to the absence of reliable enforcement
procedures. In addition, the comparatively short term of a land lease
(maximum 50 years, or 70 in limited circumstances) means that it does
not constitute a particularly attractive form of security for mortgage
purposes, where internationally a longer term (i.e. 99 years) is the norm.
Land withdrawal: A land withdrawal for a commercial or residential real
estate investment project must satisfy two conditions: (i) it must be
justified by a significant alternate project approved by the National
Assembly, the Prime Minister or the provincial-level Peoples Councils for
which land must be withdrawn, and (ii) it must have prior withdrawal
approval from the relevant land authority.
Notarization requirements: All contracts related to land transactions
must be notarized at the notary public office, except for the transfer or
lease of a property of which the owner or the landlord is licensed to do
real estate business.
8.2 Real estate developments projects:
Both the Land Law sand the Law on Real Estate Business set out strict
requirements for both local and foreign developers, who want to lease or
obtain a land allocation from the government to implement a real estate
investment project. Those requirements are - among others - as follows:
- Charter capital requirements for developers: The legal capital
requirement to engage in the real estate business shall be
determined by the government but must be at least VND 20 billion.
- Equity capital requirements for developers: Developers must
contribute a certain percentage of the project investment capital as
equity capital. For example, for an investment project with a land
area of less than 20 hectares, the developers equity capital must
be at least 20% of the total estimated investment capital of the
project. For a project of 20 hectares or more, the equity capital
must be at least 15%.
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objectives and contents of the project, and must protect the interests of
the customers and interested parties. The conditions for such transfer
are: (i) the land price and other related financial obligations must be fully
paid by the selling developer, (ii) the land must have been issued a LURC,
and (iii) the transferee conducts relevant and permitted business lines,
and satisfy the conditions prescribed in the Land Law and its guiding
decrees. For the transfer of individual land plots without any houses
constructed on them, the following conditions apply: i) the developer
must have fully paid the land price and other financial obligations for the
project land, ii) the developer has constructed the infrastructure of the
project, iii) the project is not located in the central districts of the city or
province, and iv) the provincial Peoples Committee where the land is
situated agrees to the transfer.
Vietnam prior to the filing date or priority date (if priority is claimed). An
invention is considered capable of industrial applicability if it can be
developed to the stage of mass manufacturing of the invention or to
repeat application of the inventive process.
Registration process: To obtain a patent, an application must be filed
with the National Office of Intellectual Property of Vietnam (NOIP).
Vietnam operates under a first-to-file system, meaning that the first
person to file a patent in Vietnam will own that right once the application
is granted, regardless of whether another party was the inventor or the
first to use the patented creation. This means that if a potential partner or
other third party files your patent or trade mark in Vietnam before you
do, that party will be the legal owner of your IP. Therefore, it is essential
to make your IPR registrations in Vietnam before commencing business
dealings there, and to be careful how much information you disclose to
third parties such as business partners or in the framework of joint
ventures.
As Vietnam is a party to the Paris Convention, applicants for invention
patents and utility solution patents are entitled to a right of priority if
the same filing has been made within the last 12 months in any other
country also belonging to the convention. This is very useful to patent
owners because after first filing the application in their home country,
they then have 12 months of leeway to decide which other countries they
want to register in, before having to commence international filings. The
eventual protection granted in Vietnam (or other countries) within the
time limit will be measured from the original filing date in your own
country, and will overrule any other filings made in Vietnam in the interim
period.
Scope of protection: Once the patent is granted, invention patents last 20
years from the filing date in Vietnam, with no possibilities for
extension/renewal. The registration process typically takes up to 20
months. Utility solution patents last 10 years from the filing date in
Vietnam, with no possibilities for extension/renewal. The registration
process typically takes up to 18 months.
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- The arbitral award creditors file the petitions for recognition and
enforcement in Vietnam of foreign arbitral awards with the
Ministry of Justice of Vietnam;
- Within seven days of the receipt of the petition dossiers, the
Ministry of Justice of Vietnam forwards the petition dossiers to the
competent court;
- Within three working days of the receipt of the petition dossiers
from the Ministry of Justice of Vietnam, the court accepts the case
and issues notice of acceptance;
- Within a period from two to four months, the court makes one of
the following decisions: i) Temporarily suspending the
consideration of the petition if the award is being reviewed by
foreign competent body; ii) Suspending the consideration of the
petition or iii) Organizing a court meeting for consideration of the
petition.
- Within 20 days of the decision to organize a court meeting for
consideration of the petition, the court summons the involved
parties for the meeting where a panel of three judges will decide if
the award is recognized for enforcement in Vietnam;
- Dissatisfied parties have 15 days as of the judgment date (if they
are present at the meeting) or as of their receipt of the court
judgment (if they are absent from the meeting) to appeal;
- Within one month as of its receipt of the appeal, the higher court
summons the involved parties for a meeting where a panel of 03
judges will decide if the appealed judgment is upheld, partially
amended or wholly amended.