Law on Technology Transfer
(For reference only)
NATIONAL ASSEMBLY
SOCIALIST REPUBLIC OF VIỆT NAM
No.80-2006-QH11
Independence - Freedom - Happiness
Hà Nội, November 29, 2006
LAW ON TECHNOLOGY TRANSFER
Pursuant to the 1992 Constitution of the Socialist Republic of Việt Nam, which was
amended and supplemented under Resolution No. 51/2001/QH10 on December 25,
2001, of the 10th National Assembly, the 10th session;
This Law provides for technology transfer activities.
Chapter I
GENERAL PROVISIONS
Article 1. Governing scope
This Law provides for the transfer of technologies in Việt Nam, from Việt Nam to abroad
and from abroad into Việt Nam; rights and obligations of organizations and individuals
engaged in technology transfer activities; competence of State management agencies;
and measures to encourage and promote technology transfer.
Article 2. Subjects of application
This Law applies to Vietnamese organizations and individuals, overseas Vietnamese,
and foreign organizations and individuals that are engaged in technology transfer.
Article 3. Interpretation of terms
In this Law, the terms below are construed as follows:
1. Technical know-how means information accumulated or discovered by a technology
owner in the course of research, production or business, which is decisive to the quality
and competitiveness of a technology or technological product.
2. Technology means a technical solution, process or know-how which is accompanied
or not accompanied by a tool or means for turning resources into products.
3. High technology means a technology which has a high content in scientific research
and technological development; creates products or services of high quality and added
value; and is capable of forming new production lines or services or modernizing
existing production lines or services.
4. New technology means a technology which is created for the first time in Việt Nam.
5. Advanced technology means a leading technology of a technological level higher
than that of existing technologies of the same type.
6. Technology incubator or technology business incubator means a place that has
favorable technical infrastructure and service provision conditions and necessary
supports for the incubation of technologies or technology enterprises.
7. Technology marketplace, technology fair, technology exhibition or technology
exchange center means a place for display, introduction, purchase and sale of
technologies, promotion of technology transfer and provision of other technology
transfer services.
8. Technology transfer means the transfer of right to own or the right to use a part or the
whole of a technology from a party having the right to transfer the technology to a
technology transferee.
9. Transfer of technology in Việt Nam means the transfer of technologies between
organizations and individuals operating in Vietnamese territory.
10. Transfer of technology from abroad into Việt Nam means the transfer of
technologies from organizations or individuals operating abroad to organizations or
individuals operating in Vietnamese territory.
11. Transfer of technology from Việt Nam to abroad means the transfer of technologies
from organizations or individuals operating in Vietnamese territory to organizations or
individuals operating abroad.
12. Technology transfer service means activities to support the seeking, entry into and
performance of a technology transfer contract.
13. Technology evaluation means the determination of the level, value, economic
benefits as well as socio- economic and environmental impacts of a technology.
14. Technology pricing means the determination of the price of a technology.
15. Technology appraisal means the inspection and determination of the criteria of a
transferred technology against the criteria indicated in the technology transfer contract.
16. Technology transfer activities include technology transfer and technology transfer
services.
17. Technology transfer brokerage means activities to assist involved parties that own
technologies and par- ties that need technologies in seeking partners to sign technology
transfer contracts.
18. Technology transfer consultancy means activities to assist involved parties in
selecting technologies, and negotiating, signing and performing technology transfer
contracts.
19. Technology incubation means activities to support the creation and perfection of a
technology which has prospects of practical application and commercialization from a
technological idea or scientific research and technological development results.
20. Technology business incubation means activities to support organizations or
individuals to perfect a technology, mobilize investment capital, organize production and
business activities, conduct marketing, complete legal procedures and provide other
necessary services for the establishment of an enterprise that will use the newly created
technology.
21. Technology transfer promotion means activities to promote, create and seek
opportunities for technology transfer; provide technology advertisement, display and
introduction services; and organize technology marketplaces, fairs, exhibitions or
exchanges.
Article 4. Applicable laws
1. Technology transfer activities must comply with the provisions of this Law and
relevant laws; when specific technology transfer activities are provided for in another
law, the provisions of that law prevail.
2. When a treaty to which the Socialist Republic of Việt Nam is a contracting party
contains provisions different from those of this Law, the provisions of that treaty prevail.
3. When technology transfer activities involve foreign elements, the involved parties
may agree in their contract on the application of a foreign law and international trade
practice, provided that such foreign law and international practice do not contravene the
basic principles of Vietnamese law.
Article 5. State policies towards technology transfer activities
1. To ensure the lawful rights and interests of, and create favorable conditions for,
organizations and individuals engaged in technology transfer activities in service of
rapid and sustainable national socio-economic development.
2. To prioritize the development of high technologies and advanced technologies; to
develop human resources in the technological domain simultaneously with making
investment in technological renewal.
3. To strongly develop the technology market; to encourage and promote technology
and technology business incubation; to step up the transfer of research results to
production and business activities.
4. To attach importance to raising the quality and efficiency of technology transfer
activities in rural and mountainous areas; to encourage, and create favorable conditions
for, technology transfer activities in geographical areas stricken by socio-economic
difficulties or exceptional socioeconomic difficulties.
5. To improve international cooperation and create favorable conditions for
organizations and individuals to enter into international cooperation in technology
transfer activities.
Article 6. Contents of State management of technology transfer activities
1. Promulgating, organizing the implementation of propagating, disseminating, and
educating about, the law on technology transfer.
2. Formulating, and directing the implementation of strategies, plans, programs,
measures, mechanisms and policies to promote technology transfer and technological
renewal.
3. Managing technology transfer activities in a unified manner.
4. Entering into international cooperation in technology transfer.
5. Inspecting and examining the observance of the law on technology transfer; to settle
complaints and denunciations, and handle violations of the law on technology transfer.
Article 7. Transferable subject matters of technology
1. Transferable subject matter of technology is part or the whole of a technology of the
following types:
a/ Technical know-how;
b/ Technical knowledge about the transferred technology in the form of technological
plan, technological process, technical solution, formula, technical parameter, drawing,
technical diagram, computer program, or data information;
c/ Solution to rationalize production or renew a technology.
2. The transferable subject matter of technology may be accompanied or not
accompanied by a subject matter of industrial property.
Article 8. Right to transfer technologies
1. The owner of a technology may transfer the right to own or the right to use the
technology.
2. An organization or individual that is allowed by the owner of a technology to transfer
the right to use that technology is entitled to transfer such right.
3. An organization or individual that owns a technology which is an industrial property
subject matter with the protection duration having expired or not protected in Việt Nam
may transfer the right to use that technology.
Article 9. Technologies encouraged for transfer Technologies encouraged for
transfer include high technologies and advanced technologies, which meet one
of the following requirements:
1. Creating new products of high competitiveness;
2. Creating a new industry or service;
3. Saving energy or raw materials;
4. Using new energy or renewable energy;
5. Protecting human health;
6. Preventing and controlling natural disasters and epidemics;
7. Facilitating clean and environmentally friendly production;
8. Developing traditional trades and occupations.
Article 10. Technologies restricted from transfer
A number of technologies shall be restricted from transfer for the purposes of:
1. Protecting national interests;
2. Protecting human health;
3. Protecting values of national culture;
4. Protecting animals, plants, natural resources and the environment;
5. Observing the provisions of treaties to which the Socialist Republic of Việt Nam is a
contracting party.
Article 11. Technologies banned from transfer
1. Technologies which do not comply with the law on labor safety, labor sanitation,
assurance of human health, or protection of natural resources and the environment.
2. Technologies which create products causing adverse impacts on socio-economic
development or badly affecting defense, security, or social order and safety.
3. Technologies banned from transfer under treaties to which the Socialist Republic of
Việt Nam is a contracting party.
4. Technologies listed as State secrets, unless otherwise provided for by law.
Article 12. Forms of technology transfer
Technologies may be transferred in the following forms:
1. Independent technology transfer contract;
2. Technology transfer component in the following projects or contracts:
a/ Investment project;
b/ Franchise contract;
c/ Contract on assignment of industrial property rights;
d/ Contract on purchase and sale of machines and equipment accompanied by the
transfer of a technology.
3. Other forms of technology transfer as provided for by law.
Article 13. Prohibited acts in technology transfer
1. Abusing technology transfer activities to harm national defense or security interests
or the lawful rights and interests of organizations or individuals.
2. Destroying natural resources and the environment; causing adverse impacts on
human health, fine ethics, traditions and customs of the nation.
3. Transferring technologies on the list of those banned from transfer; illegally
transferring technologies on the list of those restricted from transfer; or transferring
technologies which are not allowed to be transferred to a third party as stated in
technology transfer contracts.
4. Infringing upon technology transfer rights in technology ownership or use.
5. Committing deceits or frauds in making and performing technology transfer contracts,
technology transfer service contracts or technology transfer statistical reports.
6. Obstructing the supply of, or refusing to supply information on technology transfer
activities, which are inspected or examined by competent state agencies.
7. Abusing one's duties or powers to harass, trouble, or failing to respond in time to the
requests of, organizations or individuals engaged in technology transfer activities in
accordance with law.
8. Disclosing technological secrets or obstructing technology transfer activities.
9. Other acts as provided for by the law on technology transfer.
Chapter II
TECHNOLOGY TRANSFER CONTRACTS
Article 14. Principles of entry into and performance of a technology transfer
contract
1. A technology transfer contract shall be entered into in writing or in other equivalent
forms, including telegram, telex, fax, data message or other forms as provided for by
law.
2. Language used in a technology transfer contract shall be agreed by the contractual
parties; a contract in Vietnamese is required for transactions conducted in Việt Nam.
The Vietnamese and foreign-language versions have the same validity.
3. A technology transfer contract shall be entered into and performed in accordance
with this Law, the Civil Code, the Commercial Law and relevant laws.
Article 15. Contents of a technology transfer contract
Parties to a technology transfer contract may reach agreement on the following:
1. Name of the contract, which clearly indicates the name of the transferred technology;
2. Transferred subject matters of technology, and products to be created by the
technology;
3. Transfer of the right to own or the right to use a technology;
4. Mode of technology transfer;
5. Rights and obligations of the parties;
6. Payment price and mode;
7. Effective time and validity duration of the contract;
8. Definitions and terms referred to in the contract (if any);
9. Technology transfer plan and schedule, place where the technology transfer is
effected;
10. Responsibility to warranty the transferred technology;
11. Fine for a breach of the contract;
12. Liability for a breach of the contract;
13. Applicable law in the settlement of disputes;
14. Dispute settlement body;
15. Other agreements which are not in contravention of Vietnamese law.
Article 16. Transfer of the right to own a technology
1. Transfer of the right to own a technology means the full transfer by the owner of a
technology of the right to possess, the right to use and the right to dispose of that
technology to another organization or individual in accordance with Article 18 of this
Law.
2. When a technology is a subject matter having its industrial property rights protected,
the transfer of the right to own that technology shall be conducted simultaneously with
the assignment of industrial property rights in accordance with the law on intellectual
property.
Article 17. Transfer of the right to use a technology
1. Transfer of the right to use a technology means the permission by an organization or
individual defined in Article 8 of this Law for another organization or individual to use a
technology in accordance with Clause 2 of this Article and Article 18 of this Law.
2. The parties shall agree on the scope of transfer of the right to use a technology,
covering:
a/ Exclusive or non-exclusive use of the technology;
b/ Whether or not re-transfer of the right to use that technology to a third party is
permitted;
c/ Domain in which the technology is used;
d/ The right to innovate that technology and the right to receive information on
technology innovation;
e/ Exclusive or non-exclusive distribution or sale of products created by the transferred
technology;
f/ Territories where products created by the transferred technology may be sold;
g/ Other rights related to the transferred technology.
3. When a technology is a subject matter having its industrial property rights protected,
the transfer of the right to use that technology shall be conducted simultaneously with
the assignment of industrial property rights in accordance with the law on intellectual
property.
Article 18. Modes of technology transfer
1. Transferring technology-related documents.
2. Providing training for the transferee of a technology to master the technology in the
duration indicated in the technology transfer contract.
3. Sending specialists to provide technical assistance to the transferee of a technology
in applying the technology to production, for the purpose of achieving the quality of the
technology and products according to the criteria and schedule indicated in the
technology transfer contract.
4. Other modes as agreed upon by the parties.
Article 19. Effective time of a technology transfer contract
1. Except for the case specified in Clause 2 of this Article, the effective time of a
technology transfer contract shall be agreed by the contractual parties; if the parties
make no agreement on the effective time of the contract, it is the time the last party
completes the contract-signing procedures.
2. A contract on the transfer of a technology on the list of those restricted from transfer
becomes effective only after a State competent agency grants a technology transfer
license.
Article 20. Rights and obligations of the technology transferor
1. The technology transferor has the following rights:
a/ To request the technology transferee to strictly fulfill the commitments in the contract;
b/ To request a competent state agency to protect the lawful rights and interests relating
to the transferred technology;
c/ To get full payments and enjoy other rights and interests as agreed in the contract; to
enjoy the preferences provided for by this Law and relevant laws;
d/ Unless otherwise agreed upon by the parties, to request the technology transferee
that fails to strictly perform the obligations defined in the con- tract to take remedial
measures or pay damages;
e/ To lodge complaints about or initiate lawsuits against breaches of contract in
accordance with law.
2. The technology transferor has the following obligations:
a/ Unless otherwise agreed upon by the parties, to ensure that the technology transfer
right is lawful and not restricted by the right of a third party;
b/ To strictly fulfill the commitments in the contract; and pay damages to the technology
transferee or a third party for the transferor's breach of contract;
c/ To keep information confidential in the course of negotiating and entering into a
technology transfer contract at the request of the negotiating partner(s);
d/ When detecting technical problems which make technology transfer results
unsatisfactory as pre- scribed in the contract, to notify the technology transferee thereof
and take appropriate remedies and pay damages to the technology transferee or a third
party for the transferor's failure to strictly fulfill the commitments in the contract;
e/ To apply for a technology transfer license in case of transfer from Việt Nam to abroad
technologies on the list of those restricted from transfer;
f/ Not to reach agreement on anti-competition clauses banned under the Competition
Law;
g/ To perform the financial obligations and other obligations in accordance with law.
Article 21. Rights and obligations of the technology transferee
1. The technology transferee has the following rights:
a/ To request the technology transferor to strictly fulfill the commitments in the contract;
b/ To request a competent state agency to protect the transferee's lawful rights and
interests related to the transferred technology;
c/ To hire domestic or foreign organizations or individuals to provide technology transfer
services in accordance with law;
d/ Unless otherwise agreed upon by the parties, to request the technology transferor to
take remedial measures or pay damages in case of the technology transferor's failure to
strictly perform the obligations defined in the contract;
e/ To lodge complaints about or initiate lawsuits against breaches of contract in
accordance with law;
f/ To enjoy the preferences provided for by this Law and relevant laws.
2. The technology transferee has the following obligations:
a/ To strictly fulfill the commitments in the contract; to pay damages to the technology
transferor or a third party for the transferee's breach of contract;
b/ To keep technology-related information and other information confidential in the
course of negotiating and signing a technology transfer contract at the request of the
negotiating partner(s);
c/ To apply for a technology transfer license in case of transfer from abroad into Việt
Nam technologies on the list of those restricted from transfer;
d/ To perform the financial obligations and other obligations in accordance with law.
Article 22. Payment prices and modes in technology transfer
1. The payment prices in a technology transfer contract shall be agreed by the
contractual parties.
2. Payment may be made by one or several of the following modes:
a/ Payment in a lump sum or installments in cash or in kind;
b/ Conversion of the technological value into capital contributed to an investment project
or to capital of an enterprise in accordance with law;
c/ Other modes as agreed by the parties.
Article 23. Procedures for licensing the transfer of technologies on the list of
those restricted from transfer
1. Organizations or individuals that wish to receive or transfer technologies on the list of
those restricted from transfer shall send their dossiers as specified in Clause 1, Article
24 of this Law to a State agency competent to license technology transfer.
2. Within thirty days after receiving a valid dossier, the state agency competent to
license technology transfer shall make a written approval; in case of disapproval, it shall
give a written reply, clearly stating the reason therefore.
3. After obtaining the written approval of the competent state agency, organizations or
individuals that wish to receive or transfer technologies shall sign technology transfer
contracts.
4. After signing a technology transfer contract, one of the signatories to the contract
shall send the dossier specified in Clause 2, Article 24 of this Law to a state agency
competent to license technology transfer.
5. Within ten days after receiving a valid dossier, the state agency competent to license
technology transfer shall assess the technology transfer contract's conformity with the
contents of the written approval in order to decide on the licensing; in case of refusal to
license, it shall give a written reply, clearly stating the reason therefore.
6. In the course of performance of a technology transfer contract, if wishing to modify
the contents in the technology transfer license, one of the signatories to the contract
shall apply for a new license.
Article 24. Dossiers of application for approval of, and dossiers of application for
licensing of the transfer of technologies on the list of those restricted from
transfer
1. A dossier of application for approval of the transfer of a technology on the list of those
restricted from transfer comprises:
a/ An application for approval to sign a technology transfer contract;
b/ A document on the applicant's legal status;
c/ Explanatory documents on the technology as specified by the Ministry of Science and
Technology.
2. A dossier of application for licensing of the transfer of a technology on the list of those
restricted from transfer comprises:
a/ An application for a technology transfer license;
b/ A competent state agency's written approval of the technology transfer;
c/ Documents evidencing the legal status of the parties to the technology transfer
contract;
d/ The original or a copy of the technology transfer contract;
e/ A list of technological documents or equipment (if any), enclosed with the technology
transfer contract.
Article 25. Right to, and procedures for, registration of a technology transfer
contract
1. Parties to a technology transfer contract may register their contract at a competent
state management agency in charge of science and technology in order to enjoy the
preferences provided for by this Law and relevant laws.
2. A dossier of registration of a technology transfer con- tract comprises:
a/ An application for registration of the technology transfer contract;
b/ The original or a copy of the technology transfer contract.
3. Within fifteen days after receiving a valid dossier, the State competent management
agency in charge of science and technology shall consider and decide to grant a
technology transfer contract registration certificate.
Article 26. Obligation to secure confidentiality in granting technology transfer
licenses or technology transfer contract registration certificates
Agencies and individuals responsible for granting technology transfer licenses or
technology transfer con- tract registration certificates shall keep confidential
technological secrets or business secrets stated in dossiers of application for
technology transfer licenses or dossiers of registration of technology transfer contracts.
Article 27. Handling of breaches of a technology transfer contract
1. Sanctions imposed on organizations or individuals that breach technology transfer
contracts include:
a/ Fine for breach;
b/ Payment of damages;
c/ Forced performance of the contract;
d/ Suspension of the performance of the contract;
e/ Termination of the performance of the contract;
f/ Cancellation of the contract;
g/ Other measures agreed by the parties which are not contrary to the basic principles
of Vietnamese law, international trade practice, or treaties to which the Socialist
Republic of Việt Nam is a contracting party.
2. For immaterial breaches of a technology transfer con- tract, unless otherwise agreed
upon by the parties, suspension of the performance of the contract, termination of the
performance of the contract or cancellation of the contract may not be applied.
3. Unless otherwise provided for by law, the parties may reach agreement on limitations
on the extent of the liability to pay damages for a breach of the technology transfer
contract.
4. Sanctions specified in Clause 1 of this Article shall be applied in accordance with law.
Chapter III
TECHNOLOGY TRANSFER SERVICES
Article 28. Technology transfer services
1. Technology transfer services include:
a/ Technology transfer brokerage;
b/ Technology transfer consultancy;
c/ Technology evaluation;
d/ Technology pricing;
e/ Technology appraisal;
f/ Technology transfer promotion.
2. Organizations and individuals providing technology transfer services must possess
business registration certificates for the provision of technology transfer services.
Article 29. Principles of entry into and performance of a technology transfer
service contract
1. A technology transfer service contract shall be established in writing or in other forms
provided for by law.
2. A technology transfer service contract shall be entered into and performed in
accordance with this Law, the Civil Code, the Commercial Law and relevant laws.
Article 30. Rights of organizations and individuals providing technology transfer
services
Organizations and individuals providing technology transfer services have the following
rights:
1. To provide technology transfer services stated in their business registrations;
2. To request service users to supply information or documents necessary for the
provision of technology transfer services;
3. To employ domestic and foreign collaborators in the provision of technology transfer
services;
4. To enjoy service charges and other benefits from the provision of technology transfer
services as agreed;
5. To request service users to pay compensations for damage caused through the
service users' fault;
6. To enter into cooperation or joint venture with domestic and foreign organizations and
individuals in order to provide technology transfer services;
7. To join domestic, regional or international business associations in accordance with
law.
Article 31. Obligations of organizations and individuals providing technology
transfer services
Organizations and individuals providing technology transfer services have the following
obligations:
1. To provide technology transfer services strictly according to contents of their
business registrations;
2. To strictly perform technology transfer service con- tracts already entered into;
3. To take responsibility to service users for the results of the provision of their
technology transfer services;
4. To pay compensations for damage caused through their fault to service users;
5. To keep information confidential as agreed in technology transfer service contracts;
6. To fulfill the financial obligations and other obligations as provided for by law.
Article 32. Technology appraisal services
1. Technology appraisal service means commercial or noncommercial technology
appraisal activities to determine the actual state of transferred technologies and other
technology transfer-related contents at the request of any or all of the parties to a
technology transfer contract or of a competent State management agency.
2. Organizations or individuals providing technology appraisal services and technology
appraisal requesters shall abide by the provisions of this Law and relevant laws.
Article 33. Criteria of a technology appraiser
A technology appraiser must fully satisfy the following criteria:
1. Having a college, university or higher degree and the professional capacity relevant
to the technology appraisal requirements and domain;
2. Having worked for at least three years in the domain of the appraised technology;
3. Possessing an appraisal certificate pertaining to the domain of the appraised
technology when that certificate is required by law.
Chapter IV
MEASURES TO ENCOURAGE AND PROMOTE TECHNOLOGY
TRANSFER
Article 34. Development of the technology market
1. The State encourages organizations and individuals to participate in developing the
technology market in the following forms:
a/ Investing in the building of technology market infrastructure, including technology
marketplaces, technology fairs, technology exhibitions, technology exchanges,
technology incubators, technology business incubators, and other forms;
b/ Publicizing, disseminating, demonstrating and introducing technologies and
participating in domestic and overseas technology marketplaces, fairs or exhibitions.
2. The Ministry of Science and Technology shall coordinate with ministries, ministeriallevel agencies, government-attached agencies and People's Committees of provinces
or centrally run cities (below collectively referred to as provincial-level People's
Committees) in taking measures to encourage, and create favorable conditions for,
domestic and foreign organizations and individuals to invest in organizing technology
marketplaces, fairs or exhibitions or conducting technology transfer in other forms, and
attract various economic sectors to participate in the development of the technology
market.
Article 35. Technologies encouraged for transfer to rural, mountainous, socioeconomic difficulty- stricken or exceptional socio-economic difficulty- stricken
areas
1. Technologies in the domain of protection and development of gene sources;
hybridization, revitalization, or raising the economic value, of plant varieties or animal
breeds.
2. Technologies for planting, culturing, preserving or processing agricultural, forest or
aquatic products.
3. Technologies for the prevention and control of natural disasters or epidemics or for
the protection of the community health.
4. Technologies for epidemics prevention and control for plants or livestock.
5. Technologies using renewable energy sources.
6. Technologies for clean water supply or environmental protection.
7. Technologies for raising the productivity, quality and efficiency of traditional products
of craft villages.
Article 36. Responsibilities of organizations and individuals in technology
transfer activities in rural, mountainous, socio-economic difficulty- stricken or
exceptional socio-economic difficulty- stricken areas
1. Programs or projects on introduction of plant varieties or animal breeds or
technologies for planting, culturing, preserving or processing agricultural, forest or
aquatic products must have technology transfer contents.
2. Organizations or individuals that introduce or transfer technologies for planting,
culturing, preserving or processing agricultural, forest or aquatic products shall report
their activities to state management agencies in charge of science and technology in
localities where they conduct technology transfer.
3. Organizations or individuals that supply plant varieties or animal breeds or transfer
technologies for planting, culturing, preserving or processing agricultural, forest or
aquatic products shall provide users with guidance on planting, culturing, preserving or
processing technologies and pay compensations for damage caused by such supply or
transfer.
Article 37. Responsibilities of state management agencies in technology transfer
activities in rural, mountainous, socio-economic difficulty stricken or exceptional
socio-economic difficulty-stricken areas
1. Local state management agencies in charge of science and technology shall guide,
and create favorable conditions for, the introduction and transfer of plant varieties or
animal breeds or technologies for planting, culturing, preserving or processing
agricultural, forest or aquatic products; promote transfer technology activities in
localities, and inspect, detect and ban in time the introduction or supply of plant
varieties, animal breeds or technologies which cause damage to users.
2. Annually, the Ministry of Science and Technology shall assume the prime
responsibility for, and coordinate with concerned ministries, ministerial-level agencies
and government-attached agencies in, evaluating transfer technology activities in rural,
mountainous, socio-economic difficulty-stricken or exceptional socio-economic difficultystricken areas.
Article 38. The national technological renewal program
The national technological renewal program has the following objectives:
a/ To raise the national technological capacity and transfer technology efficiency;
b/ To serve the national key economic programs;
c/ To create favorable conditions for medium- and small- sized enterprises to replace
backward technologies, apply advanced technologies and master technologies
transferred from abroad into Việt Nam;
d/ To increase technological resources in rural, mountainous, socioeconomic difficultystricken or exceptional socio-economic difficulty stricken areas.
2. Based on national socio-economic development tasks in each period, the Ministry of
Science and Technology shall assume the prime responsibility for, and coordinate with
concerned ministries, ministerial-level agencies and government-attached agencies in,
formulating and submitting to the Government for approval the national technological
renewal program.
3. Ministries, ministerial-level agencies, government- attached agencies and provinciallevel People's Committees shall, within the ambit of their tasks and powers, organize
the implementation of the national technological renewal program.
Article 39. The national technological renewal fund
1. The national technological renewal fund is set up for the following purposes:
a/ To support medium- and small-sized enterprises in the transfer, renewal or perfection
of technologies encouraged for transfer defined in Article 9 of this Law;
b/ To promote technology transfer in service of agricultural, forestry and fishery
development in rural, mountainous, socio-economic difficulty-stricken or exceptional
socio-economic difficulty-stricken areas;
c/ To support technology and technology business incubation;
d/ To support the training of human resources in the scientific and technological
domains in service of technology transfer, renewal and perfection.
2. The national technological renewal fund shall give supports to technology transfer,
renewal and perfection in the following forms:
a/ Providing preferential loans;
b/ Supporting loan interests;
c/ Granting guarantee for capital borrowing;
d/ Providing capital supports.
3. The national technological renewal fund is formed from the following sources:
a/ Voluntary contributions of domestic and foreign organizations and individuals;
b/ Loan interests;
c/ State budget allocations for scientific and techno- logical development;
d/ Other sources.
4. The Government shall specify the setting up, management and use of the national
technological renew- al fund.
Article 40. Transfer of technologies created from state budget-funded research
and development
1. Unless otherwise provided for by law, the State shall transfer the right to own a
technology created from state budget-funded research and development to the
organization in charge of researching and developing that technology.
2. Owners of technologies created from state budget-funded research and development
are obliged to use and transfer those technologies to meet the requirements of socioeconomic development, defense and security maintenance, disease prevention and
treatment, or other urgent demands of the society.
3. When an owner of a technology created through state budget-funded research and
development fails to abide by the provisions of Clause 2 of this Article, a competent
state management agency in charge of science and technology shall transfer the right
to use the technology to another organization.
Article 41. Mortgage of state-owned assets for conducting technology transfer
activities
State-owned scientific and technological enterprises may mortgage their State-assigned
assets to borrow cap- ital for conducting technology transfer activities in accordance
with law.
Article 42. Sharing of incomes from the transfer of technologies created with
state budget funds
Incomes from the transfer of technologies created with state budget funds shall be
shared as follows:
1. Authors of inventions, industrial designs or layout designs of semiconductor
integrated circuit that have been granted protection titles are entitled to royalties
specified in the Law on Intellectual Property;
2. When a technology-creating collective or individual does not fall in the case defined in
Clause 1 of this Article, the organization in charge of technological research and
development which has been transferred the right to own the technology created with
state budget funds shall specify and publicize benefit-sharing mechanisms and ratios on
the following principles:
a/ The collective or individual that creates a technology is entitled to a certain
percentage of the selling price of products created by the technology for 10 years at
most if the organization in charge of technological research and development applies
the technology to production;
b/ The collective or individual that creates a technology is entitled to between 20% and
35% of the proceeds from the contract on the transfer of the technology.
3. After paying a remuneration to the technology-creating collective or individual, the
technology owner shall invest 50% of the remaining income in scientific research and
technological development and contribute another 50% to the welfare and reward fund.
4. When a technology is created with capital of different sources, including the state
budget source, the portion of income from the State capital portion shall be shared in
accordance with Clauses 2 and 3 of this Article.
Article 43. Contribution of capital in the form of technology to investment projects
Organizations and individuals that have the right to transfer technologies as defined in
Article 8 of this Law may contribute capital in the form of technology to investment
projects. The value of such contributed capital is the technology price agreed in a
technology transfer contract.
Article 44. Tax policies to promote technology transfer activities
1. Income tax exemption shall be given to organizations and individuals that contribute
capital in the form of patent or technology.
2. Import tax shall be exempted for goods imported for direct use in the research,
development or renewal of technologies, including machines, equipment, spare parts,
supplies and means of transport which cannot be produced at home yet, and
technologies which cannot be created at home yet; scientific documents, books and
newspapers.
3. Special-use machines, equipment and means of transport which cannot be produced
at home yet are not liable to value-added tax of they are used for the performance of
technology transfer contracts.
4. Production and business establishments that invest in the building of new production
chains, expansion of the production scale, renewal of technologies, improvement of the
ecological environment, or raising of the production capacity are entitled to enterprise
income tax exemption for increased incomes for four years and a 50% reduction of
payable tax amounts for seven subsequent years.
5. Enterprises that invest in technological renewal and receive technologies on the list of
those encouraged for transfer are entitled to enterprise income tax exemption for four
years with the total exempted tax amount not exceeding 50% of the total fund invested
in technological renewal.
6. Enterprises in socio-economic difficulty-stricken or exceptional socioeconomic
difficulty-stricken areas which execute investment projects receiving technologies are
entitled to the following preferences:
a/ Exemption from enterprise income tax for four years from the time taxable incomes
are generated and a 50% reduction of payable tax amounts for nine subsequent years,
with the total exempted tax amount not exceeding the total fund invested in
technological renewal;
b/ Exemption from import tax on goods used for the replacement or renewal of
technologies, and raw materials, supplies and accessories used for production for five
years from the time they commence production with new technologies.
7. Organizations or individuals that transfer technologies in the priority domains to rural,
mountainous, socio-economic difficulty-stricken or exceptional socio-economic difficultystricken areas are entitled to a 50% reduction of income tax on incomes earned from
the transfer of technologies or the supply of plant varieties or animal breeds.
8. Technology incubators or technology business incubators are entitled to income tax
exemption for four years, a 50% reduction of payable income tax amounts for nine
subsequent years, and land use tax exemption.
Article 45. Incentives for enterprises to apply and renew technologies
An enterprise may deduct part of its annual pre-tax profit for setting up the scientific and
technological development fund in order to carry out technological research,
development and renewal activities. After five years, if that fund is not used or is used
for improper purposes, the enterprise shall remit into the state budget the amount of
enterprise income tax on the pre-tax profit which the State allows the enterprise to retain
and the interest on that profit.
The Government shall submit to the National Assembly for decision the levels of
deduction of pre-tax profit specified in this Article.
Article 46. Incentives for foreigners and overseas Vietnamese transferring
technologies into Việt Nam
Foreigners and overseas Vietnamese who participate in the transfer of technologies on
the list of those encouraged for transfer or in the transfer of technologies to socioeconomic difficulty-stricken or exceptional socio-economic difficulty-stricken areas are
entitled to the following preferences:
1. Preferences specified in Article 44 of this Law;
2. They and their family members are granted multiple visas of a validity duration
suitable to the period of performance of technology transfer contracts;
3. Favorable conditions for residence and travel;
4. Other preferences as provided for by law.
Article 47. Incentives for the development of technology transfer service
organizations
The State shall encourage and create favorable conditions for domestic and foreign
organizations and individuals to set up technology business incubators, technology
exchanges, technology marketplaces, technology fairs and other technology-transfer
service organizations; organize establishments for technology demonstration,
introduction, application and transfer in rural and mountainous areas in order to promote
technology transfer activities.
Article 48. Responsibilities of overseas Vietnamese diplomatic missions for
technology transfer activities
Overseas Vietnamese diplomatic missions shall support and promote technology
transfer activities and create favorable conditions for organizations and individuals to
promote the transfer of technologies from abroad into Việt Nam and from Việt Nam to
abroad.
The Government shall specify responsibilities of over- seas Vietnamese diplomatic
missions for technology transfer activities.
Article 49. Publicization, demonstration and introduction of technologies
1. In publicizing, demonstrating and introducing technologies, competent state
management agencies in charge of science and technology have the following
responsibilities:
a/ To publicize an annual list of technologies created with the State budget, unless
otherwise provided for by law;
b/ To encourage and support organizations and individuals to publicize new
technologies created by themselves.
2. The State shall adopt measures to support organizations and individuals that possess
new technologies created at home in publicizing, demonstrating and introducing those
technologies, and participating in domes- tic and overseas technology marketplaces
and fairs.
Article 50. Technology transfer statistics
1. Technology transfer statistics include statistics of transferred technologies, new
technologies or renewed technologies and constitute part of annual statistical reports of
the state management agency in charge of statistics. Technology transfer statistics shall
be made in accordance with the law on statistics.
2. Annually, enterprises, scientific research and technological development
organizations, universities, colleges and other training establishments shall report their
technology transfer statistics to the State management agency in charge of science and
technology.
3. The central statistical office shall assume the prime responsibility for, and coordinate
with the Ministry of Science and Technology in, specifying the technology-transfer
statistical reporting regime.
Chapter V
RESPONSIBILITIES OF STATE MANAGEMENT AGENCIES FOR
TECHNOLOGY TRANSFER ACTIVITIES
Article 51. Responsibilities of the Government
In performing the state management of technology transfer activities, the Government
has the following responsibilities:
1. To perform the unified state management of technology transfer activities;
2. To direct the formulation, promulgation, and organization of implementation of,
strategies, plans, programs, mechanisms, policies and measures to promote technology
transfer and renewal activities suitable to each period of national socio-economic
development;
3. To direct and inspect the observance of the law on technology transfer; to
communicate, disseminate and educate the law on technology transfer;
4. To assign and decentralize the state management of technology transfer activities;
5. To promulgate a list of technologies encouraged for transfer, a list of technologies
restricted from transfer and a list of technologies banned from transfer;
6. To conduct examination and inspection, settle complaints and denunciations, and
handle violations of law in technology transfer activities.
Article 52. Responsibilities of the Ministry of Science and Technology
In performing the state management of technology transfer activities, the Ministry of
Science and Technology has the following responsibilities:
1. To be answerable to the Government for the performance of State management of
technology transfer activities; to promulgate legal documents on technology transfer
according to its competence;
2. To assume the prime responsibility for, and coordinate with ministries, ministeriallevel agencies and government-attached agencies in, formulating strategies, plans,
measures, mechanisms and policies to promote technology transfer and renewal
activities, then submit them to the Government for promulgation;
3. To draw up a list of technologies encouraged for transfer, a list of technologies
restricted from transfer and a list of technologies banned from transfer, submit them to
the Government for promulgation, and organize the implementation thereof;
4. To grant and revoke technology transfer licenses for technologies on the list of those
restricted from transfer, and certificates of registration of technology transfer contracts;
5. To publicize the list of technologies created with the state budget in accordance with
law;
6. To make technology transfer statistics in accordance with law;
7. To conduct inspection and examination; settle complaints and denunciations, and
handle violations of the law on technology transfer;
8. To perform other tasks authorized or assigned by the Government.
Article 53. Responsibilities of ministries and ministerial-level agencies
In performing the state management of technology transfer activities, ministries and
ministerial-level agencies have the following responsibilities:
1. To coordinate with the Ministry of Science and Technology in drawing up a list of
technologies encouraged for transfer, a list of technologies restricted from transfer and
a list of technologies banned from transfer; to formulate strategies, plans, programs,
measures, mechanisms and policies to promote technology transfer and renewal
activities;
2. To organize the implementation of the national technology renewal program in their
assigned domains;
3. To create favorable conditions for the transfer of technologies, especially those
encouraged for transfer, and the transfer of technologies to regions and geographical
areas where technology transfer is encouraged;
4. To communicate, disseminate and educate the law on technology transfer;
5. To perform other tasks authorized or assigned by the Government.
Article 54. Responsibilities of People's Committees of all levels
In performing the state management of technology transfer activities, People's
Committees of all levels have the following responsibilities:
1. Provincial-level People's Committees shall perform the State management of
technology transfer activities in their localities according to the Government's
decentralization;
2. People's Committees of all levels shall, within the ambit of their tasks and powers,
create favorable conditions for technology transfer activities in their localities.
Chapter VI
SETTLEMENT OF DISPUTES, COMPLAINTS AND
DENUNCIATIONS, AND HANDLING OF VIOLATIONS
Article 55. Settlement of disputes in technology transfer activities
Disputes in technology transfer activities shall be settled:
1. Through negotiation among parties;
2. Through conciliation among parties conducted by an intermediary organization or
individual as agreed by the parties;
3. At a domestic or overseas arbitration center or court.
Article 56. Dispute settlement principles
1. Disputes arising in technology transfer activities between parties that are Vietnamese
organizations or individuals shall be settled in accordance with this Law and relevant
laws.
2. For disputes arising in technology transfer activities to which a party is a foreign
organization or individual, the parties may agree to choose a dispute settlement body
and the applicable law as specified in Article 4 of this Law for settlement.
3. Disputes arising in technology transfer activities shall be settled in accordance with
Vietnamese law if the parties have no agreement on the applicable law.
Article 57. Complaints and denunciations
1. Organizations and individuals may lodge their com- plaints about acts of infringing
upon their lawful rights and interests in technology transfer activities with a competent
state management agency or initiate lawsuits at court in accordance with law.
2. Individuals may denounce acts of violation of this Law to a competent state
management agency.
3. Complaints and denunciations and settlement of complaints and denunciations in
technology transfer activities must comply with the law on complaints and
denunciations.
4. After lodging complaints or denunciations, or initiating lawsuits, organizations or
individuals shall still abide by effective administrative decisions of competent state
management agencies in charge of technology transfer. When a competent state
management agency in charge of technology transfer issues a decision on the
settlement of the complaint or denunciation or when a court makes a ruling, such
decision or ruling shall be executed.
5. Competent state management agencies in charge of technology transfer at all levels
shall settle organizations' and individuals' complaints and denunciations which fall under
their competence.
Article 58. Handling of violations of the law on technology transfer
1. Depending on the nature and severity of violations and the consequences caused to
technology transfer activities, violating organizations or individuals shall be:
a/ Sanctioned in accordance with the law on handling of administrative violations in
technology transfer activities; or,
b/ Examined for penal liability in accordance with law.
2. When an act of law violation in technology transfer activities causes damage to the
interests of the State or the lawful rights and interests of organizations or individuals,
compensations therefore shall be paid in accordance with law.
Chapter VII
IMPLEMENTATION PROVISIONS
Article 59. Transitional provisions
1. Technology transfer contracts the registration of which was certified or which were
approved by a competent state management agency before the effective date of this
Law continue to be valid till the expiration of their validity duration.
2. Dossiers of application for registration of technology transfer contracts which were
submitted to competent state management agencies before this Law takes effect but
have not yet been processed shall be processed under the provisions of this Law.
3. Scientific and technological service organizations set up and operating before this
Law takes effect and fully satisfying the operation conditions specified in this Law are
not required to re-register their operation; those failing to meet the operation conditions
specified in this Law shall, within twelve months after this Law takes effect, re-register
their operation.
Article 60. Implementation effect
This Law takes effect on July 1, 2007.
Article 61. Implementation guidance
The Government shall detail and guide the implementation of this Law.
This Law was passed on November 29, 2006, by the 11th National Assembly of the
Socialist Republic of Việt Nam at its 10th session.
Chairman of the National Assembly
(Signed)
NGUYỄN PHÚ TRỌNG
http://www.chinhphu.vn/portal/page/portal/English/legaldocuments/Policies?categoryId=886&
articleId=10001411
Law on Foreign Investment
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
--------------------NATIONAL ASSEMBLY
SOCIALIST REPUBLIC OF VIETNAM
( Legislature IX, 10th Session )
(From 15th October 1996 to 12th November 1996)
LAW ON FOREIGN INVESTMENT
IN VIETNAM
In order to expand economic co-operation with foreign countries and to make
contribution to the modernization, industrialization and development of the national
economy on the basis of the efficient exploitation and utilization of national resources;
In accordance with the 1992 Constitution of the Socialist Republic of Vietnam;
This Law makes provisions for foreign direct investment in the Socialist Republic of
Vietnam.
Chapter I
GENERAL PROVISIONS
Article 1
The State of the Socialist Republic of Vietnam encourages foreign investors to invest in
Vietnam on the basis of respect for the independence and sovereignty of Vietnam,
observance of its law, equality and mutual benefit.
The State of Vietnam protects the ownership of invested capital and other legal
rights of foreign investors, provides favourable conditions and formulates simple
and prompt procedures for foreign investors investing in Vietnam.
Article 2
In this Law, the following terms shall have the meanings ascribed to them hereunder:
1.Foreign direct investment means the bringing of capital into Vietnam in the form of
money or any assets by foreign investors for the purpose of carrying on investment
activities in accordance with the provisions of this Law.
2. Foreign investor means a foreign economic organization or individual investing in
Vietnam.
3. Foreign party means one party comprising one or more foreign investors.
4. Vietnamese party means one party comprising one or more Vietnamese enterprises
from any economic sector.
5. Two parties means the Vietnamese party and the foreign party. Multi-party means a
Vietnamese party and more than one foreign party, or a foreign party and more than
one Vietnamese party, or more than one Vietnamese party and more than one foreign
party.
6. An enterprise with foreign owned capital includes a joint venture enterprise and an
enterprise with one hundred (100) percent foreign owned capital.
7. A joint venture enterprise means an enterprise established in Vietnam by two or more
parties on the basis of a joint venture contract or an agreement between the
Government of the Socialist Republic of Vietnam and a foreign government, or an
enterprise established on the basis of a joint venture contract between an enterprise
with foreign owned capital and a Vietnamese enterprise or between a joint venture
enterprise and a foreign investor.
8. An enterprise with one hundred (100) per cent foreign owned capital means an
enterprise in Vietnam the capital of which is one hundred (100) per cent invested by
foreign investor(s).
9. A business co-operation contract means a written document signed by two or more
parties for the purpose of carrying on investment activities without creating a legal
entity.
10. A joint venture contract means a written document signed by the parties referred to
in item 7 of this article for the establishment of a joint venture enterprise in Vietnam.
11. A Build-Operate-Transfer contract means a written document signed by an
authorized State body of Vietnam and a foreign investor(s) for the construction and
commercial operation of an infrastructure facility for a fixed duration; upon expiry of the
duration, the foreign investor(s) shall, without compensation, transfer the facility to the
State of Vietnam.
12. A Build-Transfer- Operate contract means a written document signed by an
authorized State body of Vietnam and a foreign investor(s) for the construction of an
infrastructure facility; upon completion of construction, the foreign investor shall transfer
the facility to the State of Vietnam and the Government of Vietnam shall grant the
investor the right to operate commercially the facility for a fixed duration in order to
recover the invested capital and gain reasonable profits.
13. A Build-Transfer contract means a written document signed by an authorized State
body of Vietnam and a foreign investor(s) for the construction of an infrastructure
facility; upon completion of construction, the foreign investor shall transfer the facility to
the State of Vietnam and the Government of Vietnam shall create conditions for the
foreign investor to implement other investment projects in order to recover the invested
capital and gain reasonable profits.
14.An Export Processing Zone means an industrial zone specializing in the production
of exports and the provision of services for the production of exports and export
activities with specified boundaries established, or permitted to be established, by the
Government.
15. An Export Processing Enterprise means an enterprise which specializes in the
production of exports and the provision of services for the production of exports and
export activities and which is established and operated in accordance with the
regulations of the Government on export processing enterprises.
16. An Industrial Zone means a zone which specializes in the production of industrial
goods and the provision of services for industrial production established, or permitted to
be established, by the Government of Vietnam.
17. An Industrial Zone Enterprise means an enterprise established and operated within
an Industrial Zone.
18. Invested Capital means the capital required to implement an investment project,
including legal capital and loan capital.
19. Legal capital of an enterprise with foreign owned capital means the capital required
to establish the enterprise as stated in its charter.
20. Capital contribution means the capital contributed by a party to the legal capital of
an enterprise.
21. Reinvestment means using profits and other lawful earnings from investment
activities in Vietnam to invest in projects which are being implemented or to make new
investments in Vietnam under any of the forms stipulated in this Law.
Article 3
Foreign investors may invest in Vietnam in sectors of its national economy.
The State of Vietnam encourages foreign investors to invest in the following sectors and
regions :
1.
Sectors :
a.
Production of exports;
b.
Husbandry, farming and processing of agricultural produce, forestry, and aquaculture;
c.
Utilization of high technology and modern techniques, protection of ecological
environment and investment in research and development;
d.
Labour intensive activities, processing of raw materials and efficient utilization of
natural resources in Vietnam;
e.
Construction
establishments.
of
infrastructure
facilities
and
important
industrial
production
2. Regions :
(a) Mountainous and remote regions;
(b) Regions with difficult economic and social conditions;
The State of Vietnam will not license any foreign investment project in sectors or
regions which may have adverse effects on national defence, national security, cultural
and historical heritage, fine custom and tradition, or the ecological environment.
Based on the development planning and orientation for each period, the Government
shall stipulate the regions in which investment is encouraged and shall issue lists of
encouraged investment projects and specially encouraged investment projects, lists of
sectors in which licensing of investment is conditional, and lists of sectors in which
investment will not be licensed.
Private Vietnamese economic organizations shall be permitted to co-operate with
foreign investors in sectors, subject to conditions stipulated by the Government.
Chapter II
FORMS OF INVESTMENT
Article 4
Foreign investors may invest in Vietnam in any of the following forms :
1.
Business co-operation on the basis of a business co-operation contract;
2.
Joint venture enterprise;
3.
Enterprise with one hundred (100) per cent foreign owned capital.
Article 5
Two or more parties may, on the basis of a business co-operation contract, enter into a
business co-operation, such as profit sharing production, product sharing co-operation,
or other business co-operation.
The parties shall agree on, and expressly state in the business co-operation contract,
the objects, nature and duration of the business, their respective rights, obligations and
responsibilities, and the relationship between them.
Article 6
Two or more parties may, on the basis of a joint venture contract, co-operate to
establish a joint venture enterprise in Vietnam.
A joint venture enterprise may co-operate with foreign investor(s) or Vietnamese
enterprises to establish a new joint venture enterprise in Vietnam.
A joint venture enterprise shall be established in the form of a limited liability company
and shall be a legal entity in accordance with the law of Vietnam.
Article 7
1. The foreign party to a joint venture enterprise may make its contribution to the legal
capital in :
a.
Foreign currency or Vietnamese currency originating from investments in Vietnam;
b.
Equipment, machinery, plant and other construction works;
c.
The value of industrial property rights, technical know-how, technological processes
and technical services.
2. The Vietnamese party to a joint venture enterprise may make its contribution to the
legal capital in :
a.
Vietnamese currency or foreign currency;
b.
The value of the right to use land in accordance with the law on land;
c.
d.
e.
Resources, the value of the right to use water and sea surfaces in accordance with the
law;
Equipment, machinery, plant and other construction works;
The value of industrial property rights, technical know-how, technological processes
and technical services.
3. Capital contribution made by the parties in forms other than those stipulated in
clauses 1 and 2 of this article must be approved by the Government.
Article 8
Capital contribution of a foreign party or foreign parties to the legal capital of a joint
venture enterprise shall be agreed by the parties and shall not be limited provided that
the contribution is not less than thirty (30) per cent of the legal capital, except in cases
stipulated by the Government.
In the case of a multi-party joint venture enterprise, the minimum capital contribution to
be made by each Vietnamese party shall be determined by the Government.
With respect to important economic establishments as determined by the Government,
the parties shall agree to increase gradually the proportion of the Vietnamese party's
contribution to the legal capital of the joint venture enterprise.
Article 9
The value of the capital contribution made by each party to a joint venture enterprise
shall be calculated by reference to the market price at the time of contribution. The
capital contribution schedule shall be agreed by the parties, stated in the joint venture
contract and approved by the body in charge of State management of foreign
investment.
The value of equipment and machinery contributed as capital must be certified by an
independent inspection organization.
The parties shall be responsible for the truth and accuracy of the value of their
respective capital contributions. Where necessary, the body in charge of State
management of foreign investment has the right to appoint an inspection organization to
revalue the capital contribution of each party.
Article 10
The parties shall share the profits and bear the risks associated with a joint venture
enterprise in proportion to their respective capital contributions, except where it is
otherwise agreed by the parties as stated in the joint venture contract.
Article 11
The board of management shall be the body in charge of the management of the joint
venture enterprise and shall comprise representatives of the parties to the joint venture
enterprise.
Each party to a joint venture enterprise shall appoint members to the board of
management in proportion to its capital contribution to the legal capital of the joint
venture enterprise.
In the case of a two-party joint venture enterprise, each party shall have at least two
members on the board of management.
In the case of a multi-party joint venture, each party shall have at least one member on
the board of management.
If a joint venture enterprise has one Vietnamese party and more than one foreign party,
or one foreign party and more than one Vietnamese party, the Vietnamese or foreign
party concerned shall have the right to appoint at least two members to the board of
management.
In respect of a joint venture enterprise established by an existing joint venture enterprise
in Vietnam and a foreign investor or a Vietnamese enterprise, the existing joint venture
enterprise shall have at least two members on board of management, one of whom
must be appointed by the Vietnamese party.
Article 12
The chairman of the board of management shall be appointed by the parties to the joint
venture enterprise. The chairman of the board of management shall be responsible for
convening and chairing meetings of the board of management and for monitoring the
execution of any resolutions of the board of management.
The general director and deputy general directors shall be appointed and dismissed by
the board of management. They shall be responsible before the board of management
and the law of Vietnam for the management and running of the operations of the joint
venture enterprise.
The general director or the first deputy general director shall be a Vietnamese citizen.
The duties and powers of the chairman of the board of management, the general
director and the first deputy general director shall be stated in the charter of the joint
venture enterprise.
Article 13
The board of management shall decide on regular meetings. Extra-ordinary meetings of
the board of management may be convened at the request of the chairman of the board
of management, two thirds of the board members, the general director or the first
deputy general director. Meetings of the board of management shall be convened by
the chairman of the board of management.
Meetings of the board of management must have a quorum of at least two thirds of the
members of the board of management representing all the parties to the joint venture.
Article 14
1. Principal matters which relate to the organization and operation of the joint venture,
comprising the appointment and dismissal of the general director, the first deputy
general director and the chief accountant; amendments of and additions to the charter
of the enterprise; approval of final annual financial statements and final financial
statements of capital construction; and loans for investment, shall be decided by the
members of the board of management who are present at the meeting on the basis of
the principle of unanimous decision.
The joint venture parties may agree on and state in the joint venture charter other
issues which require unanimous decision.
2. With respect to matters which are not referred to in clause 1 of this article, the board
of management shall decide on the basis of the principle of simple majority voting by
members who are present at the meeting.
Article 15
Foreign investors may establish in Vietnam an enterprise with one hundred (100) per
cent foreign owned capital.
An enterprise with one hundred (100) per cent foreign owned capital shall be
established in the form of a limited liability company and shall be a legal entity in
accordance with the law of Vietnam.
An enterprise with one hundred (100) per cent foreign owned capital may co-operate
with a Vietnamese enterprise to establish a joint venture enterprise.
With respect to important economic establishments as determined by the Government,
Vietnamese enterprises shall, on the basis of agreements with the owner of the
enterprise, be permitted to purchase a part of the capital of the enterprise to convert
such enterprise into a joint venture enterprise.
Article 16
The legal capital of an enterprise with foreign owned capital must be at least thirty (30)
per cent of its invested capital. In special cases and subject to approval of the body in
charge of State management of foreign investment, this proportion may be lower than
thirty (30) per cent.
During the course of its operation, an enterprise with foreign owned capital must not
reduce its legal capital.
Article 17
The duration of an enterprise with foreign owned capital and the duration of a business
co-operation contract shall be stated in the investment licence for each project in
accordance with regulations of the Government, but shall not exceed fifty (50) years.
Pursuant to regulations made by the Standing Committee of the National Assembly, the
Government may, on a project by project basis, grant a longer duration but the
maximum duration shall not exceed seventy (70) years.
Article 18
Foreign investors may invest in industrial zones and export processing zones in any of
the investment forms stipulated in article 4 of this Law.
Vietnamese enterprises in any economic sector may co-operate with foreign investors
to invest in industrial zones and export processing zones in any of the investment forms
stipulated in clause 1 and 2 of article 4 of this Law or may establish their wholly owned
enterprises.
The transfer of goods between enterprises operating in the Vietnamese market and
export processing enterprises shall be deemed to be an export-import activity and shall
be regulated by the provisions of the law on export and import. The Government shall
provide simple and convenient procedures for export processing enterprises to
purchase raw materials, materials and other goods from the Vietnamese market.
The Government shall make regulations on industrial zones and export processing
zones.
Article 19
Foreign investors investing in the construction of infrastructure facilities may enter into
Build-Operate-Transfer contracts, Build-Transfer-Operate contracts, or Build-Transfer
contracts with an authorized State body of Vietnam. Foreign investors shall be entitled
to the rights and be subject to the obligations stipulated in such contract.
The Government shall make detailed regulations on investment on the basis of BuildOperate-Transfer contracts, Build-Transfer-Operate contracts and Build-Transfer
contracts.
Chapter III
INVESTMENT GUARANTEE MEASURES
Article 20
The State of the Socialist Republic of Vietnam shall guarantee that foreign investors
investing in Vietnam are treated fairly and equitably.
Article 21
During the course of investment in Vietnam, capital and other lawful assets of foreign
investors shall not be requisitioned or expropriated by administrative measures, and
enterprises with foreign owned capital shall not be nationalized.
The State of the Socialist Republic of Vietnam shall protect industrial property rights and
shall guarantee the legal interests of foreign investors in respect of technology transfers
into Vietnam.
Where the interests of a licensed enterprise with foreign owned capital or of the parties
to a licensed business co-operation contract are adversely affected by a change in the
law of Vietnam, the State shall take appropriate measures to protect the interests of the
investors.
Article 22
Foreign investors investing in Vietnam shall have the right to transfer abroad :
1.
Their profits derived from business operations;
2.
Payments received from the provision of technology and services;
3.
The principal of and interest on any foreign loan obtained during the course of
operation;
4.
The invested capital;
5.
Other sums of money and assets lawfully owned.
Article 23
Foreigners working in Vietnam for enterprises with foreign owned capital or for parties to
business co-operation contracts shall, after payment of income tax as stipulated by law,
be permitted to transfer abroad their lawful incomes.
Article 24
Any dispute between the parties to a business co-operation contract, between the
parties to a joint venture contract, or between enterprises with foreign owned capital or
parties to a business co-operation contract and Vietnamese enterprises must firstly be
resolved by negotiation and conciliation.
Where the parties fail to settle the dispute by way of conciliation, the dispute shall be
referred to a Vietnamese arbitration body or a Vietnamese court in accordance with the
law of Vietnam.
With respect to disputes between parties to a joint venture enterprise or a business cooperation contract, the parties may agree in the contract to appoint another arbitration
body to resolve the dispute.
Any disputes arising from a Build-Operate-Transfer, a Build-Transfer-Operate or a
Build-Transfer contract shall be resolved in accordance with the dispute resolution
mechanism agreed by the parties and stated in the contract.
Chapter IV
RIGHTS AND OBLIGATIONS
OF FOREIGN INVESTORS AND
ENTERPRISES WITH FOREIGN OWNED CAPITAL
Article 25
Enterprises with foreign owned capital and parties to a business co-operation contract
shall have the right to recruit and employ labour in accordance with its business
requirements, provided that priority must be given to recruiting and employing
Vietnamese citizens. Foreigners shall only be recruited and employed for jobs which
require a level of technical and management expertise which a Vietnamese citizen
cannot satisfy, but training Vietnamese citizens as replacements must be undertaken.
The rights and obligations of an employee of an enterprise with foreign owned capital
shall be ensured by the labour contract, the collective labour agreement and the
provisions of the law on labour.
Article 26
Employers and foreign and Vietnamese employees must comply with the provisions of
the law on labour and other relevant legislation, and respect the honour, dignity and
traditional customs of each other.
Article 27
Enterprises with foreign owned capital must respect the rights of Vietnamese
employees to participate in a political organization and socio-political organizations in
accordance with the law of Vietnam.
Article 28
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts must purchase insurance cover for property and civil liabilities from
Vietnamese insurance companies or other insurance companies permitted to operate in
Vietnam.
Article 29
The transfer of foreign technology to Vietnam in foreign investment projects may be
carried out in the form of capital contribution of the value of technology or technology
purchases made on the basis of a contract in accordance with the law on technology
transfer.
The Government of Vietnam encourages accelerated transfers of technology, especially
those of advanced technology.
Article 30
Enterprises with foreign owned capital and the parties to business co-operation
contracts must, following completion of capital construction for the establishment of the
enterprise, undertake a construction audit and prepare a financial statement of
construction works which must be certified by an inspection organization.
Enterprises with foreign owned capital and parties to business co-operation contracts
must carry out tenders in accordance with the provisions of the law on tendering.
Article 31
Enterprises with foreign owned capital and parties to business co-operation contracts
shall have the right to autonomy in conducting their businesses in accordance with the
objectives stipulated in the investment license; to import equipment, machinery,
materials and means of transport; to export and sell either directly, or through an agent,
their products in order to implement their investment projects in accordance with the
law.
Enterprises with foreign owned capital and parties to business co-operation contracts
must give priority to purchasing equipment, machinery, materials, and means of
transport in Vietnam where the technical and commercial conditions are similar.
Article 32
An enterprise with foreign owned capital may establish branches outside the province or
city under central authority in which its head office is located to carry out business
activities within the scope and objectives stipulated in the investment licence provided
that the approval of the people's committee of the province or city under central
authority in which the branch is to be located is obtained.
Article 33
Enterprises with foreign owned capital and parties to business co-operation contracts
shall, by themselves, meet the demand of foreign currency for their operations.
The Government of Vietnam assures its assistance in maintaining foreign currency
balance with respect to projects for the construction of infrastructure facilities or the
production of essential import substitutes, and other important projects.
Article 34
Any party to a joint venture shall have the right to assign its contributed capital in the
joint venture enterprise provided that priority is given to the other parties to the joint
venture enterprise. Where the assignment is made to a party other than a party to the
joint venture enterprise, the conditions of the assignment must not be more favourable
than those offered to the other joint venture parties. The assignment must be agreed to
by the parties to the joint venture.
These provisions shall also apply to the assignment of rights and obligations of a party
to a business co-operation contract.
An enterprise with one hundred (100) per cent foreign owned capital may assign its
capital provided that priority is given to Vietnamese enterprises.
The assignment of capital shall only be effective upon the assignment contract being
approved by the body in charge of State management of foreign investment.
Where profits arise from the assignment, the assignor must pay profits tax at a rate of
twenty five (25) per cent on that profit. In the case of an assignment made to a
Vietnamese enterprise, the assignor shall be entitled to a reduction of or exemption
from tax.
Article 35
An enterprise with foreign owned capital shall open bank accounts in both Vietnamese
currency and foreign currency at Vietnamese banks or joint venture banks or foreign
bank branches established in Vietnam.
In special cases, an enterprise with foreign owned capital may open a loan account at a
bank located in a foreign country provided that the approval of the State Bank of
Vietnam is obtained.
Article 36
The conversion of Vietnamese currency into foreign currency shall be effected at the
official exchange rate published by the State Bank of Vietnam at the time of conversion.
Article 37
An enterprise with foreign owned capital and a foreign party to a business co-operation
contract shall apply the Vietnamese accounting system. The approval of the Ministry of
Finance must be obtained if another common accounting system is applied.
Depreciation of fixed assets of enterprises with foreign owned capital and foreign parties
to business co-operation contracts shall be carried out in accordance with the
regulations of the Government.
Annual financial statements of enterprises with foreign owned capital and foreign parties
to business co-operation contracts shall be audited by an independent Vietnamese
auditing company or another independent auditing company permitted to operate in
Vietnam in accordance with the provisions of the law auditing. Annual financial
statements must be sent to the State financial body and the body in charge of State
management of foreign investment.
Article 38
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts shall be subject to profits tax at a rate of twenty five (25) per cent on the
profits earned; where investment is encouraged, the rate of profits tax shall be twenty
(20) per cent on the profits earned. Where the investment satisfies many investment
promotion criteria, the rate of profits tax shall be fifteen (15) per cent on the profits
earned. Where the investment is specially encouraged, the rate of profits tax shall be
ten (10) per cent on the profits earned.
For investments in the exploitation of oil, gas and other rare and precious resources, the
rate of profits tax shall be in accordance with the provisions of the Law on Petroleum
and other relevant legislation.
Article 39
Depending on the investment sector and region as stipulated in article 3 of this Law, an
enterprise with foreign owned capital and a foreign party to a business co-operation
contract may be exempted from profits tax for a maximum period of two (2) years
commencing from the first profit-making year and may be entitled to a fifty (50) per cent
reduction of profits tax for a maximum period of two (2) successive years.
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts implementing a project which satisfies many investment promotion criteria
shall be exempted from profits tax for a maximum period of four (4) years commencing
from the first profit-making year and may be entitled to a fifty (50) per cent reduction of
profits tax for a further maximum period of four (4) years.
For cases where investment is specially encouraged, exemption from profits tax may be
allowed for a maximum period of eight (8) years.
Article 40
During its operation, losses incurred by a joint venture enterprise in any tax year may be
carried forward to the following year and set off against the profits of subsequent years
for a maximum of five (5) years.
Article 41
After payment of profits tax, an enterprise with foreign owned capital shall deduct five
(5) per cent of the remaining profits to establish a reserve fund. The reserve fund shall
be limited to ten (10) per cent of the legal capital of the enterprise. The percentage of
profits set aside for a welfare fund and other funds shall be agreed by the parties and
stated in the charter of the enterprise.
Article 42
Where reinvestment is made in encouraged investment projects, the total or a part of
the profits tax paid in respect of the reinvested profits shall be refunded. The
Government shall stipulate the percentage of profits tax to be refunded in respect of the
reinvested profits depending on the investment sector and region and the form and
duration of the reinvestment.
Article 43
A foreign investor shall, when transferring profits abroad, be subject to withholding tax
at rates of five (5) per cent, seven (7) per cent or ten (10) per cent of the profits
transferred, depending on the level of capital contribution of such foreign investor in the
legal capital of the enterprise with foreign owned capital or the capital for the
implementation of a business co-operation contract.
Article 44
Overseas Vietnamese investing in Vietnam in accordance with provisions of this Law
shall be entitled to a reduction of profits tax of twenty (20) per cent of the otherwise
applicable tax rate, with the exception of cases where the ten (10) per cent rate of
profits tax is applicable, and shall be entitled to a withholding tax rate of five (5) per cent
on profits transferred abroad.
Article 45
Pursuant to Government regulations, the body in charge of State management of
foreign investment shall apply the profits tax rates, the periods of exemption from and
reduction of profits tax, and the withholding tax rates in accordance with articles 38, 39,
43, and 44 of this Law. Tax rates and periods of exemption from and reduction of tax
shall be specified in the investment licence.
If the investment conditions change during the implementation of an investment project,
the exemption from or reduction of taxes applicable to the enterprise with foreign owned
capital or the foreign party to a business co-operation contract shall be determined by
the Ministry of Finance.
Article 46
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts must pay rent for the use of land, water or sea surfaces. Where natural
resources are exploited, royalties must be paid in accordance with the provisions of the
law.
The Government shall provide for exemptions from rent for the use of land, water or sea
surfaces with respect to build-operate-transfer, build-transfer-operate, or build-transfer
projects, and investment projects in mountainous and remote regions or regions with
difficult socio-economic conditions.
Article 47
Products exported or imported by an enterprise with foreign owned capital or a party to
a business co-operation contract shall be subject to export and import duties in
accordance with the Law on Export and Import Duties.
Equipment, machinery and specialized means of transportation which are used in a
technological process imported into Vietnam for the purpose of forming the fixed assets
of an enterprise with foreign owned capital, forming the fixed assets for the
implementation of a business co-operation contract, or to expand the scale of an
investment project, and imported means of transportation used to transport workers
shall be exempted from import duty.
The Government may grant exemption from, or reduction of, export and import duties in
respect of other special goods which are subject to investment encouragement.
Article 48
An export processing enterprise shall be entitled to exemption from export duty on
goods exported from an export processing zone to a foreign country or import duty on
goods imported into an export processing zone from a foreign country.
Export processing enterprises and enterprises with foreign owned capital in industrial
zones shall be entitled to preferential tax rates in cases where investment is
encouraged or specially encouraged in accordance with articles 38, 39, 43, and 44 of
this Law. The Government shall provide for the preferential tax rates applicable to each
kind of export processing enterprise and enterprise with foreign owned capital in
industrial zones.
Article 49
In addition to the types of tax stipulated in this Law, an enterprise with foreign owned
capital and a foreign party to a business co-operation contract must pay other taxes in
accordance with the law.
Article 50
Foreign and Vietnamese personnel working in an enterprise with foreign owned capital
or for parties to a business co-operation contract must pay income tax in accordance
with the law.
Article 51
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts have the responsibility to comply with the provisions of the law on
environmental protection.
Article 52
The operation of an enterprise with foreign owned capital or a business co-operation
contract shall be terminated in the following cases :
1.
The expiry of the duration stipulated in the investment licence.
2.
Following the proposal of one or more of the parties subject to approval by the body in
charge of State management of foreign investment.
3.
According to a decision of the body in charge of State management of foreign
investment in consequence of a serious violation of the law or any provision(s) of the
investment licence.
4.
Following a declaration of bankruptcy.
5.
In other cases stipulated by law.
Article 53
1.
Upon the termination of operation as stipulated in clauses 1, 2, 3, and 5 of article 52 of
this Law, the enterprise with foreign owned capital or the parties to the business cooperation contract must proceed to liquidate the assets of the enterprise, settle the
outstanding liabilities of the parties to the contract, and perform other obligations in
accordance with the provisions of the law.
2.
Enterprises with foreign owned capital which are declared bankrupt shall be dealt with
in accordance with the law on business bankruptcy.
Chapter V
STATE MANAGEMENT OF
FOREIGN INVESTMENT
Article 54
The scope of State management of foreign investment includes :
1.
Developing strategies, master plans, plans and policies on foreign investment;
2.
Promulgating laws and regulations on foreign investment activities;
3.
4.
5.
Providing guidance to ministries and local authorities with respect to the performance
of activities relating to foreign investment;
Issuing and revoking investment licences;
Determining the co-ordination between State bodies in relation to managing foreign
investment activities;
6.
Inspecting, monitoring and supervising foreign investment activities.
Article 55
The Government shall uniformly carry out State management of foreign investment in
Vietnam.
The Government shall make provisions on the issuance of investment licences by the
Ministry of Planning and Investment; decide on the delegation of investment licence
issuing authority to qualified people's committees of provinces or cities under central
authority, based on the master plans and plans for socio-economic development, the
investment sector, the nature of the investment, and the scale of the investment project;
and make provisions on the issuance of investment licences with respect to investment
projects in industrial zones and export processing zones.
Article 56
The Ministry of Planning and Investment shall be the body in charge of State
management of foreign investment and shall assist the Government in managing
foreign investment activities in Vietnam.
The Ministry of Planning and Investment shall have the following duties and powers :
1.
Preside over the preparation and submissions to the Government of strategies and
plans to attract foreign investment; draft laws, regulations and policies on foreign
investment; co-ordinate with ministries, ministerial level bodies and Government bodies
in relation to the State management of foreign investment; provide guidance to people's
committees of provinces and cities under central authority on the implementation of
laws, regulations and policies on foreign investment;
2.
Prepare and co-ordinate list(s) of investment projects; provide guidance on investment
procedures; carry out State management of investment promotion and consultancy
activities;
3.
Receive investment applications and preside over the evaluation of investment
projects; issue investment licences within its authority;
4.
Act as a co-ordinating body to deal with problems arising during the formation,
commencement and implementation of foreign investment projects;
5.
6.
Evaluate social and economic effects of foreign investment activities;
Inspect and supervise the implementation of foreign investment activities in Vietnam in
accordance with the law.
Article 57
Ministries, ministerial level bodies, and Government bodies shall carry out State
management of foreign investment within their authority and in accordance with the
following powers and functions :
1.
Co-ordinate with the Ministry of Planning and Investment to prepare laws and
regulations, policies, master plans and plans relating to foreign investment;
2.
Prepare plans and lists of investment projects calling for foreign investment within their
respective industries; and organize the promotion and encouragement of investment;
3.
Participate in the evaluation of investment projects;
4.
Guide and resolve procedures relating to the commencement and implementation of
investment projects;
5.
Inspect and supervise the operations of enterprises with foreign owned capital and of
parties to business co-operation contracts within their respective scopes of
responsibility;
6.
Perform other duties within their authority in accordance with the provisions of the law.
Article 58
People's committees of provinces and cities under central authority shall carry out State
management of foreign investment in their respective localities in accordance with the
following powers and functions :
1.
On the basis of approved socio-economic development master plans, prepare and
publish a list of local projects calling for foreign investment; organize the promotion and
encouragement of investment;
2.
Participate in the evaluation of foreign investment projects in their respective localities;
3.
Receive investment applications, evaluate investment projects and issue investment
licences to foreign investment projects in their localities in accordance with the authority
delegated by the Government;
4.
Resolve all administrative procedures relating to the formation, commencement and
implementation of investment projects within their respective authority;
5.
Carry out State management in their localities with respect to the business production
activities of enterprises with foreign owned capital and parties to business co-operation
contracts;
6.
Inspect and supervise the operations of enterprises with foreign owned capital and
parties to business co-operation contracts.
Article 59
Parties or one of the parties or the foreign investor shall send to the investment licence
issuing body an application file for an investment licence, comprising an application for
an investment licence, the business co-operation contract or the joint venture contract,
the charter of the enterprise, a technical-economic explanatory statement and other
relevant documentation.
Article 60
The investment licence issuing body shall consider the application and notify the
investor of its decision no later than sixty (60) days as from the date of receipt of a
proper application file. The approval decision shall be notified in the form of an
investment licence.
An investment licence shall be the certificate of business registration.
Article 61
The joint venture contract, the business cooperation contract, the charter of the
enterprise, and any changes to the business objectives, the scale of production or the
contribution ratio of the legal capital must be approved by the body in charge of State
management of foreign investment.
Article 62
Ministries, ministerial level bodies, Government bodies and people's committees of
provinces and cities under central authority shall be responsible for the settlement of
procedures relating to the implementation of investment projects within thirty (30) days
as from the receipt of the proper documents.
Article 63
Any foreign investor, enterprise with foreign owned capital, party to a business cooperation contract, organization, individual, State officer or body breaching the
provisions of the law on foreign investment shall, depending on the seriousness of the
breach, be dealt with in accordance with the provisions of the law.
Article 64
Any foreign investor, enterprise with foreign owned capital, party to a business cooperation contract, organization or individual shall have the right to lodge a complaint or
to take legal action against the decision or conduct of State officers or bodies, which is
illegal, or which causes difficulties and inconveniences. The complaint or legal action
and the resolution of complaints or legal actions shall be in accordance with the
provisions of the law.
Chapter VI
IMPLEMENTATION PROVISIONS
Article 65
Pursuant to the provisions of this Law, the Government shall make provisions for
hospitals, schools, and research institutes in technological, technical, and natural
science sectors to co-operate in foreign investment activities.
Article 66
Pursuant to the principles set out in this Law, the
Government of the Socialist Republic of Vietnam may enter into agreements with
foreign governments for co-operation and investments which are consistent with the
economic relations between Vietnam and the country concerned.
Article 67
This Law shall be of full force and effect as of the date of promulgation.
This Law replaces the Law on Foreign Investment in Vietnam dated 29 December 1987,
the Law on the Amendment of and Addition to a Number of Articles of the Law on
Foreign Investment in Vietnam dated 30 June 1990, and the Law on the Amendment of
and Addition to a Number of Articles of the Law on Foreign Investment in Vietnam dated
23 December 1992.
Article 68
The Government shall make detailed provisions for the implementation of this Law.
This Law was passed by the National Assembly of the Socialist Republic of Vietnam at
its IX legislature, 10th Session on 12th November 1996.
CHAIRMAN OF THE NATIONAL ASSEMBLY
Nong Duc Manh
SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness
GOVERNMENTNo. 12/CP Hanoi, 18 February 1997
GOVERNMENT DECREE
PROVIDING DETAILED
REGULATIONS ON THE
IMPLEMENTATION OF THE LAW ON
FOREIGN INVESTMENT IN VIETNAM
the government
Pursuant to the Law on Organization of the Government dated 30 September 1992;
Pursuant to the Law on Foreign Investment in Vietnam dated 12 November 1996;
Pursuant to the Law on Promulgation of Legal Instruments dated 12 November 1996;
Following the proposal of the Minister of Planning and Investment,
Decrees :
Chapter I
GENERAL PROVISIONS
Article 1
This Decree makes detailed provisions on the implementation of the Law on Foreign
Investment in Vietnam dated 12 November 1996.
Investments in industrial zones, export processing zones and investment under buildoperate- transfer (abbreviated in English as BOT ) contracts , build-transfer-operate
(BTO) contracts and build-transfer (BT) contracts shall comply with the relevant
provisions of this Decree and other legislation of the Government on industrial
zones,export procesing zones, BOT, BTO and BT.
International credit activities, operations of branches of foreign companies in Vietnam,
and other forms of indirect investment and trade are beyond the scope of this Decree.
Article 2
Entities participating in investment co-operation in accordance with the provisions of the
Law on Foreign Investment in Vietnam shall include :
1. Vietnamese enterprises:
l State owned enterprises established in accordance with the Law on State Owned
Enterprises;Co-operatives established in accordance with the Law on Co-operatives;
Enterprises belonging to socio-political organizations;
Enterprises established in accordance with the Law on Companies;
Enterprises established in accordance with the Law on Private Enterprises.
2. Vietnamese organizations which are entities referred to in article 65 of the Law on
Foreign Investment in Vietnam and which satisfy the criteria stipulated by the
Government.
3. Foreign investors.
4. Enterprises with foreign owned capital.
5. Overseas Vietnamese.
6. State bodies authorized to enter into BOT, BTO and BT contracts.
Article 3
Based on the economic and social development planning and orientation for each
period, the Ministry of Planning and Investment shall co-ordinate with ministries,
branches and people's committees of provinces and cities under central authority
(hereinafter referred to as provincial people’s committees ) to submit to the Government
for approval and promulgation a list of regions in which investment is encouraged, a list
of encouraged investment projects and specially encouraged investment projects, a list
of sectors in which licensing of investment is conditional, and a list of sectors in which
investment will not be licensed.
Article 4
Investment license issuing bodies as stipulated in article 55 of the Law on Foreign
Investment in Vietnam shall be:
Ministry of Planning and Investment.
Qualified provincial people`s committees in accordance with the decision of the
Government on delegation of licensing authority.
Based on the proposal of the provincial people`s committee and the conditions of each
board of management of an industrial zone, the Ministry of Planning and Investment
shall submit to the Pride Minister of the Government for a decision on authorization by
the Ministry of Planning and Investment to a board of management of an industrial zone
in respect of the issuance of investment licences to investment projects in such
industrial zone.
Article 5
1.
During its operation in Vietnam, an entity participating in investment co- operation as
stipulated in article 2 of this Decree must comply with the provisions of the Law on
Foreign Investment in Vietnam, the provisions of this Decree and other relevant
provisions of the laws of Vietnam.
2.
In cases where Vietnamese law does not yet provide for dealing with particular
situations relating to foreign investment in Vietnam, the parties may agree in the
contract to apply foreign laws provided that such agreement is not inconsistent with the
provisions of Vietnamese law.
Article 6
The files of an investment project and official correspondence with State bodies of
Vietnam must be done in Vietnamese or in Vietnamese and a commonly used foreign
language.
Chapter II
FORM OF INVESTMENT
Article 7
1.
A business co-operation contract is a document signed by two or more parties
(hereinafter referred to as the parties to business co-operation contracts) which
stipulates the responsibilities of, and the sharing of business results between, the
parties for the purposes of commencing business investment in Vietnam without
creating a legal entity.
Commercial contracts, contracts for the delivery of raw materials in return for finished
products, equipment purchasing contracts on deferred payment plans, and other
contracts which do not provide for the sharing of profits or business results are beyond
the scope of the regulations of this Decree.
Business co-operation contracts for the exploration for or exploitation of oil and gas and
a number of other natural resources in the form of a production sharing contracts shall
be governed by the provisions of the law on petroleum, the relevant law, and the Law on
Foreign Investment in Vietnam.
2. A business co-operation contract shall be signed by the duly authorized
representatives of the parties to business co-operation contracts .
Article 8
A business co-operation contract must contain the following principal matters:
1.
2.
The nationalities, addresses, and names of the duly authorized representatives of the
parties to business co-operation contracts.
The objectives and scope of business.
3.
The contributions of the parties to business co-operation contracts, the sharing of
business results, and the schedule for performance of the contract.
4.
The main products and the ratio of products for export and products for domestic
consumption.
5.
The duration of the contract.
6.
The rights and obligations of the parties to business co-operation contracts.
7.
Amendment and termination of the contract and conditions of assignment.
8.
Dispute resolution.
A business co-operation contracts shall be effective as from the date of issuance of the
investment licence.
Article 9
When conducting business, the parties to business co-operation contracts may by
agreement establish a co-ordination board to monitor and supervise the performance of
the business co-operation contract. The co-ordination committee of a business cooperation contract shall not be the legal representative of the parties to business cooperation contracts.
The functions, duties and powers of the co-ordination board shall be agreed by the
parties.
Article 10
The application file for an investment licence in respect of an investment project in the
form of a business co-operation contract shall include:
1.
The application form for an investment licence.
2.
The business co-operation contract.
3.
Statements certifying the legal status and financial capacity of the parties.
4.
The economic-technical explanatory statement.
5.
Other documents stipulated in articles 38, 39, 45 and 83 of this Decree.
Article 11
1.
The foreign party shall fulfill tax obligations and other financial obligations in
accordance with the Law on Foreign Investment in Vietnam; the Vietnamese party shall
fulfill tax obligations and other financial obligations in accordance with the provisions of
the law applicable to domestic enterprises.
2.
Each of the parties to business cooperation contracts shall be responsible for its
activities before the law of the Socialist Republic of Vietnam.
Article 12
1.
A joint venture enterprise is an enterprise established in Vietnam on the basis of a joint
venture contract signed by one or more Vietnamese parties and one or more foreign
parties in order to invest and carry on business in Vietnam.
2.
A new joint venture enterprise is an enterprise established by a licensed joint venture
enterprise operating in Vietnam and a foreign investor, or a Vietnamese enterprise, or a
licensed joint venture enterprise or enterprise with one hundred (100) per cent foreign
owned capital operating in Vietnam.
In special circumstances, a joint venture enterprise may be established on the basis of
an agreement signed by the Government of the Socialist Republic of Vietnam and a
foreign government.
3. A joint venture enterprise shall be established in the form of a limited liability
company and shall be a legal entity in accordance with the law of Vietnam; each joint
venture party shall be responsible to the other party and to the joint venture enterprise
to the extent of its contribution to the legal capital.
4. A joint venture enterprise shall be established and operate as from the date of
issuance of the investment licence.
Article 13
The application file for an investment licence in respect of a joint venture enterprise
shall include:
1.
The application form for an investment licence.
2.
The joint venture contract.
3.
The charter of the joint venture enterprise.
4.
Statements certifying the legal status and financial capacity of the joint venture parties.
5.
The economic-technical explanatory statement.
6.
Other documents as stipulated in articles 38, 39, 45, and 83 of this Decree.
Article 14
A joint venture contract must contain the following principal matters:
1.
2.
The nationalities, addresses, and authorized representatives of the joint venture
parties.
The objectives and scope of the business.
3.
The invested capital, legal capital, legal capital contribution ratio, method and schedule
for making capital contributions, and schedule for capital construction.
4.
The main products and the ratio of products for export and products for domestic
consumption.
5.
The duration of operation of the enterprise.
6.
The rights and obligations of the parties.
7.
8.
Amendment and termination of the contract, conditions of assignment, conditions for
termination and dissolution of the enterprise.
Dispute resolution.
Article 15
The charter of a joint venture enterprise must contain the following principal matters:
1.
2.
The nationalities, addresses and names of the authorized representatives of the joint
venture parties, and the name and address of the enterprise.
The objectives and scope of business of the enterprise.
3.
The invested capital, legal capital, legal capital contribution ratio, method and schedule
for making legal capital contributions.
4.
The number of members, composition, duties, powers, and term of office of the board
of management; the duties and powers of the general director and deputy general
directors of the enterprise.
5.
The representative of the enterprise before the courts, arbitration bodies, and
Vietnamese State bodies.
6.
The financial principles.
7.
The ratio for distribution of profits and losses between the joint venture parties.
8.
The duration of operation, and termination and dissolution of the enterprise.
9.
Labour relations within the enterprise, training plans for executives, technical and
professional staff, and employees.
10. The procedure for amendment of the charter of the joint venture enterprise.
Article 16
If, during operation, the joint venture parties agree to amend or add to the provisions of
the joint venture contract or the charter of the joint venture enterprise, then such
amendments or additions shall only be effective upon approval by the investment
licence issuing body.
Article 17
1.
The joint venture parties shall make contributions to the legal capital in accordance
with the provisions of article 7 of the Law on Foreign Investment in Vietnam.
2.
The Vietnamese party may mobilise its own capital and other capital resources of
domestic enterprises and individuals in order to ensure an appropriate proportion of the
legal capital of the joint venture enterprise.
3.
The parties shall agree on the value of the capital contribution made by each party
based on market prices at the time of contribution.
4.
A foreign party to a joint venture enterprise may make its capital contribution in
Vietnamese currency which originates from profits earned, distribution payments upon
dissolution, and assignment of invested capital in Vietnam.
5.
The making of capital contribution by a Vietnamese party in the form of the right to use
land must take into account the specific conditions of the project in order to ensure that
the land is used effectively for business purposes.
Article 18
1.
The legal capital of the joint venture enterprise must not be less than thirty (30) per
cent of the invested capital; in respect of infrastructure construction projects in regions
with difficult economic and social conditions, investment projects in mountainous
regions and remote or distant regions, and afforestation projects, this ratio may be
reduced to twenty (20) per cent provided that the approval of the investment licence
issuing body is obtained.
2.
The capital contribution of a foreign party or foreign parties shall be agreed by the joint
venture parties but shall not be less than thirty (30) per cent of the legal capital of the
joint venture enterprise.
In the case of a new joint venture, the capital contributions of foreign investors in the
legal capital must satisfy the above ratio.
In certain cases, depending on the particular business sector, technology, market,
business results, and other economic and social benefits of the project, the investment
licence issuing body may consider and permit the foreign party to reduce its capital
contribution to the legal capital to twenty (20) per cent.
3.
With respect to important projects, the joint venture parties may, when entering into the
joint venture contract, agree on the timing, method and proportion of further capital
contributions by the Vietnamese party to the legal capital of the joint venture enterprise.
Article 19
The legal capital may be contributed once in full at the time of establishment of the joint
venture enterprise or by installments over a reasonable period; the method and
schedule of contribution to the legal capital must be stipulated in the joint venture
contract and in accordance with the economic-technical explanatory statement.
In cases where the joint venture parties fail, without reasonable cause, to make capital
contributions in accordance with the agreed schedule, the investment licence issuing
body shall have the power to withdraw the investment licence.
Article 20
During its operation, a joint venture enterprise must not reduce its legal capital. Any
increase in the invested capital or legal capital, or any change in the capital contribution
ratio of the joint venture parties, must be decided by the board of management of the
enterprise and approved by the investment licence issuing body.
Article 21
1.
The board of management shall be the body in charge of the joint venture enterprise.
The board of management shall comprise a chairman, a vice-chairman and members.
The number of members constituting the board of management, the members
representing each of the joint venture parties, and the appointments of board members,
the chairman of the board of management, the general director and deputy general
directors shall be in accordance with the provisions of articles 12 and 13 of the Law on
Foreign Investment in Vietnam.
The nominations and appointments of the above members must be carried out within a
period of sixty (60) days from the date of issuance of the investment licence.
The chairman of the board of management may concurrently hold the position of
general director of the joint venture enterprise.
2.
The term of office of the members of the board of management shall be determined by
the joint venture parties but shall not exceed five years.
3.
When establishing a new joint venture enterprise, the joint venture enterprise must
have at least two members on the board of management, with at least one of those
members being a Vietnamese citizen representing the Vietnamese party in the joint
venture.
Article 22
1.
The board of management shall hold a meeting at least once a year. Meetings of the
board of management shall be convened by the chairman of the board of management;
extraordinary meetings must be requested by two thirds of the members of the board of
management, one of the joint venture parties, the general director, or the first deputy
general director.
2.
Meetings of the board of management must have a quorum of at least two thirds of the
members of the board of management representing the joint venture parties. A member
of the board of management may appoint, by a written instrument, a proxy to attend
meetings and vote on that member's behalf on matters in respect of which the proxy is
authorized to vote.
Article 23
1.
The chairman of the board of management has the following powers and duties :
to convene and chair meetings of the board of management;
to have a key role in supervising and monitoring the execution of resolutions of the board of
management.
1.
Members of the board of management shall not be entitled to a salary but shall be
entitled to an allowance relating to the operation of the board of management as
determined by the board of management. These expenses may be included in the
management expenditure of the joint venture enterprise.
Article 24
The general director and deputy general directors of the joint venture enterprise shall be
responsible for the management and conduct of the day to day activities of the joint
venture enterprise. The general director shall be the representative of the enterprise
before the court and Vietnamese State bodies. The general director or first deputy
general director must be a representative of the Vietnamese party and must be a
Vietnamese citizen residing permanently in Vietnam. In cases where the joint venture
has only one deputy general director, that director shall be the first deputy general
director.
The board of management shall determine the powers and duties of the general director
and the first deputy general director. The general director shall be responsible before
the board of management for the operation of the joint venture enterprise. In cases
where the general director and the first deputy general director have a difference of
opinion in relation to the management and running of the enterprise, the opinion of the
general director must be complied with, however, the first deputy general director may
reserve his or her opinion and raise it with the board of management at its next meeting
for consideration and decision.
Article 25
1.
Based on the business sector and nature of the project, the board of management of
the joint venture enterprise may hire the services of a management organization to
manage the operation of the enterprise.
The management contract shall be a contract for the operation, management, and
exploitation of a project as agreed by the parties signing the contract. The signing and
performance of the contract must be in accordance with the provisions of the law of
Vietnam.
The management contract must not change the objectives and scope of operation of the
project as stipulated in the investment licence. The management contract must be
approved by the investment licence issuing body within thirty (30) days from the date of
receipt of the file. If the contract is not approved within the above time-limit, the
investment licence issuing body must notify the investor in writing stating clearly the
reasons therefor.
2.
The management organization shall operate within the scope stipulated in the
approved management contract.
3.
The management organization must fulfill all tax obligations and other obligations in
accordance with the provisions of the law currently in force. The joint venture enterprise
shall, on behalf of the management organization, pay these taxes to the State of
Vietnam.
4.
In all cases, the joint venture enterprise shall be entity responsible before the law for
the operation of the management organization in its performance of the contract. The
general director and the first deputy general director of the joint venture enterprise shall
be responsible for assisting and supervising the operation of the management
organization.
Article 26
An enterprise with one hundred (100) per cent foreign owned capital is an enterprise
owned and established in Vietnam by a foreign investor who self-manages the
enterprise and takes full responsibility for its business results.
An enterprise with one hundred (100) per cent foreign owned capital shall be
established in the form of a limited liability company and shall be a legal entity in
accordance with the law of Vietnam.
An enterprise with one hundred (100) per cent foreign owned capital shall be
established and operate from the date of issuance of the investment licence.
Article 27
The application file for an investment licence in respect of an enterprise with one
hundred (100) per cent foreign owned capital shall include :
1.
The application form for an investment licence.
2.
The charter of the enterprise.
3.
Statements certifying the legal status and financial capacity of the foreign investor.
4.
The economic-technical explanatory statement.
5.
Other documents as stipulated in articles 38,39,45 and 83 of this Decree.
Article 28
1.
The legal capital of an enterprise with one hundred (100) per cent foreign owned
capital must constitute at least thirty (30) per cent of the invested capital; in respect of
infrastructure construction projects in regions with difficult economic and social
conditions, investment projects in mountainous and remote and distant regions, and
afforestation projects, this ratio may be reduced to twenty (20) per cent provided that
the approval of the investment licence issuing body is obtained.
2.
During its operation, an enterprise with one hundred (100) per cent foreign owned
capital must not reduce its legal capital. Any increase in the legal capital or invested
capital shall be determined by the enterprise and must be approved by the investment
licence issuing body.
3.
With respect to important projects, the Ministry of Planning and Investment shall
provide guidance for the foreign investor to assign capital by agreement to a
Vietnamese enterprise. The conditions, proportion and timing of such assignment shall
be specified in the investment application form.
Article 29
The charter of an enterprise with one hundred (100) per cent foreign owned capital must
contain the following principal matters :
1.
2.
The nationality, address and name of the authorized representative of the foreign
investor, and the name and address of the enterprise.
The objectives and scope of business of the enterprise.
3.
The invested capital, legal capital, method and schedule of capital contribution, and
schedule for capital construction.
4.
The representative of the enterprise before the courts, arbitration bodies, and State
bodies of Vietnam.
5.
The financial principles.
6.
The duration of operation, termination and dissolution of the enterprise.
7.
8.
Labour relations within the enterprise and training plans for executives, technical and
professional staff, and employees.
The procedure for amendment of the charter of the enterprise.
Any amendment of or addition to the charter of an enterprise with one hundred (100)
per cent foreign owned capital shall only be effective upon approval by the investment
licence issuing body.
Article 30
The representative of an enterprise with one hundred (100) per cent foreign owned
capital shall be the general director of the enterprise. If the general director is not a
permanent resident of Vietnam, then he or she must delegate his or her authority to a
representative who must be a permanent resident of Vietnam.
Article 31
1.
The duration of operation of an enterprise with foreign owned capital and the duration
of a business co-operation contract shall be proposed by the investor in accordance
with article 17 of the Law on Foreign Investment in Vietnam and shall be approved and
specified in the investment licence by the investment licence issuing body.
2.
The duration of an enterprise with foreign owned capital and the duration of a business
co-operation contract shall be calculated from the date of issuance of the investment
licence .
When enterprises with foreign owned capital or parties to business co-operation
contracts wish to extend the duration of operation as stipulated in the investment
licence, an application must be submitted to the investment licence issuing body for
consideration and decision no later than six months prior to the expiry to the duration of
operation . Within thirty (30 ) days from the date of receipt of the application for an
extension, the investment licence issuing body must notify the applicant of its decision.
If an approval is not granted within the above time -limit, the investment licence issuing
body must notify the investor in writing stating clearly the reasons therefor.
Article 32
Enterprises with foreign owned capital or parties to business co-operation contracts
must publish in central and local newspapers the main information stipulated in the
investment licence. The contents of the advertisement shall include:
The names and the addresses of the joint venture parties , the parties to business cooperation contracts , or the foreign investor;
The objectives and scope of business;
The capital of the business co-operation, the invested capital and legal capital of the
enterprise with foreign owned capital, and the capital contribution of each party;
The representative(s) of the enterprises or parties to business cooperation contracts before
the courts, arbitration bodies, and State bodies of Vietnam;
The date on which the investment licence was issued, the duration of operation of the
enterprise or the duration of the business co-operation contract.
Article 33
1.
An enterprise with foreign owned capital or a business co-operation contract shall
terminate in any one of the circumstances stipulated in article 52 of the Law on Foreign
Investment in Vietnam. Within fifteen (15) days from the date on which operations are
terminated, an enterprise with foreign owned capital or the parties to business cooperation contracts must publish such termination in central or local newspapers and
commence liquidation of the assets of the enterprise or liquidation of the business cooperation contract.
2.
The period of liquidation of an enterprise or a business co-operation contract shall not
exceed six months as from the date on which a decision is made to dissolve the
enterprise or terminate the contract prior to expiry. In special cases where approval of
the investment licence issuing body is required, this period may be extended provided
that the total period shall not exceed one year.
3.
In the case of joint venture enterprises, the board of management shall, no later than
six months prior to the expiry of operation or no later than thirty (30) days after a
decision is made to dissolve the joint venture enterprise prior to its expiry, be
responsible for the establishment of a liquidation committee comprising representatives
of the joint venture parties and shall determine the powers and the duties of the
liquidation committee. Member of the liquidation committee may be selected from the
personnel of the joint venture enterprise or from external experts.
4.
Liquidation of a business co-operation contract or liquidation of the assets of an
enterprise with one hundred (100) per cent foreign owned capital shall be determined by
the parties to business co-operation contracts or the foreign investor respectively.
5.
All expenses incurred in the process of liquidation of an enterprise or business cooperation contract shall be borne by the enterprise or the parties to business cooperation contracts as the case may be and shall take priority over payment of all other
liabilities.
6.
All other liabilities of the enterprise or parties to business co-operation contracts shall
be paid in accordance with the following order of priority:
Wages and social insurance contributions of employees owed by the enterprise or parties
to business co-operation contacts;
Tax liabilities and other financial obligations of the enterprise or parties to business cooperation contracts payable to the State of Vietnam;
Loans (including interest);
Other liabilities of the enterprise or parties to business cooperation contracts.
Article 34
No later than thirty (30) days after the date of completion of liquidation, an enterprise
with foreign owned capital or the parties to business co-operation contracts shall be
responsible for submitting to the investment licence issuing body the investment licence
a liquidation report, and the files on the operation of the enterprise and to the seal
issuing body the seal. The liquidation report must be approved by the investment
licence issuing body . The investment licence issuing body shall withdraw the
investment licence and notify the relevant bodies.
Article 35
In cases where a dispute arises between joint venture parties or parties to business cooperation contracts, and between investors, in relation to the liquidation process, the
investment licence issuing body shall still terminate all liquidation activities upon expiry
of the liquidation period referred to in article 33 of this Decree. The disputed liquidation
matters must be resolved in accordance with the provisions of article 102 of this Decree.
The investment licence issuing body shall issue a decision withdrawing the investment
licence and shall notify the relevant bodies of that decision.
Article 36
1.
Bankruptcy of an enterprise with foreign owned capital must be carried out in
accordance with the orders and procedures stipulated in the law on business
bankruptcy.
2.
If, during the liquidation process, it is identified that the enterprise is in a position of
bankruptcy, any dealings with the assets of the enterprise with foreign owned capital or
parties to business co-operation contracts must be carried out in accordance with the
procedures stipulated in the law on business bankruptcy.
Chapter III
TECHNOLOGY TRANSFER, ENVIRONMENTAL PROTECTION AND IMPORTING
EQUIPMENT AND MACHINERY
Article 37
1.
The government of the Socialist Republic of Vietnam shall create favorable conditions
and shall protect the legal rights and interests of a party transferring technology into
Vietnam for the purpose of implementing an investment project; the Government shall
encourage and grant preferential treatment for accelerated transfers of technology,
especially those of advanced technology.
2.
Technology transferred into Vietnam for the purpose of implementing an investment
project must satisfy the following criteria:
a.
It must produce new products which are required in Vietnam or products for export;
b.
It must increase technical capability, product quality, or production capacity;
c.
It must reduce usage of raw materials and fuel; it must exploit and utilize efficiently
natural resources.
Transfers of technology which have adverse effects on the ecological environment and
occupational safety are prohibited.
Article 38
1.
The transfer of technology shall be in the form of capital contribution or technology
purchases on the basis of a contract for technology transfer. The transferor of
technology must have lawfully obtained the technology.
2.
The value of technology transferred in the form of capital contribution shall be agreed
by the parties and shall, in all cases, be no more than twenty (20) per cent of the legal
capital.
3.
When making capital contribution in the form of technology transfer, the investor must
prepare a file for transfer of technology. The file for transfer of technology must be
submitted together with the application file for an investment licence and must contain
information relating to the industrial property, certificates of protection of industrial
property rights, and other certificates of technical capability and the principles on which
the value of the technology is determined as agreed by the joint venture parties.
Capital contribution in the form of technology transfer must be considered and approved
by the State management body in charge of technology and environment.
4.
The transfer of technology in the form of a technology purchase shall be carried out on
the basis of a contract for technology transfer in accordance with the provisions of the
law on technology transfer.
Article 39
1.
Based on the nature of operation, the level of technology and the degree of
environmental impact, the Ministry of Science, Technology and Environment shall issue
a list of projects which are required to prepare an environmental impact evaluation
report.
The preparation and appraisal of the environmental impact evaluation report shall be in
accordance with the law on protection of the environment.
2.
For projects not specified in the above list, the investor shall only be required to set out
in the investment application file an explanation of any factors which may have an
environmental impact, measures proposed to deal with those factors, and an
undertaking to protect the environment during the period of construction and business
operation.
3.
In cases where the investor applies advanced international environmental standards
during construction and business operation in Vietnam, the investor shall only be
required to register with the State management body in charge of technology and
environment.
Article 40
1.
The standard and quality of equipment, machinery and materials imported into
Vietnam for the purpose of implementing an investment project must be in accordance
with the requirements of production, environmental protection, and occupational safety
as specified in the economic-technical explanatory statement, technical designs, and
provisions on importing equipment and machinery.
2.
Equipment and machinery imported for the purpose of implementing an investment
project must be inspected with respect to its value and quality prior to being imported or
prior to installation.
3.
In respect of projects for which installation or construction is completed but no
inspection has been carried out in accordance with the provisions of this Decree, the
inspection of equipment and machinery shall be decided on by the investment licence
issuing body if it is considered necessary.
4.
The organization carrying out the inspection of the imported equipment and machinery
may be a Vietnamese inspection company, a joint venture inspection company, a one
hundred (100) per cent foreign owned inspection company or a foreign inspection
company. The investor must provide the investment licence issuing body with
information on the selected inspection company.
The organization carrying out the valuation shall be legally and materially responsible
for the valuation result.
In cases where the inspection result is less than the value specified by the investor, the
investor must adjust the value in accordance with the inspection result. Where it is
identified that the investor has committed a deceptive conduct, the investor shall,
depending on the seriousness of the breach, be dealt with in accordance with the
provisions of the law.
5.
Where necessary, the investment issuing body may appoint an inspection organization
or request a re-inspection of the imported equipment or machinery.
Chapter IV
LAND USE
Article 41
The State of the Socialist Republic of Vietnam shall permit enterprises with foreign
owned capital and parties to business co-operation contracts to lease land, water and
sea surfaces for the purpose of implementing investment projects.
The rent and any exemption from or reduction of rent for land, water and sea surfaces in
respect of each project shall be stated in the investment licence.
Article 42
Rent for land, water and sea surfaces and any exemption from or reduction of rent shall
be determined by the Ministry of Finance.
Rent for land, water and sea surfaces in respect of each project shall remain stable for a
minimum period of five years and any increase in rent shall not exceed fifteen (15) per
cent of the previously applicable rent.
An investment project which, prior to a decision being made on rent increase, pays land
rent in accordance with the provisions of the investment licence may pay land rent at
the rate specified in the investment licence for an additional period of five years as from
the date on which a decision to increase rent is made.
In cases where enterprises with foreign owned capital or parties to business cooperation contracts have paid rent for the term of the lease of land, water and sea
surfaces, or have made a periodical payment, such payment shall not be readjusted if
the rent is increased during that term or period.
Article 43
In cases where the Vietnamese party to a joint venture enterprise is permitted to make
contribution to the legal capital in the form of value of the right to use land, then the
parties shall, on the basis of the land rent schedule stipulated by the Ministry of
Finance, agree on the value of such right which shall remain stable for the entire period
of capital contribution.
The Vietnamese party shall be responsible to record the said capital contribution as
debt to the State Budget and to repay the debt in accordance with the regulations of the
Ministry of Finance.
Article 44
The Prime Minister of the Government shall make a decision on the lease of land to
projects which require five or more hectares of urban land or fifty (50) or more hectares
of other land. The chairmen of provincial people's committees shall decide on the lease
of land to other projects.
Article 45
1.
The application file for leasing land shall be submitted together with the application file
for an investment licence and must contain the following principal matters :
the location and size of the land;
the land rent as proposed by the provincial people's committee on the basis of the land rent
schedule stipulated by the Ministry of Finance;
the method for compensation and site clearance as approved in principle by the provincial
people's committee.
1.
The preparation of the file for leasing land, the land leasing contract, and the issuance
of the certificate of land use right shall be in accordance with the provisions of the
General Cadastral Department.
2.
In cases where capital is contributed in the form of land use rights, the Vietnamese
party shall be responsible for completing all formalities relating to obtaining the land use
rights.
In cases where the State of Vietnam permits the leasing of land, the provincial people's
committee of the locality in which the investment project is located has the responsibility
to organize compensation and site clearance and to complete all formalities relating to
the leasing of land
3.
In respect of land allocated to a Vietnamese party for use, when entering into an
investment co-operation with a foreign party which does not change the use of land, the
investor may, after the investment licence is issued, commence immediately all
formalities in relation to design and construction or carry out other business operations
in accordance with the prevailing provisions.
Chapter V
BUSINESS ORGANIZATIONS
Article 46
Enterprises with foreign owned capital or parties to business cooperation contracts shall
have the right to determine business programs and plans in accordance with the
objectives stated in the investment licence.
Article 47
1.
Within a period of sixty (60) days from the date of issuance of investment licence,
enterprises with foreign owned capital and parties to business co-operation contracts
shall register with the Ministry of Trade all export and import activities and all products
to be consumed in the domestic market.
2.
Based on the provisions of the investment licence and the economic-technical
explanatory statement, enterprises with foreign owned capital and parties to business
co-operation contracts shall register plans to import machinery, equipment, spare parts,
materials, raw materials, and so forth (hereinafter referred to as goods) for the entire
duration of capital construction or on an annual basis in accordance with the
construction schedule of the enterprise. Plans for importing goods may be added to or
adjusted in accordance with the capital contribution schedule, work schedule and
business production programs in the first month of each quarters of a year and each
year.
3.
Based on the provisions of the investment licence, enterprises with foreign owned
capital and parties to business co-operation contracts shall annually register a plan for
products to be exported and products to be consumed in the domestic market. In
December of each year, the enterprises and parties to business co-operation contracts
shall submit to the Ministry of Trade a report on the results of implementation of the
export, import, and domestic consumption plans and any other proposals (if any) and, at
the same time, prepare export, import, and domestic consumption plans for the
following year.
Where export, import, and domestic consumption plans are required to be added to or
adjusted in respect of quantities, types, values and so forth, enterprises with foreign
owned capital and parties to business cooperation contracts shall submit a written
proposal to the Ministry of Trade for consideration and decision.
4.
In cases where commercial conditions are the same, enterprises with foreign owned
capital and parties to business co-operation contracts must give preference to goods
available in Vietnam over imports.
5.
Based on the investment licence, the economic-technical explanatory statement,
technical designs, and the provisions of clauses 2,3, and 4 of this article, the Ministry of
Trade shall, within a period of fifteen (15) days from the date of receipt of the file,
appraise the export, import, and domestic consumption plans for each project. If the
plans are not approved within the above time-limit, the Ministry of Trade must notify the
enterprise or parties to business co-operation contracts stating clearly the reasons
therefor.
Article 48
1.
Enterprise with foreign owned capital and parties to business co-operation contracts
may process or re-process products in accordance with the objectives stated in the
investment licence; processing contracts must be approved by the Ministry of Trade
2.
An enterprise with foreign owned capital which mainly produces goods for export may
establish a bonded warehouse at the enterprise for the purpose of producing goods for
export. Goods delivered into the bonded warehouse of the enterprise shall temporarily
not be liable for payment of import duties.
An enterprise permitted to establish a bonded warehouse for the above purposes must
ensure the following conditions and procedures :
it must export at least fifty (50) per cent of its products;
all goods delivered from the bonded warehouse to the production plants must be registered
and be subject to the supervision of custom authorities;
goods delivered into the bonded warehouse must not be sold in the Vietnamese market,
except in special circumstances as approved by the Ministry of Trade; in cases where
such goods are permitted to be sold in the Vietnamese market, the enterprise must pay
import duties and other taxes in accordance with the prevailing provisions of the law;
goods delivered into the bonded warehouse which are damaged, reduced in quality, or
unable to satisfy production requirements must be re-exported or destroyed. The
destruction of such goods must be in accordance with the provisions of the General
Department of Customs and be subject to the supervision of custom authorities, the tax
office and environmental authorities.
The General Department of Customs shall, pursuant to the above provisions, provide
guidelines for the issuance of a licence to establish a bonded warehouse at the
enterprise and shall carry out the management and supervision of the operation of
bonded warehouses.
Article 49
The provision of mortgage, pledges and guarantees to ensure the performance of the
obligations of enterprises with foreign owned capital and parties to business cooperation contracts shall be carried out at Vietnamese banks of foreign banks and shall
be in accordance with the provisions of the law of Vietnam.
Article 50
Enterprises with foreign owned capital and parties to business cooperation contracts
shall be entitled to operate their businesses in accordance with the objectives and
scope stated in the investment licence. In a number of business sectors or industries in
which the law requires a practicing certificate to be obtained after the issuance of an
investment licence, the investor shall only be required to register the business at the
body authorized to issue the practicing certificate.
Chapter VI
LABOUR RELATIONS
Article 51
The use of labour within an enterprise with foreign owned capital or for the performance
of a business co-operation contract shall be in accordance with article 25 of the Law on
Foreign Investment in Vietnam.
Where foreign labour is required, enterprises with foreign owned capital and parties to
business co-operation contracts must submit a statement explaining why foreign labour
is required together with the professional certificate(s) of the foreigner(s) to the
provincial or municipal office of labour, war invalids and social affairs of the locality in
which the head office of the enterprise is located for consideration of the issuance of a
work permit in accordance with the provisions of the laws on labour.
Article 52
Any breach of the laws on labour must be strictly and fairly dealt with in accordance with
the law. Labour inspection bodies shall be responsible for inspecting matters relating to
labour conditions and the protection of employees' rights in enterprises with foreign
owned capital.
Chapter VII
PROVISIONS ON TAXATION
Article 53
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts shall pay profits tax at the rate of twenty five (25) per cent on the profits
earned, except in the cases provided for in article 54 of this Decree.
With respect to exploration for and exploitation of oil and gas and a number of other rate
and precious resources, profits tax rates shall be subject to the provisions of the Law on
Petroleum and other relevant legislation.
Article 54
The profits tax rates applicable to cases where investment is encouraged shall be as
follows :
1.
A rate of twenty (20) per cent shall apply to investment projects which satisfy one of
the following criteria:
export of at least fifty (50) per cent of products;
having five hundred (500) or more employees;
cultivation or processing of agricultural, forestry or aquatic products;
utilization of advanced technology or investment in research and development;
intensive use of materials and supplies available in Vietnam; efficient processing and
exploitation of natural resources in Vietnam; obtaining a high localization rate in
production as required by the regulations in respect of each particular field.
The profits tax rate of twenty (20) per cent shall be applied for a period of ten (10) years
from the time when the project commences its production or business activities.
1.
A rate of fifteen (15) per cent shall apply to investment projects which satisfy one of the
following criteria:
export of at least eighty (80) per cent of products;
investment in the fields of metallurgy, basic chemicals, machinery manufacturing,
petrochemicals, fertilizers and manufacture of electronic components, automobiles and
motorcycle spare parts;
construction and operation of infrastructure projects (bridges, roads, water supply and
drainage systems, electricity, construction of seaports and so forth);
cultivation of perennial industrial crops;
investment in regions with difficult natural, economic and social conditions (including hotel
projects);
assignment of assets to the State of Vietnam after the expiration of the duration of
operation without any compensation (including hotel projects);
projects satisfying two of the conditions stipulated in clause 1 of this article.
The profits tax rate of fifteen (15) per cent shall be applied for a period of twelve (12)
years from the time when the project commences its production or business activities.
1.
A rate of ten (10) per cent shall apply to the following projects:
construction of infrastructure in regions with difficult natural, economic, and social
conditions;
investment in mountainous regions and remote or distant regions;
afforestation;
those in the list of projects in which investment is specially encouraged.
The profits tax rate of ten (10) per cent shall be applied for a period of fifteen (15) years
from the time when the project commences its production or business activities.
With respect to investment projects under BOT, BTO and BT contracts, projects for
infrastructure construction of industrial zones and export processing zones, and
investment projects in industrial zones and export processing zones, the incentive
profits tax rates stipulated in this article shall be applied for the duration of
implementation of the investment project.
Article 55
The tax rates provided for in article 54 of this Decree shall not apply to hotel projects (
except where investment is located in mountainous regions, remote or distant regions,
or regions with difficult natural, economic, and social conditions, or where assets shall
be assigned to the State of Vietnam after the expiration of the duration of operation
without any compensation) and projects in the fields of finance, banking, insurance,
trade and provisions of other services.
Article 56
Exemptions from and reductions of profits tax shall be applied a follows:
1.
Projects referred to in clause 1 of article 54 of this Decree shall be exempted from
profits tax for one year commencing from the time when their operations start to earn
profits and shall be granted a fifty (50) per cent reduction for the two subsequent years.
2.
Projects referred to in clause 2 of article 54 of this Decree shall be exempted from
profits tax for two years commencing from the time when their operations start to earn
profits and shall be granted a fifty (50) per cent reduction for the three subsequent
years.
3.
Projects referred to in clause 3 of article 54 of this Decree shall be exempted from
profits tax for four years commencing from the time when their operations start to earn
profits and shall be granted a fifty (50) per cent reduction for the four subsequent years.
4.
Afforestation projects, infrastructure construction projects in mountainous regions and
remote or distant regions; large scale projects having a significant socio-economic
impact which are included in the list of projects where investment is specially
encouraged shall be exempted from profits tax for eight years commencing from the
time when their operations start to earn profits.
Periods of tax exemption or reduction shall run consecutively from the first profit making
year.
5.
The exemptions from and reductions of profits tax provided for above shall not apply to
hotel projects (except in cases where the investment is located in mountainous regions,
remote or distant regions, or regions with difficult natural, economic, and social
conditions, or where the assets are assigned to the State of Vietnam after the expiration
of the duration of operation without any compensation ), and projects in the fields of
banking, finance, insurance, trade and provisions of other services.
6.
Investment projects referred to in article 53 of this Decree which invest in production
activities or invest in rural areas may be considered for profits tax exemption for a
maximum period not exceeding two years from the time when their operations start to
earn profits.
Article 57
1.
2.
Upon being transferred abroad or retained outside Vietnam, profits earned by foreign
investors from their investment in Vietnam (including profits tax refunded in respect of
any reinvestment and profits earned from assignment of capital) shall be subject to
withholding tax.
Withholding tax shall be applied at the following rates:
five per cent of profits transferred abroad in respect of foreign investors contributing no less
than ten (10) million United States dollars to the legal capital or capital of a business cooperation;
seven per cent of profits transferred abroad in respect of foreign investors contributing from
five million United States dollars to less than ten (10) million United States dollars to the
legal capital or capital of a business co-operation;
ten (10) per cent of profits transferred abroad in respect of foreign investors contributing
less than five million United States dollars to the legal capital or capital of a business cooperation.
1.
Withholding tax shall be collected each time profits are transferred.
Article 58
1.
Where an enterprise with foreign owned capital or a foreign party to a business cooperation contract fails, during the period of operation, to satisfy the conditions to enjoy
the incentive profits tax rates and profits tax exemptions and reductions provided for in
articles 54 and 56 of this Decree, the investment licence issuing body shall decide to
adjust the tax rates and exemptions from and reductions of profits tax stipulated in the
investment licence.
2.
In the event of a natural calamity, fire or other event of force majeure occurring during
the course of operations, the Ministry of Finance shall make decisions regarding any tax
exemptions or reductions in accordance with the applicable regulations.
Article 59
1.
A foreign investor which reinvests its distributed profits shall be entitled to a refund of
any profits tax already paid in respect of the amount of profits reinvested provided that
the following conditions are satisfied:
the reinvestment is made in a sector where investment is encouraged as provided for in
article 54 of this Decree;
the reinvested capital is used for three years or more;
the legal capital stated in the investment licence has been fully contributed.
1.
Profits tax shall be refunded upon reinvestment at the following rates:
one hundred (100) per cent in the case of projects provided for in clause 3 of article 54 of
this Decree;
seventy five (75) per cent in the case of projects provided for in clause 2 of article 54 of this
Decree;
fifty (50) per cent in the case of projects provided for in clause 1 of article 54 of this Decree.
1.
a.
b.
c.
When the requirement to use profits for reinvestment arises, the foreign investor shall
prepare documents for submission to the Ministry of Finance for consideration and
decision. Such documents shall comprise:
An application for a refund of tax due to reinvestment;
The investment licence or any decision to amend or add to the investment licence for
the projects in which reinvestment is made;
A certificate of the tax authority in relation to the amount of profits tax already paid.
4. Within fifteen (15) days from the date of receipt of all documents, the Ministry of
Finance shall notify the investor of its decision; if approval is granted, the investor may
proceed with the procedures for a refund of the profits tax in respect of the profits
reinvested. If approval is not granted within such time-limit, the Ministry of Finance must
notify the investor in writing stating clearly the reasons therefor.
Where any profits intended to be reinvested are not reinvested, the investor must return
any profits tax refunded, including interest, and shall be dealt with in accordance with
law.
Article 60
The tax year applicable to an enterprise with foreign owned capital and to parties to
business co-operation contracts shall commence on the first day of January and end on
the thirty first day of December of each Gregorian year.
Enterprises with foreign owned capital and parties to business co-operation contracts
may apply to the Ministry of Finance for permission to adopt their own twelve (12)
month financial year for the purpose of profits tax determination and payment.
Article 61
The taxable profits of an enterprise with foreign owned capital shall be the difference
between its total revenue and its total expenditure plus other additional profits of the
enterprise in the tax year, less any losses permitted to be carried forward in accordance
with article 40 of the Law on Foreign Investment in Vietnam. The taxable profits of an
enterprise shall comprise the taxable profits of its headquarters and its subsidiary
establishments (if any).
1.
Revenue shall comprise :
revenue from sales of products;
revenue from provision of services; and
other revenue of the enterprise.
1.
Expenditure shall comprise :
costs of raw materials and fuel required for the manufacture of principal products and by products or for the provision of services;
salaries, allowances and social insurance paid in respect of employees;
depreciation of fixed assets in accordance with the regulations provided by the Ministry of
Finance;
costs of acquisition of, or fees paid for the right to use technical documents, patents,
technology and technical services;
enterprise management expenses;
taxes, fees and imposts in the nature of taxation paid (except profits tax);
interest payments on loans;
costs of insurance of the assets of the enterprise;
other expenses not exceeding five per cent of the total amount of expenditure.
The tax authority has the power to consider the reasonableness of the revenue and
expenditure.
Article 62
In respect of business co-operation contracts, the method for determining distribution of
profits shall be decided by the investment licence issuing body as appropriate to the
type of business co-operation taking into account the proposals of the parties to
business co-operation contracts.
In the case of production sharing contracts, profits tax and other entitlements enjoyed
by the Vietnamese party (including the value of right to use land, water and sea
surfaces, and any royalties) shall be aggregated with the share of the production of the
Vietnamese party.
Article 63
1.
An enterprise with foreign owned capital and parties to business co-operation
contracts shall be entitled to exemption from import duties in respect of the following:
Equipment and machinery imported as part of the fixed assets of the enterprise or as part
of the fixed assets for the implementation of the business co-operation contracts
Specialized means of transport which form part the technological process imported as part
of the fixed assets of the enterprise or as part of the fixed assets for the implementation
of the business co-operation contract, and means of transport used for transporting
employees ( automobiles of twenty four (24) or more seats and watercraft).
Components, parts, spare parts, support structures, moulds and accessories of the above
equipment, machinery, specialized means of transport and means of transport.
The exemption of import duties applicable to the above equipment, machinery and
means of transport shall also be applied in the case of expansion of a project and
replacement or renewal of technology.
Raw materials and supplies imported for the implementation of BOT, BTO and BT projects.
Species of plants and animals or specialized agricultural chemicals permitted to be
imported for the implementation of agricultural, forestry and fishery projects.
Other goods and materials required for projects in which investment is specially
encouraged as determined by the Prime Minister.
1.
With respect to raw materials, spare parts, accessories and other supplies imported for
the production of goods for export, import duties must be paid upon being imported into
Vietnam and shall be refunded upon export of finished products in proportion to the
quantity of finished products exported.
2.
On the basis of the investment licence, feasibility study and technical design of the
project, the Ministry of Trade shall determine the list of goods to be imported duty free in
the case of goods referred to in clause 1 of this article.
3.
The imported goods referred to in clauses 1 and 2 of this article may not be sold or
disposed of in the Vietnamese market. Where they are sold or disposed of in the
Vietnamese market, the approval of the Ministry of Trade must be obtained and import
duties, turnover tax or special sales tax must be paid in accordance with law.
4.
Patents, technical know-how, technology processes and technical services, and so
forth, to be used as capital contribution shall be exempted from any taxes related to
transfers of technology.
Article 64
1. Any assignment of capital shall be carried out in accordance with article 34 of the
Law on Foreign Investment in Vietnam.
Assignment documents shall comprise:
assignment contract;
resolution of the board of management;
status report regarding the operations of the enterprise;
legal status, financial capacity and authorized representative of the assignee (where
capital is assigned to a party outside the enterprise).
2. An assignment shall only be effective upon approval being granted by the investment
licence issuing body. The approval process shall be completed within thirty (30) days
from the date of receipt of assignment application documents. If approval is not granted
within such time-limit, the investment licence issuing body must notify the investor in
writing stating clearly the reasons therefor.
3. Taxable profits shall be determined as follows:
a) Taxable profits shall be equal to the assigned value less the original value of the
assigned capital less any assignment expenses, where:
The assigned value shall be equal to the actual total value enjoyed by the assignee under
the assignment contract.
The original value of the assigned capital shall be determined on the basis of the
accounting books and records as at the time of capital contribution or the capital
contribution finalization report.
Thereafter, each time of subsequent assignee assigns its contributed capital, the
original value of the assigned capital shall be equal to the assigned value stated in the
preceding assignment contract plus additional contributed capital ( if any )
Assignment expenses mean the actual expenses directly related to the assignment as
evidenced by source documents accepted by the tax authority. Where assignment
expenses are incurred overseas, source documents must be certified by a local notary
public or independent auditing company.
b) The rate of capital assignment profits tax shall be twenty five (25) per cent on the
profits earned.
Where capital is assigned to a Vietnamese State owned enterprise or an enterprise in
which the State holds a controlling share, the foreign investor shall be exempted from
capital assignment profits tax.
Where a foreign investor assigns capital to a Vietnamese enterprise other than the
above, capital assignment profits tax must be paid at the rate of ten (10) per cent.
Chapter VIII
ACCOUNTING SYSTEM,
STATISTICS AND INSURANCE
Article 65
1.
Accounting, auditing and statistical work for enterprises with foreign owned capital and
foreign parties to business co-operation contracts shall be conducted in accordance
with Vietnamese laws relating to accounting, auditing and statistics.
2.
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts shall adopt the Vietnamese accounting system.
Where, for valid reasons, an enterprise with foreign owned capital or a foreign party to a
business co-operation contract requires to adopt a generally accepted foreign
accounting system, the approval of the Ministry of Finance must be obtained.
3.
The foreign party to a business co-operation contract shall keep accounting records as
appropriate to the type of business co-operation concerned.
4.
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts must register the accounting system to be adopted at the Ministry of Finance
and shall be subject to inspection by the financial authorities.
Article 66
1.
The standard units of measure used in accounting and statistics shall be the official
units of measure of Vietnam. All other units of measure must be converted into the
official Vietnamese units of measure.
2.
The monetary unit to be used in accounting and statistics shall be the Vietnamese
Dong but may be a foreign currency as proposed by the enterprise with foreign owned
capital or the foreign party to the business co-operation contract and approved by the
Ministry of Finance.
3.
The books of accounts and statistics shall be kept in Vietnamese or in both
Vietnamese and a commonly used foreign language.
Article 67
The financial year of an enterprise must be in conformity with the tax year as prescribed
in article 60 of this Decree.
Article 68
An enterprise with foreign owned capital or a foreign party to a business co-operation
contract must, within three months of the close of its financial year, submit its annual
financial statements to the investment licence issuing body, the Ministry of Planning and
Investment, the Ministry of Finance, and the General Department of Statistics.
The annual financial statements of an enterprise with foreign owned capital or a foreign
party to a business co-operation contract shall, prior to being submitted to the above
bodies, be audited by a Vietnamese independent auditing company or another
independent auditing company permitted to operate in Vietnam in accordance with the
auditing regulations.
The audited financial statements of an enterprise with foreign owned capital or a foreign
party to a business cooperation contract may be used as the basis for determining and
finalizing tax obligations and other financial obligations to the State of Vietnam.
The auditing company must be responsible before the law for the independence,
objectiveness and truthfulness of the audit results.
Article 69
The audit report prepared by the auditing company shall include the following main
contents:
1.
Certification of the objectiveness, truthfulness and reasonableness of the financial
statements and accounting figures.
2.
Assessment of the conduct of the accounting work and compliance with the law,
regulations and standards of accounting.
3.
Recommendations.
The audit report must be signed by, and state the name and registration number of the
practicing certificate of the auditor, and be signed and sealed by the auditing company.
Article 70
1.
Enterprises with foreign owned capital and foreign parties to business cooperation
contracts shall take out insurance under insurance policies entered into with
Vietnamese insurance companies or other insurance companies permitted to operate
legally in Vietnam.
2.
Enterprises with foreign owned capital and foreign parties to business co-operation
contracts shall take out voluntary insurance and compulsory insurance in accordance
with law.
3.
Items to be insured include people, assets, civil liability and other items stipulated by
law.
Chapter IX
FOREIGN EXCHANGE CONTROL
Article 71
Enterprises with foreign owned capital shall open foreign currency accounts and
Vietnamese Dong accounts with banks permitted to operate in Vietnam.
Enterprises may open loan accounts with banks abroad for the purpose of receipt of
loan capital in cases where foreign lenders require loan accounts to be opened with
banks abroad subject to the approval of the State Bank of Vietnam.
Foreign parties to business co-operation contracts may open bank accounts in
accordance with the above provisions. Where a foreign party to a business cooperation
contract carries on operations directly in Vietnam, it must open bank accounts at banks
permitted to operate in Vietnam.
Article 72
Enterprises with foreign owned capital or foreign parties to business co-operation
contracts shall, by themselves, meet the foreign currency requirements of their
operations.
With respect to projects for the construction of infrastructure or the production of
essential import substitutes and some specially important projects, the State Bank
assures that enterprises with foreign owned capital and foreign parties to business cooperation contracts shall be permitted to convert Vietnamese currency into foreign
currency in order to meet their reasonable requirements in strict compliance with the
regulations on foreign exchange control of Vietnam.
With respect to enterprises with foreign owned capital and foreign parties to business
co-operation contracts which are not entitled to the above assistance in meeting their
foreign currency requirements and which encounter difficulties in meeting their foreign
currency requirements, the State Bank may consider permitting conversion or purchase
of foreign currency in accordance with the regulations provided by the State Bank.
Article 73
1.
After fulfilling their tax obligations, foreign investors investing in Vietnam shall be
permitted to transfer abroad:
their profits derived from business operations;
payments received from provision of services and transfer of technology;
the principal of and interest on any foreign loan obtained during the course of operation;
the invested capital;
other sums of money and assets lawfully owned by them.
1.
Upon termination and dissolution of an enterprise, foreign economic organizations and
individuals shall, following payment of all their liabilities, have the right to transfer
abroad the capital invested and reinvested by them in the enterprise.
2.
In cases where the amount transferred abroad under clause 2 of this article is greater
than the initial (original) amount of capital and reinvested capital, then the excess
amount can only be transferred abroad upon approval being granted by the investment
licence issuing body.
Article 74
Foreigners working in enterprises with foreign owned capital and for parties to business
co-operation contracts are permitted to transfer abroad, in foreign currency, their
salaries and other legal income after deductions for income tax and other expenses
have been made.
Article 75
The exchange rate for conversion of foreign currency into Vietnamese currency and
vice versa during the implementation of investment and production and business
operations of enterprises with foreign owned capital and foreign parties to business cooperation contracts shall be in accordance with the regulations of the State Bank of
Vietnam.
Chapter X
CUSTOMS, IMMIGRATION, RESIDENCE AND COMMUNICATIONS
Article 76
On the basis of the investment licence and written approval of the plan for import and
export of goods as issued by the Ministry of Trade, customs authorities shall complete
expeditiously all procedures for the import and export goods in accordance with the
laws on customs.
Article 77
Foreigners entering Vietnam for the purposes of investigating and preparing for
investment may be granted multiple entry visas for a period not exceeding three months
and such visas may extended for further periods of three months each.
Article 78
Foreigners working for parties implementing investment projects (including spouses,
minor children and foreign domestic servants) shall be granted multiple entry visas as
appropriate to the duration of operation of those projects.
Article 79
1.
Entry visas shall be issued by diplomatic representative offices or consular offices of
the Socialist Republic of Vietnam in foreign countries, no later than five days after
application by an applicant.
2.
In urgent cases, where due to unforeseen circumstances, a foreigner may be issued
with an entry visa at the port in accordance with the applicable regulations.
3.
Where a foreign applicant is a citizen of a country with which the Government of the
Socialist Republic of Vietnam has entered into an agreement providing for exemption
from the requirements for exit and entry visas, that agreement shall apply.
Article 80
Any foreigner referred to in article 77 and 78 of this Decree shall be free to travel in the
territory of Vietnam, except for "prohibited areas".
Article 81
Following completion of all formalities required by the relevant postal and
telecommunication authorities, a foreigner working in an enterprise with foreign owned
capital shall be entitled to:
use available postal and telecommunication facilities of Vietnamese post offices; and
set up his own communication system for the internal operations of the enterprise.
Chapter XI
PROVISIONS ON CONSTRUCTION, TENDERING,
ACCEPTANCE OF PROJECTS AND FINALIZATION OF THE VALUE OF INVESTED
CAPITAL
Article 82
The administration of construction of projects with foreign owned capital shall be carried
out by way of the following :
1.
Issuance of certificates of zone planning on the basis of which investors may formulate
their projects;
2.
Evaluation of zone planning and architecture of investment projects involving
construction;
3.
4.
5.
Evaluation of technical designs and approval of the construction of the project;
Inspection of the construction tendering processes and issuance of construction and
consultancy contractor permit to contractors who are awarded to undertake construction
works and projects in Vietnam;
Management of the quality of construction works.
Article 83
File for application of investment licence must include certificate of zone planning and
the preliminary design indicating the proposed architecture.
Zone planning and the proposed architecture of the project shall be evaluated during
the process of evaluation of the investment project.
During the course of evaluating a project, the investment licence issuing body must
obtain the opinions of the Ministry of Construction and the provincial people's committee
in relation to the zone planning and architecture of any project involving construction;
with respect to other projects related to the planning for a particular branch of industry,
the investment licence issuing body must obtain the opinion of the relevant branch
ministry regarding conformity with the planning for the branch and territorial master plan.
Article 84
The following aspects of the construction design of a project shall be evaluated:
1.
The legal status of the design organization;
2.
The conformity of the design with zone planning and the architecture of the project
which has been evaluated and the detailed master plan which has been approved;
3.
Compliance with Vietnamese construction and design technical standards or foreign
technical standards approved by the Ministry of Construction.
Investors are responsible before Vietnamese law for project safety, fire and explosion
prevention and extinguishment and protection of the environment during the
construction period as well as during the period of operation of the project.
Article 85
The organization of the evaluation of technical designs and approval of construction is
provided for as follows:
1.
The Ministry of Construction shall evaluate the technical designs of Group A projects
as stipulated in article 93 of this Decree. Provincial people's committees shall evaluate
the technical designs of Group B projects as stipulated in the article 93 of this Decree.
2.
With respect to Group A projects, within twenty (20) days from the date of receipt of
the documents, the Ministry of Construction shall complete the evaluation of the
technical design and notify the investor of its decision. After the technical design of the
project has been approved, the investor may commence construction works.
3.
With respect to Group B projects, within twenty (20) days from the date of receipt of
the documents, the provincial people's committee shall complete the evaluation of the
technical design and notify the investor of its decision. After the technical design of the
project has been approved, the investor may commence construction works.
4.
After the expiry of the above twenty (20) day time-limit, if the design evaluation body
fails to notify the investor of its decision, the investor may commence construction
works.
5.
The investor must notify the provincial people's committee responsible for the locality
in which the construction will take place of the commencement of construction works at
least ten (10) days in advance.
Article 86
In order to implement an investment project, the investor must organize a tender for, or
select, consultants and designers and organize a tender for procurement of equipment
and construction, and so forth, in accordance with the Vietnamese regulations on
tendering.
Contractors must comply with laws relating to construction, finance, import and export
and other relevant legislation.
Article 87
Investors shall be responsible before Vietnamese laws for the quality of construction
works.
Surveying, designing and construction contractors must be responsible to investors and
before Vietnamese laws for the part of the work that they perform with respect to the
quality of the construction works.
Article 88
Upon completion of construction of a project, the investor shall report to the project
design evaluation body on the completion of the project construction and shall be
permitted to commence operating project. Where necessary, the above body shall
inspect the project. Any breach of the approved construction design which is discovered
shall be dealt with in accordance with the law.
Article 89
During the course of capital construction establishing a joint venture enterprise, the
enterprise must open a separate bank account with a bank located in Vietnam in order
to control the receipts and expenditure related to the capital construction of the
enterprise. All receipts and expenditure related to the construction works must be
effected through this account.
Article 90
Within six months from the date of completion of project construction, the investor must
submit a report on the finalization of invested capital to the investment licence issuing
body and the Ministry of Planning and Investment. The investor must be responsible for
the truth and accuracy of the report on finalization of invested capital. The report relating
to the project construction must be certified by an inspection organization.
Where necessary, the investment licence issuing body may reconsider the report on
finalization of invested capital.
Chapter XII
PROVISIONS ON FORMULATION, EVALUATION
FOR ISSUANCE OF INVESTMENT LICENCES AND
IMPLEMENTATION OF INVESTMENT PROJECTS
Article 91
Ministries, branches and provincial people's committees shall be responsible for
providing guidance, providing necessary information and creating all favourable
conditions for investors to select investment opportunities in Vietnam.
Article 92
1.
Following receipt of project documentation as provided for in articles 10, 13 and 27 of
this Decree, the investment licence issuing body shall organize the evaluation of the
project.
2.
The aspects of an investment project which are the subject of evaluation shall
comprise:
The legal status and financial capacity of the foreign and Vietnamese investors;
The conformity of the project objectives with planning;
Socio-economic benefits (the capacity to create new production forces, new branches of
industry and new products, to expand markets, to create employment; economic
benefits of the project and revenue for the Budget, and so forth);
The technological and technical level to be applied, the proper use and protection of natural
resources and the ecological environment;
The proper use of land; the plan to compensate for site clearance; the valuation of assets
to be contributed as capital by the Vietnamese party (if any).
Article 93
The authority to consider and approve investment projects is provided for as follows:
1.
The Prime Minister shall make decisions in relation to Group A projects comprising:
Infrastructure construction of industrial zones and export processing zones; BOT, BTO and
BT projects;
Projects with invested capital of forty (40) million or more United States dollars in the
following fields: electricity, mining, oil and gas, metallurgy, cement, chemicals, seaports,
airports, cultural and tourist areas, and real estate business;
Sea and air transport projects;
Postal and telecommunications projects;
Cultural, publishing, press, radio and television broadcasting, training, scientific research
and health care projects;
Insurance, finance, auditing and inspection projects;
Projects for exploitation of rare and precious natural resources;
National defence and security projects;
Projects using five (5) or more hectares of urban land or fifty (50) or more hectares of land
of other categories.
1.
The Ministry of Planning and Investment shall make decisions in relation to Group B
projects ( Group B projects being all projects which are not stipulated in clause 1 of this
article), except for projects referred to in clause 3 of this article and projects in respect
of which the boards of management of industrial zones are authorised to issue
investment licences.
2.
Provincial people's committees shall make decisions in relation to projects in respect
of which they are delegated by the Government with authority to issue investment
licences.
Article 94
1.
Project evaluation shall be provided for as follows:
In respect of Group A projects, the Ministry of Planning and Investment shall collect the
opinions of relevant ministries, branches and provincial people's committees and for
submission to the Prime Minster for consideration and decision.
In the event that there are different opinions in respect of important aspects of a project,
the Ministry of Planning and Investment shall establish an advisory committee,
composed of competent representatives of relevant bodies and experts, in order to
consider the project prior to submission to the Prime Minister. Depending on each
specific case, the Prime Minister may require the State Council for Evaluation of
Investment Projects to study and advise before making a decision.
In respect of Group B projects, the Ministry of Planning and Investment shall collect the
opinions of relevant ministries, branches and provincial people's committees prior to
consideration and decision.
1.
Time-limits for project evaluation shall be as follows:
Within fifteen (15) days from the date of receipt of project documents, ministries, branches
and provincial people's committees shall provide their written opinions to the Ministry of
Planning and Investment in relation to the contents of the project within their respective
scope of administration. Upon the expiry of such time-limit, if no written opinions have
been provided, the ministries concerned shall be deemed to have accepted the contents
of the project.
In respect of Group A projects, within forty (40) days from the date of receipt of documents,
the Ministry of Planning and Investment shall submit its evaluation results to the Prime
Minister. Within seven days from the date of receipt of approval of the Prime Minister,
the Ministry of Planning and Investment shall issue investment licences.
In respect of Group B projects, within forty five (45) days from the date of receipt of project
documents, the Ministry of Planning and Investment shall complete the project
evaluation and issue investment licences.
Within seven days of the expiry of such time-limit, if no investment licence has been
issued, the Ministry of Planning and Investment shall notify the investors in writing
stating clearly the reasons therefor with copies distributed to the relevant bodies.
The above time-limits shall not include the period of time during which an investor is
permitted to amend or add to its investment application documents.
Any requirement of the Ministry of Planning and Investment for amendment of or
addition to project documents shall be fulfilled within twenty (20) days from the date of
receipt of the documents.
3. Copies of investment licences shall be distributed to relevant bodies.
4. The evaluation and issuance of investment licences in respect of investment projects
within the authority of provincial people's committees shall be in accordance with article
100 of this Decree.
5. The evaluation and issuance of investment licences in respect of investment projects
in industrial zones and export processing zones shall be in accordance with article 4 of
this Decree and the regulations provided by the Government on industrial zones and
export processing zones.
Article 95
1.
The Ministry of Planning and Investment shall be the co-ordinating body responsible
for dealing with any problems arising during the formulation, commencement and
implementation of investment projects, including the following tasks:
Guiding and co-ordinating with ministries, branches and provincial people's committees in
relation to planning, zoning and preparation of the list of projects calling for foreign
investment;
Preside over evaluation, issuance and amendment of investment licences in respect of
investment projects within its scope of authority;
Acting as a mediator of disputes when so requested;
Organizing the inspection and examination of the implementation of investment projects;
Assessing the socio-economic benefits of projects issued with investment licences;
In respect of projects within its scope of authority, making decisions to dissolve enterprises
with foreign owned capital and to terminate business co-operation contracts prior to the
expiry of their duration.
1.
The Ministry of Planning and Investment shall prepare a summary report regarding the
issuance of investment licences and foreign investment activities in Vietnam for
submission to the Prime Minister and distribution to ministries, branches and provincial
people's committees on a regular basis (semi-annually and annually).
Article 96
Ministries, ministerial level bodies and Government bodies shall:
Contribute opinions relating to project evaluation and amendment of investment licences;
Issue and provide guidelines for the implementation of technical, technological and
environmental policies and standards;
Carry out specialized inspection; assess socio-economic benefits of investment projects
within their respective areas of branch authority.
Article 97
Provincial people's committees shall have the following responsibilities:
1.
Preside over evaluation, issuance or amendment of investment licences in respect of
projects within their authority; participating in the evaluation of investment projects in
their respective localities;
2.
Carrying out State administration of all foreign investment projects located within their
respective localities by way of the following:
Monitoring capital contribution and compliance with the terms of investment licences and
other relevant legislation.
Monitoring compliance with regulations on financial obligations, labour relations, salaries,
social order and security, environmental protection and fire and explosion prevention
and extinguishment;
Issuing certificates of land use rights; organizing site clearances; permitting establishment
of offices and branches; registering the residence and movements of foreigners working
in enterprises; recommending Vietnamese employees to enterprises; registering
operations, and so forth;
Joining ministries in organizing specialized inspections of the operations of enterprises with
foreign owned capital;
Assessing socio-economic benefits of foreign direct investment activities in their respective
localities.
Article 98
1.
Any examination or inspection of the operation of enterprises with foreign owned
capital or parties to business co-operation contracts must be conducted in strict
compliance with functions, authority and applicable regulations.
Examinations or inspections may be held periodically or on an ad-hoc basis. Ad-hoc
inspections or examinations may be conducted only where the operations of an
enterprise or a party to a business co-operation contract indicate a breach of the law.
Prior to conducting specialized inspections or examinations within their respective
powers, State bodies must notify the Ministry of Planning and Investment and the
relevant provincial people's committee for the purpose of co-ordination.
2.
Organizations and individuals making decisions to conduct unlawful inspections or
using inspections and examinations to cause trouble and difficulties for the operations of
an enterprise shall, depending on the seriousness, be dealt with in accordance with law.
3.
The Ministry of Planning and Investment shall provide detailed regulations regarding
the organization and co-ordination of inspections of foreign investment activities.
Chapter XIII
DELEGATION OF AUTHORITY TO ISSUE
INVESTMENT LICENCES
Article 99
1.
Investment projects in respect of which provincial people's committees are delegated
with authority to issue investment licences must meet the following conditions:
Being in accordance with the approved planning and socio-economic development plans;
Not falling with Group A as stipulated in article 93 of this Decree.
1.
Provincial people's committees shall not be delegated with the authority to issue
investment licences to investment projects in the following fields (irrespective of the size
of invested capital):
Exploration and exploitation of oil and gas and petroleum services;
Energy industry;
Construction of seaports, air ports, national highways and railways;
Cement, metallurgy, production of sugar, alcohol, beer and cigarettes.
1.
On the basis of the specific conditions of cities and provinces under central authority
and on the basis of the field and size of the investment, the Prime Minister shall
determine a list of projects in respect of which the provincial people's committees shall
be delegated with the authority to issue investment licences. The list of provincial
people's committees and the list of such projects may be subject to periodic amendment
and addition as appropriate to the prevailing situation.
Article 100
1.
The evaluation and issuance of investment licences within the authority of provincial
people's committees shall be provided for as followsd:
The content of project evaluation shall be in accordance with article 92 of this Decree.
Within thirty (30) days from the date of receipt of project documents, the provincial people's
committee shall complete project evaluation and issue an investment licence.
Within seven days of the expiry of such time-limit, if no investment licence has been
issued, the provincial people's committee shall notify the investor in writing stating
clearly the reasons therefor with copies distributed to the relevant bodies.
The above time-limit shall not include any period of time during which the investor is
permitted to amend or add to its investment application documents.
Any requirement of a provincial people's committee for amendment of or addition to the
project documents shall be fulfilled within fifteen (15) days from the date of receipt of the
documents.
2. Investment licences shall be issued to investors in the standard form as stipulated
and issued by the Ministry of Planning and Investment.
3. Within seven days from the date of issuance of an investment licence, the provincial
people's committee shall forward an original investment licence to the Ministry of
Planning and Investment and copies to the Ministry of finance, Ministry of Trade, the
relevant branch ministries and other relevant State administrative bodies.
4. On a semi-annual and annual basis, provincial people's committees shall report to the
Ministry of Planning and Investment on the status of evaluation and issuance of
investment licences.
Chapter XIV
INVESTMENT GUARANTEES AND SETTLEMENT
OF DISPUTES AND BREACHES
Article 101
The Government of Vietnam guarantees that foreign investors investing in Vietnam shall
be entitled to fair and equitable treatment in accordance with the Law on Foreign
Investment in Vietnam. Where an international treaty on investment promotion and
protection entered into between the Socialist Republic of Vietnam and a foreign country
contains provisions which are inconsistent with the regulations on foreign investment,
such international treaty shall prevail.
In the event that there are changes in the laws of Vietnam which adversely affect the
interests of foreign investors as stated in their investment licences, the investment
licence issuing body shall take appropriate measures to ensure the protection of the
interests of the investors by coming to an agreement to apply the following:
1.
Change the operational objectives of project;
2.
Grant tax reductions or exemption in accordance with law;
3.
4.
Deem the adverse effects on the investor to be a loss and carry such loss forward to
the following years;
Consider payment of fair compensation where necessary.
With respect to projects licensed by a provincial people's committee, such provincial
people's committee must, prior to taking any of the above measures, reach an
agreement with the Ministry of Planning and Investment and the Ministry of Finance.
Article 102
1.
Disputes between parties to joint venture enterprises and business co-operation
contracts shall be resolved primarily through conciliation and negotiations between the
parties.
Failing such conciliation, the disputing parties may, on the basis of mutual agreement,
select one of the following dispute resolution alternatives:
a Vietnamese court;
a Vietnamese arbitration body, foreign arbitration body or international arbitration body, or
an arbitration tribunal established pursuant to an agreement between the parties.
2. Disputes between enterprises with foreign owned capital, or between enterprises with
foreign owned capital or foreign parties to business co-operation contracts and
Vietnamese economic organizations shall be resolved by Vietnamese arbitration
organizations or courts in accordance with the law of Vietnam.
Article 103
Foreign investors, parties to business co-operation contracts, enterprises with foreign
owned capital and Vietnamese organizations and individuals must comply with the law.
Vietnamese State employees and State bodies are strictly prohibited from using their
authority to cause trouble and difficulties or hinder foreign investment activities. Any
person in breach shall, depending on the seriousness, be held liable in accordance with
law.
Chapter XV
IMPLEMENTATION PROVISIONS
Article 104
1.
This Decree shall be of full force and effect as of 1 March 1997. All previous provisions
which are inconsistent with this Decree are hereby repeated.
2.
Ministers, heads of ministerial level bodies, heads of Government bodies and
chairmen of people's committees of provinces and cities under central authority shall be
responsible for the implementation of this Decree.
ON BEHALF OF THE GOVERNMENT
PRIME MINISTER
(Signed)
VÕ VĂN KIỆT
http://www.chinhphu.vn/portal/page/portal/English/legaldocuments/Policies?categoryId=886&
articleId=10001394
Commercial Law
THE NATIONAL ASSEMBLY
SOCIALIST REPUBLIC OF VIETNAM
______
Independence- Freedom- Happiness
Law No.36/2005/QH11
______________________________
THE NATIONAL ASSEMBLY
SOCIALIST REPUBLIC OF VIETNAM
IXth Term, 7th session
(From May 05 to June 14, 2005)
______
COMMERCIAL LAW
Pursuant to Article 103 and Article 106 of the 1992 Constitution of the Socialist Republic
of Vietnam, which was amended and supplemented under Resolution No.
51/2001/QH10 dated December 25, 2001, of the Xth National Assembly, the 10th
session;
This Law provides for commercial activities.
Chapter I
Section 1. GOVERNING SCOPE AND SUBJECTS OF APPLICATION
Article1. Governing scope
1. Commercial activities conducted in the territory of the Socialist Republic of Vietnam.
2. Commercial activities conducted outside the territory of the Socialist Republic of
Vietnam in cases where the involved parties agree to this Law for application, or where
a foreign law or a treaty to which the Socialist Republic of Vietnam is a contracting party
stipulates the application of this Law.
3. Activities not for profit purposes conducted by a party in its transactions with traders
in the territory of the Socialist Republic of Vietnam in cases where the party conducting
such not-for-profit activities chooses to apply this Law.
Article 2. Subjects of application
1. Traders conducting commercial activities as provided for in Article 1 of this Law.
2. Other organizations and individuals conducting commerce-related activities.
3. Basing itself on the principles provided for by this Law, the Government shall specify
the application of this Law to individuals who independently and regularly conduct
commercial activities without having to make business registration.
Article 3. Interpretation of terms
In this Law, the following terms shall be construed as follows:
1. Commercial activities mean activities for the purpose of generating profits, including:
sale and purchase of goods, provision of services, investment, commercial promotion
and other activities for the profit purpose.
2. Goodsinclude:
a) All types of movables, including those to be formed in the future;
b) Things attached to land;
3. Custom in commercial activities meansa code of conduct that has an explicit
meaning, is established and repeated time and again for a long period of time between
and implicitly recognized by involved parties in order identify their respective rights and
obligations in commercial contracts.
4. Commercial practice means a custom that is widely recognized in commercial
activities in an area, a region or a commercial domain, has an explicit meaning, and is
recognized by involved parties in order to identify their respective rights and obligations
in commercial activities.
5. Data message means information created, sent, received and stored in electronic
media.
6. Vietnam-based representative office of a foreign trader meansa dependent unit of the
foreign trader, which is established under the provisions of Vietnamese law to conduct
market survey and a number of commercial promotion activities permitted by
Vietnamese law.
7. Vietnam-based branch of a foreign trader means a dependent unit of the foreign
trader, which is established and conducts commercial activities in Vietnam under the
provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam is a
contracting party.
8. Purchase and sale of goods mean commercial activities whereby the seller is obliged
to deliver goods, transfer ownership of goods to the purchaser and receive payment; the
purchaser is obliged to pay to the seller and receive goods and the ownership thereof
as agreed.
9. Provision of services means commercial activities whereby a party (hereinafter
referred to as the service provider) is obliged to provide a service to another party and
receive payment; the service-using party (hereinafter referred to as the customer) is
obliged to pay to the service provider and use the service as agreed.
10. Commercial promotion means activities of promoting and seeking opportunities for
the purchase or sale of goods and provision of services, including sale promotion,
commercial advertisement, display and exhibition of goods and services, and trade fairs
and exhibitions.
11. Commercial intermediary activities mean activities carried out by a trader to effect
commercial transactions for oneor several identified traders, including representation for
traders, commercial brokerage, goods sale or purchase entrustment, and commercial
agency.
12. Contractual breach means the failure of a party to perform, to fully or properly
perform its obligations according to the agreement between the involved parties or the
provisions of this Law.
13. Substantial breach means a contractual breach by a party, which causes damage to
the other party to an extent that the other party cannot achieve the purpose of the entry
into the contract.
14. Origin of goods means a country or a territory where all the goods are turned out or
where the last stage of substantial processing of goods is performed in cases where
many countries or territories join in the process of producing such goods.
15. Forms of validity equivalent to documents include telegraph, telex, facsimile, data
message and other forms provided for by law.
Article 4. Application of the Commercial Law and relevant laws
1. Commercial activities must comply with the Commercial Law and relevant laws.
2. Particular commercial activities provided for in other laws shall comply with the
provisions of such laws.
3. Commercial activities, which are not provided for inthe Commercial Law and other
laws shall comply with the provisions of the Civil Code.
Article5. Application of treaties, foreign laws and international commercial
practices
1. Where a treaty to which Vietnam is a contracting party stipulates the application of
foreign laws or international commercial practices, or contain provisions different from
those of this Law, the provisions of such treaty shall apply.
2. Parties to commercial transactions involving foreign elements may agree to apply
foreign laws or international commercial practices if such foreign laws or international
commercial practices are not contrary to the fundamental principles of the Vietnamese
law.
Article6. Traders
1. Traders include lawfully established economic organizations and individuals that
conduct commercial activities in an independent and regular manner and have business
registrations.
2. Traders are entitled to conduct commercial activities in occupations and sectors, in
geographical areas, in forms and by modes, which are not banned by law.
3. The right of traders to conduct lawful commercial activities is protected by the State.
4. The State exercises for a definite time its monopoly over commercial activities in
respect to a number of goods and services or in a number of geographical areas in
order to ensure the national interests. The Government shall specify the lists of goods,
services and geographical areas subject to the State monopoly.
Article 7. Obligation of traders to register business
Traders are obliged to register their business according to the provisions of law. Where
traders have not yet registered their business, they are still held responsible for all of
their activities according to the provisions of this Law and other provisions of law.
Article8. Agencies in charge of state management over commercial activities
1. The Government performs the unified state management over commercial activities.
2. The Ministry of Trade is answerable to the Government for performing the state
management over activities of goods sale and purchase and specific commercial
activities provided for in this Law.
3. Ministries and ministerial-level agencies shall, within the scope of their respective
tasks and powers, have to perform the state management over commercial activities in
their assigned domains.
4. People's Committees at all levels perform the state management over commercial
activities in their respective localities according to the decentralization by the
Government.
Article9. Commercial associations
1. Commercial associations are established to protect the legitimate rights and interests
of traders, mobilize traders to take part in commercial development, and disseminate
and propagate the provisions of law on commerce.
2. Commercial associations are organized and operate according to the provisions of
law on associations.
Section 2. FUNDAMENTAL PRINCIPLES IN COMMERCIAL ACTIVITIES
Article10. Principle of traders' equality before law in commercial activities
Traders of all economic sectors are equal before law in commercial activities.
Article11. Principle of freedom and freewill to agreement in commercial activities
1. Parties have the rights of freedom to reach agreements not in contravention of the
provisions of law, fine traditions and customs and social ethics in order to establish their
rights and obligations in commercial activities. The State respects and protects such
rights.
2. In commercial activities, the parties shall act on their own freewill, and neither party is
allowed to impose its own will on, to force, intimidate or obstruct, the other party.
Article 12. Principle of application of customs in commercial activities preestablished between parties
Except otherwise agreed, the parties shall be regarded as automatically applying
customs in commercial activities pre-established between them which they have already
known or ought to know, provided that such customs are not contrary to the provisions
of law.
Article13. Principle of application of practices in commercial activities
Where it is neither provided for by law nor agreed by the parties, and there exist no
customs pre-established between them, commercial practices shall be applied provided
that such practices are not contrary to the principles provided for in this Law and the
Civil Code.
Article14. Principle of protection of legitimate interests of consumers
1. Traders conducting commercial activities are obliged to provide consumers with
sufficient and truthful information on goods and/or services they trade in or provide and
take responsibility for the accuracy of such information.
2. Traders conducting commercial activities must be responsible for the quality and
lawfulness of goods and/or services they trade in or provide.
Article15. Principle of recognition of legal validity of data messages in
commercial activities
In commercial activities, data messages, which satisfy all technical conditions and
standards provided for by law shall be recognized legally valid as documents.
Section 3. FOREIGN TRADERS CONDUCTING COMMERCIAL ACTIVITIES IN
VIETNAM
Article 16. Foreign traders conducting commercial activities in Vietnam
1. Foreign traders mean traders established and making their business registrations
according to the provisions of foreign laws or recognized by foreign laws.
2. Foreign traders are entitled to set up their representative offices or branches in
Vietnam; to establish in Vietnam foreign-invested enterprises in the forms provided for
by Vietnamese law.
3. Vietnam-based representative offices and branches of foreign traders have the rights
and obligations specified by Vietnamese law. Foreign traders shall be held responsible
before Vietnamese law for all activities of their Vietnam-based representative offices
and branches.
4. Foreign-invested enterprises established in Vietnam by foreign traders according to
the provisions of Vietnamese law or international treaties to which the Socialist Republic
of Vietnam is a contracting party shall be regarded as Vietnamese traders.
Article17. Rights of representative offices
1. To operate for the purposes, within the scope and duration stipulated in their
establishment licenses.
2. To rent offices, rent and purchase equipment and facilities necessary for their
operations.
3. To recruit Vietnamese and expatriate employees to work for them according to the
provisions of Vietnamese law.
4. To open accounts in foreign currencies or foreign currency-based Vietnam dong at
banks licensed to operate in Vietnam, and to be allowed to use those accounts solely
for their operations.
5. To have seals bearing their names according to the provisions of Vietnamese law.
6. To have other rights as defined by law.
Article 18. Obligations of representative offices
1. Not to directly conduct profit-generating activities in Vietnam.
2. To conduct commercial promotion activities within the scope permitted by this Law.
3. Not to enter into contracts, not to amend or supplement contracts already entered
into by foreign traders, except where chief representatives obtain valid letters of
authorization from foreign traders or other cases specified in Clauses 2, 3 and 4, Article
17 of this Law.
4. To pay taxes, fees and charges, and fulfill other financial obligations provided for by
Vietnamese law.
5. To report on their operations according to Vietnamese law.
6. To have other obligations as defined by Vietnamese law.
Article19. Rights of branches
1. To rent offices, rent and purchase equipment and facilities necessary for their
operations.
2. To recruit Vietnamese and expatriate employees to work for them according to
Vietnamese law.
3. To enter into contracts in Vietnam in compliance with their operation contents
specified in their establishment licenses and the provisions of this Law.
4. To open Vietnam dong accounts and foreign-currency accounts at banks licensed to
operate in Vietnam.
5. To transfer profits overseas according to the provisions of Vietnamese law.
6. To have seals bearing their own names according to the provisions of Vietnamese
law.
7. To conduct activities of goods purchase and sale and other commercial activities in
compliance with their establishment licenses according to the provisions of Vietnamese
law and treaties to which the Socialist Republic of Vietnam is a contracting party.
8. To have other rights provided for by law.
Article20. Obligations of branches
1. To observe the accounting regime provided for by Vietnamese law; in cases where it
is necessary to apply another commonly used accounting system, the approval by the
Ministry of Finance of the Socialist Republic of Vietnam is required.
2. To report on their operations according to the provisions of Vietnamese law.
3. To have other obligations provided for by law.
Article 21. Rights and obligations of foreign-invested enterprises
Rights and obligations of foreign invested enterprises shall be determined according to
the provisions of Vietnamese law or treaties to which the Socialist Republic of Vietnam
is a contracting
party.
Article22. Competence to license foreign traders to conduct commercial activities
in Vietnam
1. The Government shall uniformly manage the licensing of commercial activities of
foreign traders in Vietnam.
2. The Ministry of Planning and Investment shall be answerable to the Government for
managing the issuance of licenses to foreign traders investing in Vietnam according to
the provisions of Vietnamese law.
3. The Ministry of Trade shall be answerable to the Government for. managing the
issuance of licenses to set up Vietnam-based representative offices of foreign traders;
or licenses to set up branches, joint-venture enterprises or enterprises with 100%foreign
capital in Vietnam in cases where such traders are specialized in conducting activities of
goods purchase and sale or other activities directly related to goods purchase and sale
in compliance with Vietnamese law and treaties to which the Socialist Republic of
Vietnam is a contracting party.
4. Where a specialized law contains specific provisions on the competence of ministries
or ministerial-level agencies, which are responsible before the Government for
managing the issuance of licenses to foreign traders for conducting commercial
activities in Vietnam, the provisions of such specialized law shall apply.
Article23. Termination of operations in Vietnam of foreign traders
1. Foreign traders shall terminate their operations in Vietnam in the following cases:
a) Upon expiration of the operation duration stipulated in their licenses;
b) At the request of traders, which is approved by competent state management
agencies;
c) Under decisions of competent state management agencies as a sanction against
their violations of law and their licenses;
d) Where traders are declared bankrupt;
e) Where foreign traders terminate their operations according to foreign laws, for
representative offices, branches or foreign parties to business cooperation contracts
with Vietnamese parties;
f) Other cases provided for by law.
2. Before terminating their operations in Vietnam, foreign traders are obliged to pay
debts and fulfill other obligations toward the State, concerned organizations and
individuals in Vietnam.
Chapter II
PURCHASE AND SALE OF GOODS
Section 1. GENERAL PROVISIONS ON ACTIVITIES OF PURCHASE AND SALE OF
GOODS
Article24. Form of contracts for purchase and sale of goods
1. Contracts for sale and purchase of goods may be expressed in verbal or written form
or established by specific acts.
2. For types of contracts for purchase and sale of goods, which, as provided for by law,
must be made in writing, such provisions must be complied with.
Article25. Goods banned from business, goods subject to business restrictions
and goods subject to conditional business
1. On the basis of socio-economic conditions of each period and international treaties to
which the Socialist Republic of Vietnam is a contracting party, the Government shall
specify the lists of goods banned from business, goods subject to business restrictions,
and goods subject to conditional business and the conditions for trading in such goods.
2. For goods subject to business restrictions and goods subject to conditional business,
the purchase and sale thereof shall be effected only when goods and the goods
purchasing and selling parties fully meet the conditions provided for by law.
Article26. Application of urgent measures with respect to domestically circulated
goods
1. Goods legally and domestically circulated may be subject to the application of one or
all of such measures as compulsory withdrawal from circulation, circulation ban,
circulation suspension, conditional circulation, or compulsory circulation permission in
the following cases:
a) Where such goods constitute sources or transmitters of various epidemics and
diseases;
b) Where an emergency circumstance occurs.
2. Specific conditions, order, procedures and competence for announcing the
application of urgent measures to domestically circulated goods shall comply with the
provisions of law.
Article27. International purchase and sale of goods
1. International purchase and sale of goods shall be conducted in form of export, import,
temporary import for re-export, temporary export for re-import and transfer through
border-gates.
2. International purchase and sale of goods shall be conducted on the basis of written
contracts or other forms of equal legal validity.
Article 28. Export and import of goods
1. Export of goods means the bringing of goods out of the territory of the Socialist
Republic of Vietnam or into special zones in the Vietnamese territory, which are
regarded as exclusive customs zones according to the provisions of law.
2. Import of goods means the bringing of goods into the territory of the Socialist
Republic of Vietnam from foreign countries or special zones in the Vietnamese territory,
which are regarded as exclusive customs zones according to the provisions of law.
3. On the basis of socio-economic conditions in each period and treaties to which the
Socialist Republic of Vietnam is a contracting party, the Government shall specify the
lists of goods banned from import and/or export, goods to be imported or exported
under permits of competent state management agencies, and the procedures for
granting permits.
Article29. Temporary import for re-export and temporary export for re-import of
goods
1. Temporary import of goods for re-export means the bringing of goods into Vietnam
from foreign countries or special zones locating in the Vietnamese territory, which are
regarded as exclusive customs zones according to the provisions of law, with the
completion of the procedures for importing such goods into Vietnam, then procedures
for exporting the same goods out of Vietnam.
2. Temporary export of goods for re-import means the bringing of goods overseas or
into special zones in the Vietnamese territory, which are regarded as exclusive customs
zones according to the provisions of law, with the completion of procedures for
exporting such goods out of Vietnam, then procedures for importing the same goods
back into Vietnam.
3. The Government shall specify activities of temporary import for re-export and
temporary export for re-import of goods.
Article30. Transfer of goods through border-gates
1. Transfer of goods through border-gates means the purchase of goods from a country
or territory for sale to another country or territory outside the Vietnamese territory
without carrying out the procedures for importing such goods into Vietnam and the
procedures for exporting such goods out of Vietnam.
2. Transfer of goods through border-gates shall be conducted in the following forms:
a) Goods are transported directly from the exporting country to the importing country
without going through Vietnamese border-gates;
b) Goods are transported from the exporting country to the importing country through
Vietnamese border-gates without carrying out the procedures for importing them into
Vietnam and the procedures for exporting them out of Vietnam;
c) Goods are transported from the exporting country to the importing country through
Vietnamese border-gates and brought into bonded warehouses or areas for
transshipment of goods at Vietnamese ports without carrying out the procedures for
importing them into Vietnam and the procedures for exporting them out of Vietnam.
3. The Government shall provide for in detail activities of transfer of goods through
border-gates.
Article31. Application of urgent measures to activities of international purchase
and sale of goods
Where it is necessary to protect the national security or other national interests in
compliance with Vietnamese law and treaties to which the Socialist Republic of Vietnam
is a contracting party, the Prime Minister shall decide on the application of urgent
measures to activities of international purchase and sale of goods.
Article32. Labels for domestically circulated, exported and imported goods
1. Goods labels mean writings, prints, drawings or photos of texts, pictures or images,
which are stuck, printed, affixed, molded, carved or engraved directly on goods or their
commercial packing or other materials which are attached to the goods or their packing.
2. All goods that are domestically circulated, imported and exported must have their
labels, except for some cases specified by law.
3. Contents, which must be inscribed in goods labels and the labeling of goods shall
comply with regulations of the Government.
Article33. Certificates of origin of goods and rules of origin of goods
1. Export goods and import goods must have certificates of origin in the following cases:
a) Goods are eligible for tax or other preferences;
b) It is so provided for by Vietnamese laws or treaties to which the Socialist Republic of
Vietnam is a contracting party.
2. The Government shall provide in detail for the rules of origin for exports and imports.
Section 2. RIGHTS AND OBLIGATIONS OF PARTIES TO CONTRACTS FOR
PUHCHASE AND SALE OF GOODS
Article34. Delivery of goods and goods-related documents
1. The seller must deliver goods and relevant documents, as agreed in contracts on
quantity, quality, packing and preservation modes and other contractual terms.
2. In cases where there is no specific agreement, the seller is obliged to deliver goods
and relevant documents according to the provisions of this Law.
Article 35. Place of delivery of goods
1. The seller is obliged to deliver goods at the agreed place.
2. In cases where there is no agreement on place of goods delivery, such a place shall
be specified as follows:
a) In cases where goods are things attached to land, the seller must deliver goods at
the place where such goods exist;
b) In cases where the contract contains a provision on goods transportation, the seller is
obliged to deliver goods to the first carrier;
c) In cases where the contract contains no provision on goods transportation, and at the
time the contract is entered into, the parties know the location of the goods storage, the
place of goods loading or the place of goods manufacture, the seller shall have to
deliver the goods at such place;
d) In other cases, the seller shall have to deliver goods at his/her place of business, or
his/her place of residence identified at the time the purchase and sale contract is
entered into in cases he/she has no place of business.
Article 36. Responsibilities upon delivery of goods where carriers are involved
1. Where goods are handed over to the carrier without being identified with specific
signs or marks on them, accompanied with transportation documents or otherwise, the
seller must notify the purchaser of the handover of goods to the carrier and clearly
identify names and method of recognizing transported goods.
2. Where the seller is obliged to arrange the goods transportation, the seller shall have
to enter into necessary contracts for the transportation of goods to the destination by
means of transportation suitable to specific circumstances and under normal conditions
for such modes of transportation.
3. Where the seller is not obliged to purchase insurance for the goods in the course of
transportation and if requested by the purchaser, the seller must supply to the
purchaser all necessary information on the goods and the transportation thereof to
enable the purchaser to purchase insurance for the goods.
Article 37. Time limit for delivery of goods
1. The seller must deliver goods at the time already agreed upon in the contract;
2. Where only the time limit for delivery of goods is agreed upon without a specific time
for delivery of goods, the seller may deliver goods at any time within such time limit and
must notify the purchaser of the delivery in advance;
3. Where there is no agreement on the time limit for delivery of goods, the seller must
deliver goods within a reasonable time limit after the contract is entered into.
Article 38. Delivery of goods before the agreed time
Where the seller delivers goods earlier than the agreed time, the purchaser may receive
or reject the goods, unless otherwise agreed upon by the parties.
Article 39. Goods, which are not appropriate to contracts
1. Where it is not specified in the contract, goods shall be considered not appropriate to
the contract when they fall into one of the following cases:
a) They are not suitable to common use purposes of goods of the same type;
b) They are not suitable to any specific purpose that has been notified by the purchaser
to the seller or the seller should have known at the time the contract is entered into;
c) Their quality is not the same as the quality of the samples previously handed over by
the seller to the purchaser;
d) They are not preserved or packaged by a method common to such goods, or not
preserved by proper preserving methods in cases where no common preserving
method is available.
2. The purchaser may reject the goods if such goods are not appropriate to the contract
according to the provisions of Clause 1 of this Article.
Article 40. Liability for goods, which are not appropriate to contracts
Unless otherwise agreed upon by the parties, the liability for goods, which are not
appropriate to contracts is provided for as follows:
1. The seller shall not be liable for any defect of the goods if the purchaser, at the time
the contract is entered into, knew or should have known such defect;
2. Except for the case specified in Clause l of this Article, within the time limit for lodging
complaint provided for in this Law, the seller shall be liable for any defect of the goods
which already exists before the time of passing the risk to the purchaser despite the fact
that such defect may be discovered after passing the risks.
3. The seller shall be liable for defects of goods occurring after the pass of risks if such
defects are attributable to contract breaches by the seller.
Article 41. Remedies in case of delivery of goods in insufficient quantity or
delivery of goods not appropriate to contracts
1. Unless otherwise agreed, and where the contract only provides for a time limit for
delivery of goods and does not determine a specific time for delivery of goods, and the
seller delivers goods before the expiration of such time limit but in insufficient quantity or
goods not appropriate to the contract, the seller may still deliver the deficit quantity of
goods or provide substitute goods which are appropriate to the contract or remedy the
inappropriateness of the goods within the remaining duration.
2. Where the seller, when applying the remedies provided for in Clause 1 of this Article,
causes disadvantages or unreasonable costs to the request the seller to deal with such
disadvantages or bear such costs.
Article 42. Delivery of goods-related documents
1. Where there is an agreement on the delivery of documents, the seller is obliged to
deliver all goods-related documents to the purchaser within the time limit, at the place
and by mode already agreed.
2. Where there is no agreement on the time limit and place for delivery of goods-related
documents to the purchaser, the seller must deliver such documents to the purchaser
within a reasonable time limit and at a convenient place so that the purchaser can
receive the goods.
3. Where the seller has delivered goods-related documents before the agreed time, the
seller can still rectify errors of such documents within the remaining duration of the time
limit.
4. When the seller, when rectifying errors mentioned in Clause 3 of this Article, causes
disadvantages or unreasonable costs to the purchaser, the purchaser shall have the
right to request the seller to deal with such disadvantages or bear such costs.
Article 43. Delivery of goods in excessive quantity
1. Where the seller delivers goods in excessive quantity, the purchaser may reject or
accept such excessive quantity of goods.
2. Where the purchaser accepts the excessive quantity of goods, the purchaser must
pay for that quantity at the price agreed in the contract unless otherwise agreed upon by
the parties.
Article 44. Pre-delivery examination of goods
1. Where it is agreed by the parties that the purchaser or the purchaser's representative
shall examine the goods before the delivery, the seller must ensure that the purchaser
or the purchaser's representative shall be given conditions for conducting such
examination.
2. Except where it is otherwise agreed, the purchaser or the purchaser's representative
in the cases mentioned in Clause 1 of this Article must examine the goods within the
shortest period of time allowed by practical circumstances. Where the contract provides
for the transportation of goods, the examination of goods may be postponed until the
goods are transported to the destination.
3. Where the purchaser or the purchaser's representative does not conduct the
examination of goods before the delivery of goods as agreed, the seller may deliver the
goods according to the contract.
4. The seller shall not be liable for defects of goods which the purchaser or the
purchaser's representative has known or should have known but failed to notify them to
the seller within a reasonable time limit after the examination of goods.
5. The seller shall be liable for defects of goods already examined by the purchaser or
the purchaser's representative if the defects of the goods cannot be detected in the
course of examination through common measures and the seller knew or should have
known such defects but failed to notify them to the purchaser.
Article 45. Obligation to assure the ownership right over goods
The seller must assure that:
1. The ownership right of the purchaser over goods sold is not disputed by any third
party;
2. The goods are lawful;
3. The handover of the goods is lawful.
Article 46. Obligation to assure intellectual property rights over goods
1. The seller must not sell goods infringing upon intellectual property rights. The seller
shall be held responsible for any dispute related intellectual property rights over goods
sold.
2. Where the purchaser requests the seller to observe technical drawings, designs,
formulas or specifications furnished by the purchaser, the purchaser shall be liable for
complaints related to infringements of intellectual property rights which arise from the
fact that the seller has complied with the request of the purchaser.
Article 47. Notification requirements
1. The seller shall lose the right to invoke the provisions of Clause 2, Article 46 of this
Law when failing to promptly notify the purchaser of a third party's complaint about the
delivered goods after the seller knew or should have known such complaint, except for
cases where the purchaser knew or should have known a third party's complaint.
2. The purchaser shall lose the right to invoke the provisions of Article 45 and Clause 1,
Article 46 of this Law when failing to promptly notify the seller of a third party's complaint
about the delivered goods after the purchaser knew or should have known such
complaint, except for cases where the purchaser knew or should have known a third
party's complaint.
Article 48. Obligation of the seller in cases where goods are subject to measures
of security for performance of civil obligations
Where the goods sold are subject to measures of security for performance of civil
obligations, the seller must notify the purchaser of such security measures and must
obtain the consent of the security beneficiary regarding the sale of such goods.
Article 49. Obligation to provide warranty for goods
1. Where goods are purchased and sold under warranty, the seller shall have to provide
warranty for such goods according to the agreed contents and duration.
2. The seller must fulfill the warranty obligation as soon as the practical situation
permits.
3. The seller must bear all warranty expenses unless otherwise agreed.
(To be continued)
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