In case an enterprise provides cleaning services to customers in an export processing zone or other non-tariff zone, the enterprise needs to determine as follows:
If the service is consumed in a non-tariff zone and meets the following conditions: having a service supply contract, having a document of payment via a bank for the service fee and other documents as prescribed. In this case the VAT rate is 0%;
In case there is a basis to believe that the machine repair service is used outside the export processing zone, the corresponding VAT rate is 10%.
Currently, the issue of as the qualification of consumption inside or outside the non-tariff zone has not been specified, so businesses need to base on the nature of service activities to make an appropriate determination.
Currently, on-the-spot export of goods is still considered one of the cases where input VAT is deducted and refunded, but to achieve this, businesses need to meet the following cumulative conditions:
Having a goods purchase and sale contract or a processing contract specifying delivery to Vietnam;
On-spot export and import customs declarations, customs procedures have been completed;
Having a value-added invoice or an export invoice clearly stating the name of the foreign buyer, the name of the receiving enterprise and the delivery location in Vietnam;
In case goods are sold to foreign traders but delivered in Vietnam, payment must be made via banks in freely convertible foreign currencies. If the on-spot importer is authorized by the foreign party to make payment to the on-spot exporter, the payment currency shall comply with the provisions of the law on foreign exchange;
In accordance with the provisions of the investment license in the case of on-spot exports of foreign-invested enterprises.
Currently, to attract investment capital from abroad, the Government has issued many preferential policies for investment projects, especially tax incentives, including:
The following investment projects will enjoy tax incentives:
A business license is a mandatory license for a foreign-invested company in some specific cases such as:
Business license will be issued by the Department of Industry and Trade and in some special cases will need approval from the Ministry of Industry and Trade. Enterprises must satisfy the Business License conditions when they actually want to carry out the respective activities, which means that the business sectors listed above can still be recorded in their operations at the time of establishment or addition business sectors.
Only e-commerce websites that sell goods with online ordering function must carry out this notification procedure. Online ordering function is understood as a function that allows customers to initiate the process of entering into a contract according to the terms published on the website, including entering into a contract with an automatic system. Accordingly, when websites are designed to serve the purpose of providing information and marketing products to customers without the function of online ordering, the owner does not have to make a notice as prescribed.
Depending on the loan term, businesses must carry out loan registration procedures at the State Bank for:
For foreign loans, it is required to be registered with the State Bank. The borrower may only withdraw capital and repay the principal and interest of the foreign loan through the account registered with the State Bank.
Before importing, enterprises shall determine whether the goods to be imported fall into the following circumstances:
Depending on the type of goods, the import conditions as well as the sub-licenses from specialized agencies will be different, so enterprises need to compare the expected type of goods to be imported with general and specific regulations from different management agencies. Typically, if such goods are food, pharmaceuticals, or cosmetics, an inspection or opinion is required from the Ministry of Health, or the Ministry of Agriculture and Rural Development for the case of importing animals, plants, aquatic animals, etc.
Not all of foreign investors being individuals or organizations are allowed to establish 100% foreign-owned company in Vietnam. According to Vietnam’s commitments in WTO and specialized laws, currently, Vietnam does not allow foreign investors to invest 100% of their capital in some business sectors.
These are conditional business sectors, and foreign investors are required to enter joint venture with Vietnamese investors and are limited in the ratio of capital contribution. In case, foreign-owned company has many business sectors, the lowest limit of the capital contribution ratio of one of all business sectors shall be applied to foreign investors.
According to provisions of Vietnamese law, when investing in Vietnam through the company establishment, it is necessary to meet market access conditions applied for foreign investors, including:
As foreign investors would like to purchase shares or contributed capital in a company in Vietnam, it is necessary to keep in mind the specific conditions under provisions of investment law:
In which, the market access conditions are understood as the conditions that Vietnam has committed under the WTO as well as recognized in specialized law, according to which a number of regulated business sectors have not been committed for foreign investors to access or foreign investors are required to enter into joint ventures with Vietnamese investors and are limited in the ratio of capital contribution. In this case, the company in Vietnam to which the investors intend to contribute capital or purchase shares needs to review the existing business sectors to adjust to suit the conditions of market access before carrying out the procedures for purchase of shares or contributed capital.
Under Vietnamese law, foreign investors can choose to establish any type of business such as a private enterprise, limited liability company, joint stock company, or partnership. However, foreign investors often choose two types of limited liability companies and joint stock companies because these types help investors to limit liability to shareholders/members corresponding to their shares or contributed capital in the company, as well as having flexibility in business management structure.
According to Law on Enterprise, assets for capital contribution shall include:
According to labour law, foreign employees working in Vietnam must fully satisfy the following conditions:
A foreign employee working in Vietnam is subject to participate in compulsory social insurance when having a work permit or a practicing license issued by Vietnamese competent authorities and having indefinite-term labour contract or a definite-term labour contract of 01 year or more with an employer in Vietnam.
A foreign employee working in Vietnam is not subject to participate in compulsory social insurance when under one of following cases:
After being granted Enterprise Registration Certificate, in spite of not having conducted any business activities, the enterprise still has to perform tax reporting obligations. Types of tax reporting to be done include:
E-commerce activities have 3 main subjects: Government (G – Government), Business (B – Business) and Customer (C – Customer or Consumer). Accordingly, in Vietnam, there are mainly B2B (Business to Business), B2C (Business to Customer) and C2C (Customer to Customer) models, specifically:
According to the Law on Investment, real estate trading is on the list of conditional business sectors, so foreign investors are only allowed to operate within certain scope; accordingly, real estate trading activities that investors are allowed to conduct shall include:
Currently, each industrial park will allow certain business sectors to be conducted, so when choosing an industrial park, forein investors need to keep in mind the business sectors that are allowed to operate in the industrial park.
In case foreign investor would like to lease directly from the industrial park, legal documents of the industrial park needed shall include documents on legal status, documents recording the legitimate land use rights from competent state agencies, environmental permits (noise, waste, water…). In case foreign investor subleases from another enterprise in the industrial park, the foreign investor needs to check to ensure that the lessor has full legal status to lease to ensure the validity of the lease agreement.
Environmental issues include wastewater treatment system and compare with the expected production capacity of the proposed investment project to ensure that the environmental system of the industrial park is satisfactory as required by law.
Tax incentives include exemption and reduction of corporate income tax rates for a certain period of time, whereby the tax legislation sets out a number of tax incentives for enterprises with investment projects in industrial parks. The level of incentives will depend on the area of the business sectors operating in the industrial park.
Based on the characteristics and advantages of the type of industrial park, foreign investor can consider and choose a suitable location to invest in Vietnam.
An industrial park is an area with a defined geographical boundary, specialized in manufacturing industrial goods and providing services for industrial manufacturing, approved by the Prime Minister, established according to the conditions, order and procedures as prescribed by law. Industrial parks shall include:
An exporting processing area is an industrial park specializing in manufacturing export goods, provision of services for manufacturing exports and export activities, and is established according to the conditions, order and procedures applicable to the specified industrial park in Decree No. 82/2018/ND-CP.
The export processing zone is separated from the outside area according to the regulations applicable to the non-tariff zone specified in the law on export tax and import tax; The EPZ has a geographical boundary defined in the Decision on the establishment of an EPZ, but is isolated from the territories outside the EPZ by a fence system.
Auxiliary industrial area means an industrial park specializing in manufacturing auxiliary industrial products and rendering services satisfying the needs of this business line. The maximum area of land leased or re-let to develop projects on investment in auxiliary industries shall account for 60% of the area of rentable industrial land within the boundaries of an industrial park.
The auxiliary industrial area has an important meaning in the production of auxiliary products, providing auxiliary services for industrial products, thereby linking the system of industrial parks, facilitating production concentration, diversifying, meeting the needs of using or assembling products; increasing the competitiveness of industrial products as well as the level of the initiative of an economy.
Eco-industrial park means an industrial park in which enterprises get involved in cleaner production, make effective use of natural resources and enter into manufacturing cooperation and affiliation in order to tighten industrial symbiosis and promote economic, environmental and social efficiency in these enterprises.
This industrial park model is aimed at long-term, sustainable development, balance between immediate/local interests and common/long-term interests on the basis of ensuring that production activities must be with measures to minimize adverse impacts on the environment, limit waste discharge, rational use goes hand in hand with the conservation and preservation of energy and natural resources.
Vietnamese law has not completely allowed foreign investors in real estate tradingin Vietnam, therefore, before making capital contribution transactions to companies with real estate trading, foreign investors should pay attention to a number of issues such as:
To assess Seller’s compliance in M&A transaction, foreign investors need to check the following issues:
According to provisions of Circular No. 103/2014/TT-BTC, foreign organizations will be considered as foreign contractors and are subject to foreign contractor withholding tax if:
Enterprises providing software services is not subject to VAT as prescribed in Clause 21, Article 4, Circular 219/2013/TT-BTC.
However, please also note that if enterprises are providing software service for foreign organizations, individuals, or consumers outside Vietnam; supplies to organizations and individuals in non-tariff zones and for consumption in non-tariff zones as prescribed by law, they are eligible for the VAT rate of 0% if they satisfy the conditions specified in Article 9, Circular 219/2013 / TT-BTC.
Therefore, enterprises should also pay attention to service providers and location of service provision like in foreign countries and non-tariff zones to be able to apply tax rates and declare accurately in accordance with laws.
For overseas investment, enterprises should pay attention to the following reports:
Duration of implementation: Within 60 days from the date of approval or licensing of overseas investment project in accordance with the law of the country receiving the investment.
Four (04) quarterly reports on the operation of the investment project:
One (01) annual periodic report:
Unscheduled reports at the request of competent state agencies:
This report shall be submitted at the request of a competent state agency addressing issues related to investment projects or state management.
One (01) report on the operation of financial statements the overseas investment project:
As precribed by law, the head office of Vietnamese enterprise must be located in Vietnamese territory and be the contact address of the enterprise, determined according to the geographical boundaries of the administrative unit; have a phone number, tax number and email address (if any) and must meet the following conditions:
The enterprise’s legitimate ownership or use right to the head office is shown through specific documents and documents such as house/office/real estate lease contracts or through certificate of land use right and ownership of properties attached to land. In many cases, the competent authority may require the investor to provide the above documents in the application for registration of company establishment.
In order to facilitate the enterprise management by the competent authority as well as the ease of the enterprises in the process of communicating with their partners. The law stipulates that the address of the head office must be clear, stable, long-term and specifically identified: number, niche, alley, alley, street; or hamlets, communes, wards, townships, districts, urban districts, towns, provincial cities, provinces or central cities.
According to the provisions of Law on Residential Housing 2014, condominiums/collective houses are only allowed to be used for residential purposes. Therefore, the company cannot choose to register its head office address at such locations.
In addition, it should be noted that in the case of an officetel apartment – a multi-purpose apartment used for living and as an office. According to the guidance of the competent authority, the business can still choose to put the company address at this location, however, it is necessary to provide more documents about the use of the location with the confirmation of the investor in the application for company establishment.
One of the important factors for choosing a location for head office is its suitability of the business sectors that the enterprise which shall be registered with the local authorities and compliance with specialized law.
For the project, the parties need to determine whether the transfer has met the mandatory conditions to be conducted, specifically:
For the transferor, it is necessary in order to comply with the provisions of the land law, to determine whether the investor has legal documents recognizing their legal rights for all or part of the project,.
For transferee, the investor must be a real estate business enterprise, have sufficient financial capacity and commit to continue the implementation of construction and business investment in accordance with the provisions of law, ensuring the progress and content of the project.
If the Law on Real Estate Business 2006 requests investors to transfer the entire project, the Law on Real Estate Business 2014 gives the investor the right to transfer all of part of the project. This is considered more feasible than the previous regulations since it meets the intention of the project investor. It is also considered more suitable since in practice the value of projects to build commercial centers, apartments, adjacent apartments, and resorts is quite large, and finding an investor to receive the transfer of the whole project can be very challenging.
In both cases of transfer – a whole or part of project, the parties involved in the transfer transaction need to ensure that the transfer will:
The transfer of a partial or whole real estate project must be approved by the competent authority in written document. Besides, since this is a real estate project, the rights of the transferee should be recognized by the issuance of the new Certificate of Land Use Right, ownership of houses and other properties attached to land or registered for change in the issued certificates in accordance with the law on land.
On the administrative side, the transferee of the real estate project does not have to resubmit the whole project dossier, construction planning and construction permit of the project if there is no change in the content of the Approval for the investment policy, Investment Decision of the project.
According to Article 29.2 of the Law on Investment, the selection of investors to implement the project as prescribed in Point a and Point b Clause 1 of this Article shall be carried out after approving the investment policy, unless the investment project is not subject to approval of the investment policy.
In accordance with Article 29.2 of Decree No. 31/2021/ND-CP dated 26 March 2021 detailing and guiding the implementation of the Law on Investment, for investment projects subject to approval of investment policies specified in Articles 30, 31 and 32 of the Law on Investment, the competent authority shall consider approving the investment policy and decide on the method to select the investor, such as through auction of land use rights, bidding.
Based on Article 32.1.a of the Law on Investment, the Provincial-level People’s Committees shall approve investment policies for investment projects that requests the State to assign land, lease land not through auction, bidding or receiving transfer and investment projects with proposals to allow the transfer of land use purposes.
Based on the above provisions, investment projects that request the State to assign land, lease land through auction of land use rights, bidding for selection of investors not in the cases specified in Articles 30, 31 and Points b, c, d of Article 32.1 of the Law on Investment shall not have to carry out procedures for approving the investment policies before auctioning land use rights or bidding for investor selection.