Legal Guide To Doing Business in Vietnam 2016

2016
A LEGAL GUIDE TO
DOING BUSINESS
IN VIETNAM
SECOND EDITION
Member of
Eric Le Drau
Managing Partner
Nguyen Quoc Tuan

Partner
Le Thi Quynh Thu

Senior Associate
Archelle Lagsub
Foreign Senior Associate
Words of
INTRODUCTION
The past year has been a banner year of sorts for Vietnams further integration into the global market
as the country concluded various bilateral and multilateral free trade pacts with its major trading
partners (Korea, the Eurasian Economic Union, the European Union, the United States and the ten
other Trans-Pacific Partnership member states, and the nine other ASEAN members states through the
recent establishment of the ASEAN Economic Community).
The past year likewise saw a significant overhaul of the countrys legal framework (reminiscent of its
preparation for its accession to the World Trade Organization in 2007) through the revamp of its major
legal instruments, in particular, its corporate, investment, residential housing and real estate business
laws (among others).
Vietnam also ended last year on a very positive note, with a growth rate of 6.7 per cent (2016 forecast
is of 6.8 per cent), a rate reaching 9.85 per cent for HCMCs territory alone and with foreign direct
investment increasing by 15 per cent from 2014 (reaching an estimated total amount of USD 24 billion).
Indeed, Vietnam remains a strong growth story and as we usher in 2016, our team has prepared this
Legal Guide to provide you insights into the key aspects of undertaking business in Vietnam, from
the initial establishment of an entity, implementation of appropriate legal and tax structures, ongoing
compliance issues (including labor, financing, commercial and intellectual property concerns during
business operation) to dissolution.
We hope that you find this publication useful in your endeavors to establish and operate a successful
venture in Vietnam.
Eric Le Drau
Managing Partner
DISCLAIMER
The material contained in this Legal Guide is intended for information purposes only, and should not be relied
upon as or treated as a substitute for legal advice. For further information or clarification in relation to any matter
in this publication, kindly contact any of our Vietnam offices or drop us an email at il.hcmc@indochinalegal.com.
This Legal Guide is current as at January 2016.

Table of
CONTENTS
chapter 1 LEGAL SYSTEM 04 - 05
chapter 2 FREE TRADE AGREEMENTS 06 - 09
chapter 3 FOREIGN INVESTMENT AND LICENSING 10 - 19
chapter 4 BUSINESS VEHICLES 20 - 31
chapter 5 SUSPENSION, DISOLUTION & BANKRUPTCY 32 - 39
chapter 6 FOREIGN CURRENCY EXCHANGE AND CONTROL 40 - 41
chapter 7 LAND AND REAL ESTATE 42 - 43
chapter 8 LENDING AND SECURITY 44 - 47
chapter 9 LABOR AND SOCIAL SECURITY 48 - 53
chapter 10 PERSONAL AND CORPORATION TAX 54 - 65
chapter 11 INTERNATIONAL TRADE AND CUSTOMS 66 - 71
chapter 12 COMPETITION AND ECONOMIC CONCENTRATIONS 72 - 75
chapter 13 INTELLECTUAL PROPERTY 76 - 81
chapter 14 COMMERCIAL TRANSACTIONS 82 - 89
chapter 15 DISPUTE RESOLUTION 90 - 101
2 Indochina Legal 2016

GLOSSARY OF MAIN ACRONYMS AND ABREVIATIONS 102 - 103
TABLES AND CHARTS 104 - 105
Paracels
Spratleys
Indochina Legal 2016 3

Legal
SYSTEM
What is the legal system (i.e. common law system, civil law system or both) in Vietnam?
Vietnam has a civil law system, akin to the French legal system, with certain incorporated socialist orientations such as ownership
of land and natural resources by the Vietnamese people through the State. There are also certain de facto political and cultural
sensitivities that form part of the Vietnamese legal system.
With Vietnams accession to the WTO and entry into various bilateral and multilateral FTAs, however, Vietnam has liberalized its
trade and investment regime so as to open its market to foreign investment and increase its integration with the regional and global
economy.
What are the sources of law (such as constitution, statute law and common law)?
Being a country of civil law tradition, Vietnams source of law is written legislation (officially referred to as legal normative documents).
Under the 2013 Constitution and the 2015 Law on Promulgation of Legal Documents, Vietnams primary sources of law comprise the
Constitution and the laws, codes and resolutions passed by the NA, which set out general rules and principles, followed by secondary
regulations issued by executive and judicial bodies empowered to promulgate legal documents, which provide details on the actual
implementation of the general rules and principles embodied in the primary legal documents.
In some instances, certain State bodies having competence to decide on particular matters (e.g., tax offices or business registration
offices) issue their official opinion to clarify some points or to provide guidelines on the scope of application or manner of
implementation of relevant regulations. Although not recognized as official sources of law, these official letters or opinions are
deemed binding on the addressed parties, and may (as in the case of tax office issuances) be considered instructive (as to the
interpretation of certain legal provisions) to parties similarly situated. As to the principle of stare decisis (doctrine of legal precedent),
the same does not apply in Vietnam, court judgments not being recognized as official sources of law.
See in page 5 an overview of the hierarchy of Vietnams key legal documents (in descending order).
What is/are the official language(s)?

Vietnamese (ting Vit) is the national and official language of Vietnam. However, the English translation of legal documents is
readily available either as published in the Official Gazette of Vietnam or electronically through various websites (including the official
website of State bodies). Application dossiers for setting up business in Vietnam may also be made and submitted in Vietnamese and
in another foreign language although the Vietnamese version shall prevail in case of conflict of interpretation. Official documents
issued overseas must first be legalized and translated into Vietnamese prior to submission to State authorities.

Table 1 - Hierarchy of Key Legal Documents in Vietnam
CONSTITUTION
The fundamental law of the State as passed by the NA, which sets out the fundamental rights of Vietnamese citizens and
the framework for the operation and administration of the State
CODES and LAWS of the NA RESOLUTIONS of the NA

Address fundamental issues and provides for the rights Reflect the NAs decisions on socio-economic
and obligations of Vietnamese citizens in relation to such development tasks and the planning, allocation and
issues adjustment of State budget
ORDINANCES of the NASC RESOLUTIONS of the NASC

Contain regulations on the tasks assigned by the NA that Aim to interpret the Constitution and
are proposed to be developed as laws after a certain NA laws and resolutions
period of implementation
ORDERS and DECISIONS of the State President

Issued by the State President to exercise tasks and competencies defined in the Constitution and NA laws and resolutions
DECREES of the Government

Provide detailed guidelines on the implementation of higher-ranking legal documents; specify tasks, authority structure
and organizational structure of ministries, ministry-like agencies and government-affiliated agencies
DECISIONS of the Prime Minister

Issued by the Prime Minister to focus on State management relating to government operation, the public administrative
system and working regulations of the Governments members and chairmen of provincial peoples committees
MINISTRY SPCJC SPCJC / SPPC JOINT GSA

CIRCULARS RESOLUTIONS CIRCULARS CIRCULARS DECISIONS
Provide detailed Provide Provide detailed regulations Issued between Prescribe
guidelines on the guidance on issues within their SPCJC and SPPC auditing
implementation of to courts in respective powers and and/ or Ministries standards and
higher-ranking legal applying legal duties, eg. organizational to regulate the guidelines for
documents, specify documents in management of local cooperation detailed auditing
regulations on a consistent People's and military courts between such procedures
technical standards manner as for SPCJC or methods bodies in litigation
and procedures, and to implement duties and proceedings
set techno-economic authority of local People's
standards of sectors they and Military procuracies as
are in charge of for SPPC

Free Trade
AGREEMENTS
What is a FTA?
A FTA is an agreement between 2 or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and
non-tariff barriers on substantial trade between them.
What is the difference between a FTA and a Comprehensive Economic Cooperation

Agreement or Comprehensive Economic Partnership Agreement?
FTAs typically cover the elimination of tariffs on items covering substantial bilateral trade between the partner countries. CEPAs and
CECAs meanwhile are more comprehensive in that they provide an integrated package of trade in goods and services (i.e., reduction
and elimination of tariff and non-tariff barriers) as well as other areas such as intellectual property rights, investment, government
procurement, customs procedures and cooperation, technical standards and regulations, conformity assessment procedures,
e-commerce, and competition policy.
What are the major FTAs/ CECAs/ CEPAs of Vietnam?

To date, Vietnam is a signatory to the following 13 bilateral and multilateral FTAs:
Multilateral agreements:
TPP negotiation finished, subject to ratification by the respective members

European Union-Vietnam FTA negotiation finished; legal texts being finalized
Eurasian Economic Union-Vietnam FTA signed on 29 May 2015 but not yet effective
ASEAN Trade in Goods Agreement in effect
ASEAN Economic Community formally established on 31 December 2015
ASEAN-Australia-New Zealand FTA in effect
ASEAN-Japan CEPA in effect
ASEAN-Peoples Republic of China CECA in effect
ASEAN-Republic of Korea CECA in effect
ASEAN-India CECA in effect
Bilateral agreements:
Japan-Vietnam Economic Partnership Agreement in effect

Republic of Korea-Vietnam FTA - signed on 5 May 2015 but not yet effective
Chile-Vietnam FTA in effect
Vietnam is presently a party to the negotiation of the following 5 bilateral and multilateral FTAs:
A SEAN-EU FTA
egional Comprehensive Economic Partnership, a FTA among 10 ASEAN members and 6 other countries with which
R
ASEAN has existing FTAs (namely, Australia, India, Japan, New Zealand, Peoples Republic of China and Republic of
Korea)
European Free Trade Association (i.e., Iceland, Norway, Switzerland Liechtenstein)-Vietnam FTA
A SEAN- Hong Kong FTA
Vietnam-Israel FTA

What are among the key points of the major multilateral FTAs/CEPAs/CECAs entered
into by Vietnam?
Table 2 - Key Points of Some of Vietnams Multilateral FTAs
TPP (10 countries : US, Australia, Brunei, Canada, EU-Vietnam FTA

Chile, Japan, Malaysia, Mexico, New-Zealand, Peru,
Singapore and Vietnam) Eliminates nearly all tariffs (over 99%) over 10 years
(Vietnam) or 7 years (EU). Only some sensitive
Elimination and reduction of tariff for almost all lines, agricultural products will not be fully liberalized (e.g.
in particular 65.8% on Vietnams side at the time of rice, sweet corn, garlic, mushrooms, sugar, surimi, etc.)
entry but the EU has offered access to Vietnamese exports
Vietnam is projected to be the biggest winner from via tariff rate quotas)
the trade deal: nations GDP may gain 11% in 10 years A large number of EU exported goods to be fully
and exports may jump 28% and up to 50% for apparel liberalized at entry into force: almost all machinery
and footwear and appliances, roughly half of pharmaceuticals, 70%
Seafood industry stands to benefit from the of chemicals and the totality of textile fabrics
elimination of import taxes on shrimp, squid and tuna, Recognition and protection of geographical
which now average from 6.4% to 7.2% indications for food and drink products from a specific
Strengthening of requirements concerning rules of geographical origin
origin Allows EU companies to bid for Vietnamese public
Agreement relating to access to trade in services contracts in line with Government Procurement
broadens access to various service activities except for Agreement rules
the sectors on Vietnams reservation list (publication Improves access for EU companies to a broad range of
pending) services sectors, including business, environmental,
postal and courier services, banking, insurance and
maritime transport
AEC, ATIGA, AFAS (10 ASEAN members : Brunei, EEU-VN (EEU countries of Armenia, Belarus,
Indonesia, Malaysia, Philippines, Singapore, Thailand, Kazakhstan, Kyrgyzstan and Russia-Vietnam)
Myanmar, Cambodia, Laos and Vietnam)
Reduction of duties to 88% of mutual trade goods,
Preferential tariffs of 0-5% with the objective of 0% for where 59% will be reduced immediately and 29%
around 97% of tariff lines no later than 2015 (or 2018 will be reduced gradually within 5-10 years such that
for Cambodia, Laos, Myanmar and Vietnam) overall level of import duties of Vietnam for EEU
Harmonization of technical regulations and standards products will be reduced from 10 to 1%
with respect to cosmetic products, electronics and Reduction of export duties to zero and simplification
electrical materials of many procedures leading to savings on fees for
Trade facilitation initiatives including the Self- exporters
Certification System (which enables a certified Elimination of duties may lead to increase of exports
exporter to make out an invoice declaration for the from EEU to Vietnam of products such as meat and
export of goods to obtain preferential tariff concession dairies, wheat, fertilizers, oil and oil products, steel
under ATIGA) and the ASEAN Single Window (a pipes. Vietnam meanwhile will increase supplies
regional initiative that connects and integrates to EEU of fish, rice, fruits, vegetables, electronic
National Single Windows of members to expedite equipment, leather goods, industry and household
cargo clearance) products
Access to trade in services for the following sectors : As a separate annex to the FTA, Russia and Vietnam
business, financial, educational, recreational, medical have agreed to simplify market access in the services
services, maritime transport, air transportation, sector while other EEU countries can join in later
construction, telecommunication, distribution,
tourism, culture and sports
Mutual recognition of qualifications for professionals
in the health, tourism, accounting, architecture and
engineering sectors

Free Trade
AGREEMENTS
Chart 3 - FTAs entered

into or under negotiation
by Vietnam
ASEAN
LAOS
MYANMAR VIETNAM
THAILAND
CAMBODIA
PHILIPPINES
BRUNEI
ASEAN Economic Community (AEC)/ ATIGA, AFAS
MALAYSIA
ASEAN FTAs (China, Japan, Australia New-Zealand, India, Korea) SINGAPORE
Regional Comprehensive Economic Partnership (RCEP)
Eurasian Economic Union Vietnam FTA (EEUVFTA)
INDONESIA
Trans-Pacic Partnership (TPP)
EU Vietnam FTA (EVFTA)
ASEAN FTAs/ RCEP and TPP (Japan, Australia New-Zealand)
ACE and TPP (Malaysia, Singapore and Brunei)

Vietnam bilateral treaties Made by Big Sister Data
8 Indochina Legal 2016 Indochina Legal 2016 9

Foreign Investment
AND LICENSING
Are there any conditional or sensitive sectors for foreign investment in Vietnam?
Yes. Conditional or sensitive sectors refer to business lines where investment in Vietnam is made subject to satisfaction of certain
conditions (such as those relating to the foreign ownership ratio, form of investment, nationality of foreign investor, professional
expertise of the investor, scale of investment project, type of goods and services and time implementation of the investment project)
prior to approval. These sectors include, among others, national defense, security, social order and safety; finance and banking;
fields that affect public health; culture, information, press, publishing; entertainment services; and prospecting, exploring and
exploiting of natural resources, ecological projects and the environment.
Is there any ownership limitation for foreign investors in Vietnam?

Yes, certain foreign ownership restrictions apply, whether the foreign investor is establishing a new entity or purchasing shares or
capital contribution from a Vietnamese enterprise, as follows:
The foreign ownership ratio for those sectors restricted in Vietnams WTO commitments must follow the limits set
therein. Although almost all the foreign ownership limitations in the service sectors specified under Vietnams WTO
commitments have been abolished as of 26 June 2015, certain sensitive sectors such as banking, telecommunication,
transportation, agriculture and audio-visual services still maintain limitations on foreign ownership.
For publicly listed companies, while Decree No. 60/2015/ND-CP has already removed the 49% cap on foreign
ownership of public companies, foreign ownership is still restricted for certain sectors under Vietnams international
treaties (including Vietnams WTO commitments) and sectors restricted to foreign investors under the 2014 Law on
Investment and its implementing regulations. But where there are no set specific ownership limitations under the
relevant guidelines on the 2014 Law on Investment, which are yet to be issued by the Government and/or the relevant
Ministry, foreign ownership is capped at 49%. For other business sectors, the company charter may provide specific
foreign ownership ratio.
The permitted foreign ownership ratio under domestic law in the banking, civil aviation, logistics, publication, and
press sectors is restricted.
A foreign investor may own a maximum of 49% of the charter capital of a securities company if the investor itself
does not operate in banking, securities or insurance; or if it has been operational for less than 2 consecutive years
immediately preceding the year of capital contribution to establish the securities company or the year in which it
purchases shares or charter capital.
The ratio of foreign ownership of foreign investors in SOEs conducting equitization or converting their ownership into
another form is restricted under the law on equitization and conversion of SOEs.
How is foreign ownership ratio determined for purposes of foreign ownership limitation?
For purposes of compliance with foreign ownership limitation, foreign ownership ratio is determined under both the 2014 Law
on Investment and Decree 60/2015/ND-CP based on the total ownership of voting shares or voting capital contribution of foreign
investors being foreign nationals and corporations established overseas as well as economic organizations in which foreign investor(s)
hold(s) at least 51% of the charter capital therein.
Aside from foreign ownership limitation, are there any other restrictions faced by a
foreign individual or company when they want to invest in Vietnam?
Yes, foreign investment in Vietnam may also be subject to any or a combination of the following restrictions:
Requirements on corporate form such as undertaking of certain business lines through a joint venture or business
cooperation contract with Vietnamese partner(s)

Mandatory screening and evaluation procedures during incorporation and procurement of an IRC for a foreign
investment project in Vietnam
Residency requirement for certain corporate executives
Certain foreign employment restrictions
What are the common forms of investment in Vietnam?

The 2014 Law on Investment provides for the following forms of investment for foreign investors:
Establishment of a wholly foreign owned economic organization
Establishment of and implementation of investment activities through a joint venture
Investment in the form of capital contribution or purchase of shares or portion of capital
Investment in the form of PPP
Investment in the form of BCC
Establishment of a representative office or a branch
Is an approval or permit required if a foreign individual or company wants to enter a

certain industry?
Yes. Under the 2014 Law on Investment, a foreign investor wishing to enter a certain industry in Vietnam must first have a particular
investment project in Vietnam, that is, a proposal for the expenditure of medium- or long-term capital in order to conduct business
investment activities in a specific location where the business is registered for a specified duration.
To be able to carry out such investment project in Vietnam, a foreign investor must undergo mandatory screening and evaluation
procedures to have such investment project licensed via the issuance of an IRC. For certain investment projects in conditional
sectors, an investment policy approval must first be procured from the National Assembly, the Prime Minister or the local provincial
Peoples Committee (depending on the nature of the project) prior to undertaking the IRC formalities.
Once the investment project has been approved and licensed via the issuance of an IRC, the foreign investor must then proceed
to have its new entity registered with the relevant business registration body via the issuance of an ERC. In case of investment in
conditional sectors, other permits (the so-called baby licenses) may be required in addition to the IRC and ERC, to enable the
investor (either local or foreign) to undertake a particular conditional business activity.
By law, an IRC shall be issued within 15 working days while an ERC shall be issued within 3 working days. In practice, however, the
IRC licensing procedure may take longer.
Is the licensing process different between foreign and local investors?

Yes. Unlike foreign investors who are required to carry out IRC/ investment licensing formalities, local investors only undertake the
simpler and straightforward ERC/ business registration formalities.
Generally, investment licensing for foreign investors is specific only to the investment project being carried out and for a term not
exceeding 50-70 years (depending on project location). In contrast, local investors may register for any proposed line of business
without the need for project evaluation and are licensed for both initial and any subsequent projects for an indefinite term of
operation.
A foreign investor establishing a new entity in Vietnam typically undergoes the process described at Table 4 on the following page.

Foreign Investment
AND LICENSING
Table 4 - Typical Steps of Setting Up a New Entity in Vietnam
INVESTMENT PROJECT CHECK PROPOSED NEW ENTITY INVESTMENT POLICY

PRELIMINARIES APPROVAL
What is the investment project Has land been allocated or Is the project subject to prior
proposed to be carried out in leased for the project location? investment policy approval?
Vietnam? Is in-principle approval for land Will the investment policy
Is the project in a conditional lease required from the local approval come from the
or sensitive sector? Peoples Committee? Government, Ministerial or
Are there any foreign Who are the proposed legal provincial level?
ownership restrictions? representative, general Are there any tax and/or
director/director, members of other incentive to which the
Are there any corporate the Members Council (for LLCs)
form requirements? In what investment project will be
and Board of Management (for entitled to?
form will the new entity be JSCs) of the new entity?
established in?
If entering into a JV, have the
terms been agreed with the
Vietnamese partner for the
establishment of a JV?
What are the proposed charter
and investment capital? Capital
contribution of each investor?
What is the proposed location
of the project?
Is the project subject to certain
environmental requirements?
INVESTMENT PROJECT ENTERPRISE REGISTRATION POST-LICENSING

LICENSING
Is the application dossier Is the application dossier Have the post-licensing

requesting issuance of an IRC requesting issuance of an ERC formalities (e.g., seal
ready for submission? ready for submission to the registration, etc.) been
Who has the competence to relevant business registration complied with?
issue the IRC for investment office? Does the implementation of
licensing for the project? the approved project require
baby licenses? If so, have the
requirements for procurement
of such licenses been satisfied?
Are there any particular points that a foreign investor must be aware of during licensing
process?
Yes. Any foreign investor requesting for the issuance of a relevant license from the Vietnamese authorities must be aware of the
following:

T he preparation step for any licensing procedure is generally time-consuming as it involves the legalization of
the foreign investors offshore documents and the notarization of the Vietnamese translations of such legalized
documents.
hile some licensing procedures may be straightforward (e.g. issuance of ERC or representative office license), the
W
investment licensing process (especially for investment projects in conditional sectors) is generally cumbersome as
it involves evaluation (as opposed to registration), possibly requiring, inter alia, the request for opinions from other
relevant State authorities and review of the license application at the central government ministry level in Hanoi.
The timeframe for license issuance may take longer in practice than the period prescribed by law.
Are there any required environmental reports or studies to be made for investment
projects in Vietnam?
Yes. Certain investment projects in Vietnam (depending on, among others, nature, scale and impact to environment) are subject to
the establishment of a particular environmental document, either in the form of an environmental impact assessment report or in
an environment protection plan, as follows:
Table 5 - Mandatory Environmental Planning and Assessment
Environment Protection
Criteria Environmental Impact Assessment
Planning
For which Projects subject to prior decision of the National Assembly/ Government/ Prime Projects not subject to
types of Minister on investment policy Environmental Impact
projects? Projects using land in national parks, wildlife sanctuaries, world heritage sites, Assessment
biosphere reservation areas or historical-cultural heritage sites and scenic sites
ranked national level; or
Projects causing deforestation, change of forest/arable land use purpose or of
certain scales
Certain projects of construction, production of materials for construction,
transportation, electronic, energy, radiation or in relation to irrigation, forest
exploitation, cultivation; of mineral exploration, mining and mineral processing
or in relation to petroleum; of waste treatment and recycling, wood processing,
production of glass, ceramic and porcelain; of production and processing of food,
agricultural processing, production of fertilizers and plant preservatives or in
relation to chemicals, medicines, cosmetics and plastics, production of papers and
stationery or in relation to textiles, dyeing and garments and certain mechanical
or metallurgical projects, etc.
Required Environmental Impact Assessment Report to be evaluated and approved by the Environment Protection Plan
document competent authority to be registered with the
competent authority

Foreign Investment
AND LICENSING
Environment Protection
Criteria Environmental Impact Assessment
Planning
When The assessment is to be carried out in the preparation phase of a project. Approval of Investors must establish the
required? the Environmental Impact Assessment Report acts as a prerequisite for: Environment Protection Plan
The National Assembly or the Prime Minister to decide on the investment policy for their projects and submit it
of a project where such decision is required or for the investment registration to the competent authority for
authority to issue the investment registration certificate in other cases confirmation on registration
prior to the actual operation of
Other competent authorities to grant several licenses, permits and/or approvals such projects.
required by law for certain types of projects, i.e. mining license for projects of
mineral exploration and mining, approval of mining plan or mine development plan
for projects of petroleum exploration and exploitation, construction permit for
projects with construction items subject to State permission.
With respect to certain projects of great scale or threatening to cause adverse
impact to the environment, the investors are additionally required to report on
the completion of environmental protection items prescribed in the approved
Environmental Impact Assessment Report to the competent authority for
certification on such completion prior to the projects actual operation.
Who has the competence to decide on investment policy for certain conditional sectors?
Depending on the scale and nature of the investment project in a conditional sector, investment policy approval is required to be
procured from the National Assembly Prime Minister, the relevant Ministry or Provincial Peoples Committee, as the case may be,
as follows:
Table 6 - Types of Investment Projects Subject to Investment Policy Approval
Type 1 Type 2 Type 3

Small Scale Medium Scale Large Scale
Provincial Peoples
Prime Minister of the Government National Assembly
Committee
Projects to which Projects involving relocation and settlement of 10,000 people or Projects with great effect on
the State allocates more in mountainous areas the environment or with a
or leases out land Projects on construction and commercial operation of airports and potentially serious effect on the
without auction, air transportation environment, including nuclear
tendering or transfer power plants, conversion of the
Projects on construction and commercial operation of national land use purpose of a national
Projects requiring seaports
conversion of the park, etc.
land use purpose Projects on exploration, production and processing of petroleum Projects with a land use
Projects using Projects on business of betting and casinos requirement for conversion of
technology in the list the land use purpose for wet
Projects on development of infrastructure in IZs , EPZs and
of technologies the rice cultivation on two harvests
functional areas in EZs
transfer of which is in an area of 500 hectares or
Projects on construction and commercial operation of golf courses more
restricted
Projects with a scale of investment capital of VND 5,000 billion Projects with relocation and
or more settlement of 20,000 people or
Projects of foreign investors in sea transportation, more in mountainous areas or
telecommunications services with infrastructure network, 50,000 people or more in other
publication and press, and establishment of a scientific or areas
technological enterprise with 100% foreign owned capital Projects requiring application of
Others projects stipulated by law as subject to authority of the a special mechanism or policy
Prime Minister to make a decision on the investment policy or an
investment decision

Is there any operational duration for an investment project in Vietnam?
Yes, but only as to FIEs. While investment projects of Vietnamese owned enterprises have unlimited duration, for FIEs, the operational
duration of an investment project in an economic zone or in areas with specially difficult socio-economic conditions or of projects
with great investment capital but slow capital recovery shall not exceed 70 years; all other investment projects shall have a project
operational duration not exceeding 50 years.
Which State body issues IRCs?

Generally, the DPI of the locality in which the head office or operating office of the investor is located or proposed to be located for
implementation of the investment project issues the IRC. In certain cases, the IRC for an investment project is issued by the Prime
Minister, the relevant Ministry, the relevant DPI or zone management board, as follows:
Table 7 - Levels of Investment Licensing Authorities
Development and commercialization of airports and air transport, and national

seaports
Exploration, mining and processing of oil and gas; exploration and exploitation
of minerals
Radio and television; casinos; production of cigarettes
Establishment of university level educational institutions
Government Level
(through the Establishment of IZs, EPZs, HZs and EZs
Prime Minister) Projects with investment capital of VND 1,500 billion upwards in the following
sectors: sale of electricity, mineral processing and metallurgy; construction of
railway infrastructure, roads and inland waterways; and production and sale of
wine and beer
Foreign investment in the following sectors: maritime transport; establishment
of networks and provision of postal services, courier; telecommunication and
internet; network setup and signal transmission; printing and distribution of
newspapers; publication; and establishment of independent scientific research
Ministry of Planning and Investment: BOT, BTO, BO investment projects

Ministry of Commerce and Industry: investment projects in oil and gas sector
Ministerial Level
State Bank of Vietnam: licensing for banks and other financial institutions
Ministry of Finance: investment projects of insurance business
Department of Planning and Investment: investment projects implemented

in various locations of various provinces or cities under central authority &
Provincial Level investment projects implemented both inside and outside IZs, EPZs, HZs, & EZs
Zone Management Board: investment projects in IZs, EPZs, HZs, and EZs

Foreign Investment
AND LICENSING
Are there any specific requirements as to the implementation of an investment project?
Yes. Under the 2014 Law on Investment in relation to the 2013 Land Law, an investor must provide an escrow deposit as security
for performance of the project for which the State allocates or leases out land or permits conversion of land use right. The rate of
the escrow deposit shall be from 1% to 3% of the investment capital of the project based on the scale, nature and implementation
schedule of each specific project.
What is the significance of an enterprises IRC and/or ERC?

All validly existing private business enterprises in Vietnam must have both an IRC and ERC (for FIEs) or an ERC (for Vietnamese
enterprises).
An IRC is required only for investment projects of foreign investors and of economic organizations where 51% or more of the capital
is owned by foreign individual or corporate investors. The IRC need not be procured for:
Investment projects of domestic investors and of economic organizations with less than 51% foreign ownership
I nvestment in the form of capital contribution or purchase of shares or portion of capital contribution in existing
Vietnamese companies that are not in conditional sectors
For investment projects where an IRC is required, the IRC must be included in the application file for ERC.
An IRC is a written and electronic document issued by the licensing authority recording information registered by the investors about
an investment project, including:
Investment project code
Name and address of the investor
Name of the investment project
Location of implementation of the investment project; and land area to be used
Objectives and scale of the investment project
Investment capital of the project, schedule of capital contribution, and raising sources of capital
Operational duration of the project
S chedule of implementation of the investment project; schedule of capital construction and commissioning of the
works (if any); schedule of realization of operational objectives and main works of the project, and in the case of
projects to be implemented in various phases, the objective, duration and content of operations in each phase must
be specified
Incentives or investment support and bases or conditions for application thereof (if any)
Conditions applicable to the investor implementing the project (if any)
An ERC meanwhile is a written and electronic document issued by the licensing authority to a company, recording information about
company registration, including:
ame of the enterprise and enterprise code number (i.e. a numerical code created by the national system or
N
information on enterprise registration that is issued to the enterprise upon establishment)
Address of the head office of the enterprise; telephone number, facsimile number, email (if any)
Lines of business
Charter capital

lasses of shares, par value of shares of each class and total number of shares of each class which may be offered for
C
sale by a JSC
Information about registration of tax
Number of employees
F ull name, permanent residential address, nationality and identity card or passport number of the owner in case of a
sole proprietorship or the general partners in case of a partnership or the legal representative of the enterprise in case
of a LLC or JSC, and the members in an LLC or shareholders in a JSC
What is the significance of business lines for a FIE?

Unlike Vietnamese enterprises that are free to conduct business in the lines which are not otherwise prohibited by law, FIEs are
generally permitted only to conduct business according to the lines which are recorded in the IRC and ERC. Furthermore, in respect of
business activities which are designated as conditional business lines, the company must also satisfy the specific conditions required
to participate in such a business line both at the time of registration and during its business operation.
Must an investor establish a Vietnamese legal entity in order to invest in Vietnam?

Not necessarily. A foreign investor may acquire shares or contribute capital to an already existing legal entity in Vietnam, in which
case, such foreign investor need not undergo the formalities for the issuance of an IRC and ERC. However the following formalities
must be carried out:
I n certain cases (e.g., for target companies in conditional sectors or where as a result of the acquisition, foreign
ownership in the target company becomes 51% or more), there must be prior registration of the acquisition of the
new foreign investor with the licensing authorities.
The target company must proceed with the amendment of its IRC and/or ERC.
What is a PPP and how is investment in this form carried out?

A PPP is a form of investment whereby the State partners with private investors through authorized State agencies to jointly
implement public sector projects on a contractual basis. Under the PPP Decree No. 15/2015/ND-CP, investment projects in
construction, renovation, operation, business activities, management of infrastructure facilities and provision of equipment and
public services with respect to the following sectors are eligible for implementation in the form of PPPs:
All transport infrastructure facilities and related services
L ighting systems, water supply systems, drainage systems, waste and wastewater collection and treatment systems,
social housing, resettlement housing and cemeteries
Power plants
I nfrastructure facilities in healthcare, education, vocational training, culture, sports and other related services, as well
as, office buildings of State agencies
ommercial infrastructure facilities, science and technology, hydro-meteorological facilities, economic zones,
C
industrial zones, high-technology zones, information technology-focused zones and information technology
applications
gricultural and rural infrastructure facilities and development services for connecting production with processing, as
A
well as the actual sale of agricultural products
Other investment sectors as decided by the Prime Minister

Foreign Investment
AND LICENSING
What is a BCC and how is investment in this form carried out?
A BCC is a form of investment whereby foreign and/or local investors cooperate in order to carry out specific business activities. This
form of investment does not constitute the creation of a new legal entity. The investors in a BCC generally share the revenues and/or
products arising from a BCC and have unlimited liability for the debts of the BCC. A coordinating board is established by the parties,
which supervises the performance of the BCC.
What is a branch?
A branch of a foreign investor in Vietnam (as opposed to a branch of an LLC/JSC established by a foreign investor in Vietnam) is
a dependent unit of the foreign investor. As a simple extension of its parent company, a branch does not have a separate legal
personality and does not have its own rights, obligations and assets. It may engage in the same activities as its parent company, in
part or in whole, subject to the scope of activities recorded in the branch license.
Currently, Vietnamese regulations provide only for the establishment and operation of branches of foreign traders (i.e., those
established and conducting activities for the sale and purchase of goods).
Are there any conditions for establishing a branch in Vietnam?

Yes. Besides specific regulations on the setting up and operation of branches of foreign entities in certain specialized sectors such
as the banking and legal professions, Vietnamese law to date provides only for the establishment of a branch in Vietnam by foreign
traders (i.e., those engaged in the sale and purchase of goods). As of the date of application, the foreign investor must have been
operating for more than 5 years and must have the audited financial statement of the latest fiscal year to prove its actual existence
and operation.
What is the procedure for the establishment of a branch?

A foreign investor wishing to establish a branch in Vietnam must apply for a branch license with the MOIT. The procedure for branch
establishment is quite straightforward and in practice, the MOIT takes around 2 months to issue a branch license.
What is a representative office?

A representative office is typically the first step for foreign investors to explore the local market in anticipation of future investment.
A representative office does not have a separate legal personality from the offshore enterprise. Establishing a representative office
is generally cheaper and faster than other forms of commercial presence; however, the scope of activities that a representative office
can perform is quite limited.
What is a representative office permitted to do?

The functions of a representative office are limited to promotional and liaison activities to the exclusion of any commercial or
income-generating activities (i.e., execution of contracts, receipt of funds, sale or purchase of goods, or provision of services). In
particular, a representative office is permitted to:
Act as a liaison office to observe the business environment
Search for trade and/or investment opportunities and partners
S upervise and assist with the implementation of contracts entered into between its head office and Vietnamese
partners
Act on behalf of its head office to supervise and direct the implementation of projects in Vietnam

Are there any conditions for establishing a representative office?
Yes. As of the date of application, the foreign investor must have been operating for more than 1 year and must have the audited
financial statement of the latest fiscal year to prove its actual existence and operation.
What is the procedure for the establishment of a representative office?

A foreign investor wishing to establish a representative office in Vietnam must apply for a representative office license with the
provincial DOIT. The procedure for establishment of a representative office is also quite straightforward and the DOIT may issue the
representative office license within 15 working days.
What grants or incentives are available to a foreign individual or company to encourage

investment?
Investment incentives available to both foreign and local investors in Vietnam may include:
preferential CIT rate for the whole duration of the project operation term or for a certain limited period starting
A
from the commencement of operation
CIT exemptions or holidays from 2-4 years from the first profit-making year
Certain 50% tax reduction from 4-9 years
Exemption from or reduction of land rent, land use fee or land use tax
ssistance with costs of site clearance, relocation and auxiliary infrastructure construction for investors in PPP
A
projects
For an investment project to be entitled to investment incentives, it must be a new and/or expanded investment project and meet
any one of the following conditions:
It must be an investment project in a preferential investment industry and trade.
I t must be located in one of the designated preferential investment geographical areas such as areas with difficult or
especially difficult socio-economic conditions, or industrial, export processing, economic or high-tech zones.
I t must have a scale of capital of VND 6,000 billion or more of which at least VND 6,000 billion is disbursed for a period
of three years from the date of issuance of IRC.
It must be located in a rural area and employ 500 employees or more.
The project must be a high-tech, scientific or technological enterprise.

Business
VEHICLES
Forms of Companies
What types of legal entity may investors establish in Vietnam?
A foreign investor (just like a local investor) may select one of the following Vietnamese legal entities to carry out a project in Vietnam:
limited liability company (cng ty trch nhim hu hn), in the form of either a single-member LCC or an LLC with
A
two or more (up to a maximum of 50) members
shareholding or joint stock company (cng ty c phn) with at least three shareholders (no maximum number),
A
which can either be private or public
A general or limited liability partnership
A private enterprise (akin to a sole proprietorship)
What is a LLC?
A LLC is a legal entity established by its members through capital contributions to the company. The capital contribution of each
member is treated as equity (charter capital), and the members are liable for the financial obligations of the company only to the
extent of their capital contributions. A LLC formed by foreign investors may take the form of either a wholly foreign-owned enterprise
(where the sole member in a SLLC or all members of a MLLC are foreign investors) or a foreign-invested joint venture enterprise
between foreign investors and at least one domestic investor.
What is a JSC?
A JSC is a limited liability entity established through a subscription for shares in the company. Under Vietnamese law, this is the only
type of company that can issue shares. A JSCs charter capital is divided into shares and each founding shareholder holds shares
corresponding to the amount of capital the shareholder has contributed to the company. Like a LLC, a JSC may either be a WFOE or
a JV between foreign and domestic investors.
What is a public company?

Under the Amended 2006 Law on Securities, a public company is a JSC under any of the following categories:
JSC that has completed a public offer of shares, which is an offer of shares to the public through an (i) offer to sell a
A
tranche of shares to at least 100 investors, excluding professional securities investors and the existing shareholders of
the company at the time of the offer; (ii) offer to sell a tranche of shares through mass media communication, including
the internet; or (iii) offer to sell shares to an indefinite number of investors
A JSC whose shares have been listed on the stock exchange or a securities trading centre
JSC whose shares are held by at least 100 investors, exclusive of professional securities investors, and that has a
A
paid-up charter capital of at least VND 10 billion
Under Vietnamese law, a public company need not be a listed company but a listed company is necessarily a public company.
What are the key differences between a LLC and a JSC?

Table 8 on the opposite page shows the key differences between a LLC and a JSC.

Table 8 - Key Differences between a LLC and a JSC
LLC JSC
Minimum of 3 shareholders, no
Investor(s) From 1 to 50 members
maximum number
By way of capital infusion (by By sale of shares (including

Capital mobilization current or new members) ; cannot preference shares), bonds and
issue shares and bonds securities
Can be listed on a securities

No, unless first converted into a JSC Yes
exchange?
Generally, shareholders may freely

Subject to the mandatory right of
Capital assignment assign shares; right of first refusal
first refusal of other member(s)
can be agreed amongst shareholders
Generally more complex

Easier to manage and owner(s) have
Corporate governance management structure for better
control over decision-making
and transparent governance
What is a partnership?
A partnership may be established between two general partners being co-owners of the company jointly conducting business
under one common name. A general partner has unlimited liability for the operations of the partnership. In addition, to the general
partners, the company may also have limited liability partners that shall only be liable for the debts of the company to the extent of
the amount of capital they have contributed to the company.
What is a sole proprietorship?

A sole proprietorship or private enterprise is a company owned by one individual who is liable for all activities of the enterprise
to the extent of his or her assets. It may not issue any type of securities and is prohibited from contributing capital to establish or
purchase share(s) of capital contribution in partnerships, LLCs or JSCs. Under Vietnamese law, each individual may only establish one
private enterprise and the owner of the private enterprise must not concurrently act as the head of a business family household or
a member of a partnership.
Capital Structure
What is the capital structure of an enterprise in Vietnam?
Enterprises in Vietnam generally have both charter capital and investment capital.
Charter capital, as registered in the ERC, is the total value of assets contributed or undertaken to be contributed by members when
establishing a LLC or partnership; or the total aggregate par value of shares sold or registered for subscription when establishing a
JSC.
Investment capital meanwhile, as registered in the IRC, is the total value of money and other assets in order to implement an
investment project. It usually comprises the charter capital or equity and loan capital (i.e., shareholder loans and/or bank loans).

Business
VEHICLES
Is there a minimum capital required in setting up a new entity?
Generally, no. Except for investment projects in certain conditional sectors where legal capital is required, there is generally no
minimum capital requirement for a FIE. The company, however, must have enough capital resources to successfully implement
its investment project and realize its business goals for the licensing authority to approve the investment project and register the
enterprise.
Can capital contribution be made or shares issued for non-cash consideration, such as
assets or services?
Yes. Aside from cash in Vietnamese Dong or in a freely convertible foreign currency, the following assets may also be contributed as
capital to an enterprise in Vietnam:
Gold
Value of land use rights
Value of intellectual property rights, technologies, technical know-how
Other assets which can be valued in Vietnamese Dong
How and when are assets contributed as capital valued?

Assets contributed as capital, which are not denominated in Vietnamese Dong, freely convertible foreign currency or gold must be
valued by members, founding shareholders or professional price evaluation organizations, and must be denominated in Vietnamese
Dong.
If the assets are contributed to an enterprise upon its establishment, their valuation shall be as agreed among members or founding
shareholders or as determined by a professional price evaluation organization, in which case, the organizations valuation of the
assets must be approved by a majority of members or founding shareholders.
If the assets are contributed to an enterprise during the course of operation, they shall be valued on the basis of an agreement
between the owner (SLLC) or the members council (MLLC) or the board of management (JSC) and the person making the capital
contribution or by a professional price evaluation organization, in which case, the organizations valuation must be accepted by the
person making the capital contribution and the enterprise.
Are there any time limits for contribution of capital in a FIE? What happens when a
member or shareholder does not contribute the full amount of capital within any statutory
timeframe?
Yes, depending on the form of corporate vehicle. The time limit for contribution and the consequences of failure to contribute or
inability to contribute in full are as follows (see Table 9 on the opposite page)

Table 9 - Rules for Capital Contribution in Vietnamese Enterprises
Time-limit
Corporate Form Consequences if the contribution is not made within time-limit
for contribution
SLLC Within 90 days from The sole member (i.e., the company owner) must register an
date of issuance of adjustment of the charter capital to reflect the value actually
ERC contributed within 30 days from the last day on which the charter
capital must be fully contributed.
MLLC Within 90 days from A member who does not contribute any capital at all as undertaken
date of issuance of shall automatically cease to be a member of the company.
ERC A member failing to pay any part of its share of capital contribution as
undertaken shall have the rights corresponding only to the share of
capital contribution already paid.
The share of capital contribution having not yet been paid by a
member shall be offered for sale in accordance with a decision of the
Members Council.
The company must register adjustment of its charter capital and/
or capital contribution ratios of members equal to the amount of
contributed capital within 60 days from the last day on which the
share of capital contribution is required to be fully paid.
JSC Within 90 days from The shareholder who has not paid at all for the shares registered
date of issuance for subscription shall automatically no longer be a member of the
of ERC except company and may not assign the right to purchase such shares to
where the charter another person.
of the company or The shareholder who has only paid for part of the number of shares
share subscription registered for subscription shall have the right to vote and receive
agreement stipulates dividends and other rights in proportion to the number of shares paid;
a shorter time-limit and may not assign the right to purchase the number of shares unpaid
to another person.
Shares which have not been paid for shall be deemed unsold shares
and the Board of Management has the right to sell such shares.
The company must register adjustment of the charter capital on the
basis of the par value of shares which have been paid for in full and
any change to founding shareholders within 30 days from the date of
expiry of the period in which the shares registered for subscription
must be paid for in full.

Business
VEHICLES
Can the capital contribution of a FIE be reduced?
Yes, subject to a qualified waiting or lock-up period, as follows:
Table 10 - Capital Lock-up Periods in Vietnamese Enterprises
Corporate Form Lock-up Period
SLLC The company may return part of the capital contribution in its charter capital if it has carried out
business activities continuously for more than 2 years from the date of enterprise registration, and
ensures payment of all of its debts and other property obligations after it repays the owner.
MLLC The company may return part of the contributed capital to members in proportion to their respective
shares of contributed capital in the charter capital if the companys business operations have been
carried out continuously for more than 2 years from the date of enterprise registration, and the
company ensures that debts and other property obligations are able to be paid in full after returning
part of the contributed capital to members.
JSC Pursuant to a decision of the General Meeting of Shareholders, the company may return part of
the capital contribution to the shareholders in proportion to their ratio of ownership of shares if the
company has conducted business activities for 2 consecutive years, and ensures payment of all debts
and other property obligations upon return to the shareholders.
Management Structure
Are there any quorum and majority requirements for decision-making bodies of a
Vietnamese enterprise?
Yes. The following table summarizes the key quorum and majority requirements of the decision-making bodies of Vietnamese
enterprises under the 2014 Law on Enterprises:
Table 11 - Quorum and Majority Requirements of Decision-Making Bodies

of Vietnamese Enterprises
Ordinary Majority
Corporate Meeting quorum Extraordinary
Who can convene a meeting? voting for written
Form (first convening) voting majority
majority opinions
Majority for Members Council Chairman Attendance of at least Simple At least 3/4 of Not provided in
written 2/3 of the total number majority the attending the 2014 Law on
opinions of members (more than members Enterprises
50% of the
attending
members)

Ordinary Majority
Corporate Meeting quorum Extraordinary
Who can convene a meeting? voting for written
Form (first convening) voting majority
majority opinions
MLLC Members Council Chairman Attendance of members At least At least 75% of the Members
Member or group of representing at least 65% of the aggregate capital holding at
members holding 10% or 65% of the charter aggregate of the attending least 65% of
more the charter capital capital or a specific capital members the charter
or a smaller percentage as percentage as stipulated of the capital; specific
stipulated in the charter under the charter attending percentage as
members stipulated in the
1 member holding more charter
than 90% of the charter
capital and charter does
not stipulate a smaller
percentage
JSC GMS for annual meetings Attendance ofmembers At least 51% At least 65% of Members
Board of Management for representing at least of the total the total number holding at least
extraordinary meetings 51% of the total number of of votes of all 51% of the
number of votes or a votes of all attending members total number
Inspection Committee (if specific percentage as attending of votes of
BOM fails to convene) stipulated under the members all attending
Shareholder(s) holding 10% charter members;
or more of the total ordinary specific
shares for a consecutive percentage as
period of 6 months or more, stipulated in
or a smaller percentage as the charter
stipulated in the charter (if
Inspection Committee fails
to convene)
Are there also quorum and majority requirements for a board of management of
Vietnamese JSCs?
Yes. Under the 2014 Law on Enterprises, the quorum and majority requirements of a JSC board of management are as follows:
Table 12 - Quorum and Majority Requirements of a JSC Board of Management
Who can Meeting

Ordinary voting Extraordinary Majority for
convene a quorum (first
majority voting majority written opinions
meeting? convening)
BOM chairman At least 3/4 or more Simple majority (more Not provided in Not provided in
of the total number of than 50% of attending the 2014 Law on the 2014 Law on
members in attendance members) and in case Enterprises Enterprises
of a tied vote, decision
by the BOM chairman

Business
VEHICLES
What is the management structure for enterprises in Vietnam?
Depending on corporate form, the management structure of a Vietnamese enterprise generally comprises the respective bodies
or officers for decision-making, management and day-to-day operations, and overseeing of the company management, as follows:
Table 13 - Management Structure of Common Forms of Vietnamese Enterprises
Management/ Overseeing
Corporate Legal
Decision-Making Day-to-Day of Company
Form Representative
Operations Management
SLLC Chairman of the company General director or Inspectors or controllers 1 legal representative
(if owner appoints only 1 director as may be decided by as provided in the
authorized representative) owner charter; otherwise,
OR the chairman of the
Members Council Members Council
comprised of 3-7 or chairman of the
authorized representatives company
appointed by owner
MLLC Members Council General director or Inspection Committee 1 or more legal

(number in proportion to director (mandatory if MLLC representative(s) as
the respective shares of has more than 11 provided in the charter
capital contribution of the members; otherwise,
members of the company) may be established in
accordance with the
corporate governance
requirements)
JSC General Meeting of Board of Management Structure 1: Inspection 1 or more legal

Shareholders comprised of comprised of 3-11 Committee (not representative(s) as
the individual or authorized members mandatory if JSC has provided in the charter
representative(s) of less than 11 corporate
corporate shareholders General director or shareholders owning less If there is only 1, the
entitled to vote director than 50% of the total chairman of the Board
shares) of Management or the
general director
Structure 2: 20% of the
members of the Board If not provided in the
of Management who charter, the chairman
must be independent of the Board of
members + an internal Management
auditing committee
under the Board of If there is more than
Management one, the chairman
of the Board of
Management and the
general director

What is a legal representative of a Vietnamese enterprise?
The legal representative is an officer of a Vietnamese company, as stated in the company charter (and in the absence of which, as
determined by law), who has the primary responsibility and power to sign, act on behalf of the company, and bind the company in its
dealings with the State authorities and counterparties.
Previously under the 2005 Law on Enterprises, there could only be one legal representative for every Vietnamese enterprise. This
has since been repealed by the 2014 Law on Enterprises, which allows companies to appoint one or more legal representatives
except in the case of a SLLC (as shown in the preceding table).
Is there any requirement relating to legal representatives?

Yes. The legal representative (or in the case of multiple legal representatives, at least one of them) is required to reside in Vietnam
and if absent from Vietnam for more than 30 days then he must provide a written authorization to another person who will perform
the rights and obligations of the legal representative.
What is the difference between authorized representative and legal representative?

The legal representative (as discussed above) is the company officer so designated under the charter of the company to represent,
act for and bind the company in its dealings with other parties. An authorized representative meanwhile is the individual authorized
in writing and so notified to the company by a corporate owner, member or shareholder to exercise its rights and perform its
obligations in the company by virtue of membership in the Members Council (in the case of LLCs) and the General Meeting of
Shareholders (in the case of JSCs).
How many authorized representatives can a corporate investor appoint in a Vietnamese

enterprise?
Depending on the shareholding of a corporate owner, member or shareholder in the companys charter capital and unless otherwise
stipulated by the company charter:
An organization being a member of a MLLC and holding at least 35% of the charter capital may authorize up to 3
representatives.
An organization being a shareholder of a JSC and holding at least 10% of the total ordinary shares may authorize up
to 3 representatives.
If the owner, a member or a shareholder of a company being an organization appoints multiple authorized
representatives, the owner, such member or shareholder must specifically determine the share of capital contribution
or number of shares of each representative. If the owner, such member or shareholder fails to determine the share of
capital contribution or number of shares corresponding to each authorized representative, then the share of capital
contribution or number of shares shall be equally distributed among the authorized representatives.
Are there any requirements in the appointment of an authorized representative?

Yes. First, the individual so appointed must meet the qualifications mandated by law and provided in the company charter. Second,
the appointment must be made in writing and must be notified to the company and shall only be effective in respect of the company
as from the date of receipt of the notice by the company. Third, the power of attorney for the appointed authorized representative
must contain the following:
Name, enterprise code number and head office address of the owner, member or shareholder
umber of authorized representatives and percentage of shares or share of capital contribution corresponding to
N
each authorized representative

Business
VEHICLES
F ull name, permanent residential address, nationality, passport or identity card number of each authorized
representative
espective term of authorization applicable to each authorized representative, specifying the date of commencement
R
of authorization
F ull names and signatures of the legal representative of the owner, member or shareholder and of the authorized
representative
Who can be appointed director of a Vietnamese enterprise ?

Any individual meeting the following criteria is qualified to be appointed director or general director of a Vietnamese enterprise:
Have full capacity for civil acts and not be otherwise prohibited from managing enterprises
ave professional qualifications and experience in business administration of the company if the charter of the
H
company does not otherwise stipulate
I n addition, in the case of a subsidiary company of a company in which the share of capital contribution or shareholding
held by the State accounts for more than 50% of the charter capital, the director or general director of the subsidiary
company must not be the spouse, natural father, adoptive father, natural mother, adoptive mother, child, adopted
child, sibling, brother-in-law or sister-in-law of the managers of the parent company and of the person representing
the State share of capital in such parent company
What positions can be concurrently held by one individual ?

In the case of LLCs, the chairman of the Members Council, other members of the Members Council or the chairman of the company
may concurrently act as the director or general director and/or legal representative of the company unless otherwise stipulated by
law or the charter of the company.
In the case of JSCs, the chairman of the Board of Management may act concurrently as the director or general director and/or legal
representative of the company unless otherwise stipulated in the charter of the company and the law on securities and except for
JSCs in which the State holds more than 50% of the total number of votes, whereby the chairman of the Board of Management is not
permitted to act concurrently as the director or general director.
Is there a company secretary under Vietnamese law?

No, Vietnamese law neither provides for the role of a company secretary nor require a legal entity to have a company secretary.
Are there any restrictions or requirements on foreign managers?

Vietnams current policy on the recruitment and employment of foreigners generally allows the hiring or transfer into Vietnam of
foreign directors, executive directors or managers subject to the following requirements and restrictions (in addition to the work
permit requirement as discussed in Chapter 9):
E mployers, excluding contractors in Vietnam, must file an annual plan, for submission to and approval by the chairman
of the peoples committee in the locality of the head office (the PC Chairman), explaining the need to employ foreigners
for each working position. Employers are also required to report to the PC Chairman any change in their need to
employ foreigners.
Only certain managers are exempted from the work permit requirement in Vietnam (see discussion in Chapter 9).
T he legal representative or at least one of the legal representatives of an enterprise (as the case may be) must reside
in Vietnam.

Can corporate managers be held liable in Vietnam?
Yes. The 2014 Law on Enterprises, which entered into force on 7 February 2014 (2014 LOE), provides for the general fiduciary
obligations of managers of an enterprise, including the chairman of the Members Council or Board of Management, general director
and other managerial positions as stipulated in the company charter. Also, board members of listed and unlisted public companies
have further specific obligations provided by other regulations.
In case of a managers breach of his duties, he may be personally liable under the law and the companys charter for any resulting loss.
Depending on the nature and gravity of the breach, an offender may be subject to administrative, civil and even criminal liability.
The 2014 LOE now also specifically provides instances where a member of a LLC or a shareholder or group of shareholders of a JSC
owning at least 1% of the number of ordinary shares for 6 consecutive months has the right, in its own name or on behalf of the
company, to initiate a legal action regarding civil liability against the relevant manager(s) in breach of his/her (their) duties.
Is there a principle of parent company liability in Vietnam?

As a general rule, a parent company is only accountable for the debts, liabilities and property obligations of its subsidiary to the
extent of its capital contribution to the subsidiary. The 2014 LOE, however, provides for the lifting of the corporate veil and for liability
to be directly imputed to the parent company when the parent company performs the following acts in the name of its subsidiary:
Breach of law
Conduct of business or other transactions not in the interests of the subsidiary and causing damage to other persons
Premature payment of debts in cases where the company is likely to be in financial danger
What are the mandatory reporting requirements for enterprises?

Reporting requirements of enterprises in Vietnam generally relate to any of the following matters and are to be completed according
to the specific time frame provided by law (see Table 14 on the following page).

Business
VEHICLES
Table 14 - Mandatory Reporting Requirements of Vietnamese Enterprises
Subject matters Reporting requirements
General post- Publication of announcement on enterprise establishment

licensing Registration of commencement of operations of the head office
Registration with the Police Department of the company seal
Setting up of the register of members (for MLLCs) and register of shareholders (for JSCs)
Tax code registration
Organization Notification and registration of additions and changes to the enterprises lines of business, head office,
and business name, charter capital or capital contribution ratio, founding shareholders (for JSCs), members (for
registration MLLCs), authorized representatives, and legal representatives, any of which require the amendment of
the IRC and/or ERC
Finance and Registration under the VAS with the MOF

accounting MOF approval to use an accounting system other than VAS or a foreign currency as currency
accounting unit
Submission of audited annual financial statements within 90 days from the closing of the financial
year
Labor and Registration of labor use and labor books

employment Report on the changes in the labor contracts of employees
FIEs report on foreign employees
Registration of written internal labor regulations
Submission of social insurance participation dossier and quarterly reconciliation of social insurance

Suspension, Dissolution
& BANKRUPTCY
Project Postponement/ Suspension/ Termination
Can an investor postpone its project investment schedule? And if so, are there are
conditions for such postponement?
Yes. An investor may postpone the schedule of realization of investment capital or of construction and commissioning of works (if any)
or of realization of operational objectives of the investment project, provided that the investor first proposes such postponement to
the investment registration agency for approval, and that the aggregate period of postponement of the investment schedule does
not exceed 24 months.
How can the operation of an investment project be temporarily suspended?

The operation of an investment project may be temporarily suspended in the following cases:
By decision of the investor with notice of temporary suspension submitted to the investment registration agency
y decision on suspension of all or part of operation of an investment project by the State administrative agency for
B
investment to protect monuments, heritage, antiques or national precious objects; or to remedy an environmental
offence; or to take measures to ensure labor safety; or under the decision or judgment of a court or arbitration body;
or if the investor fails to correctly implement the content of the IRC and has been dealt with for an administrative
offence but continues to commit the offence
y the Prime Minister of the Government where implementation of the investment project is at risk of affecting the
B
national security
How can an investment project be terminated?

The operation of an investment project shall be terminated in the following cases:
Where the investor makes the decision of terminating the operation of the project
Pursuant to the conditions for termination of operation prescribed in the charter of the company
Upon expiry of the operational duration of the investment project
here the operation of the investment project has been temporarily suspended by the State administrative agency
W
for investment or the prime Minister and the investor is unable to remedy the conditions for suspension of operation
T he State repossesses the land for implementation of the investment project or the investor no longer is permitted to
use the investment site and fails to carry out the procedures for change of the investment site within 6 months from
the date on which the decision resuming the land is made or the time the investor is no longer permitted to use the
investment site
T he operation of the investment project is suspended and the investment registration agency is unable to contact the
investor or its lawful representative within 12 months from the date of suspension of operation
T he investor fails to implement or is unable to implement the project in accordance with the schedule registered
with the investment registration agency within 12 months and the project is not a case in which the implementation
schedule of the investment project can be extended
Under an adjustment or decision of a court or an arbitration body

Can an investor assign an investment project? If so, are there any conditions for such
assignment?
Yes, an investor is entitled to assign all or part of the investment project to another investor upon satisfaction of the following
conditions:
It is not one of the cases in which the operation of the investment project is terminated in accordance with law
S atisfaction of foreign investment conditions if the project being assigned is in the industries or trades in which foreign
investment is conditional
ompliance with the conditions prescribed in the law on land or the law on real estate business in the case of the
C
assignment of a project attached to the assignment of land use rights
Conditions prescribed in the IRC or in accordance with other relevant laws (if any)
Dissolution and Bankruptcy

How can a company close its business in Vietnam?
Under the 2014 Law on Enterprises, a company can be dissolved in any of the following circumstances:
The operation term prescribed in the company charter has expired without a decision to extend
pon the decision of the owner (i.e., the company owner for a private company, all unlimited liability partners for a
U
partnership, the members council or the company owner for a LLC or the general meeting of shareholders for a JSC)
T he company fails to maintain the minimum number of investors required by law for a period of 6 consecutive months
and does not carry out the procedure for conversion to the proper form of enterprise
pon a court decision on dissolution of the company or a decision of the business registration authority on revocation
U
of the companys ERC.
Based on any of the above grounds, a company can then be dissolved but only if (i) the payment for all of its debts and other
property obligations are ensured and (ii) such company is not involved in any dispute resolution proceedings, either at the court
or by arbitration. In addition, a company must close all of its branches, representative offices and business locations (if any) before
proceeding with the dissolution registration to the business registration authority.
What are the typical steps of dissolution procedure in Vietnam?

Except where a company is dissolved pursuant to a court decision or a decision of the relevant business registration authority on ERC
revocation, the dissolution procedure shall go through the following steps (see Chart 15 on the following page)

& BANKRUPTCY
Chart 15 - Typical Steps of Dissolution Proceedings in Vietnam
1 2 3 4 5
Adoption of Notification of Liquidation Filing of Issuance of
decision on the decision on of assets and dissolution dossier announcement
dissolution of dissolution to settlement of to the business on the companys
the company the business all debts and registration dissolution by
registration other property authority (right the business
authority obligations, after completion registration
(within 7 working including tax of Step 3) authority
days from Step 1) clearance (within 5 working
(within 6 months days following
from Step 1) Step 4)
What comprises a dissolution dossier?

Under the 2014 Law on Enterprises and its implementing instruments, the dissolution dossier to be submitted to the business
registration authority shall generally comprise:
Notification of dissolution of the company
Report on liquidation of the companys assets
L ist of creditors and of the debts which have been settled (including but not limited to tax liabilities, social insurance
contribution and salary for employees)
T he seal and certificate of the seal sample (if any) or the confirmation of the relevant police department on revocation
of the seal in case the companys seal is established and used under the 2005 Law on Enterprises
The companys ERC
In practice, the business registration authority in several provinces shall request the provision of additional documents, such as the
following, as part of the dissolution dossier in order to ensure that the company is free of all debts and other property obligations:
Confirmation of the relevant tax department on the companys fulfilment of tax liabilities
onfirmation of the General Customs Department on the companys fulfilment of customs duties in case the company
C
have export and/or import activities
Document evidencing the companys fulfilment of social insurance contribution
To what extent should the managers of a company be held accountable even after
dissolution of the company?
The following managers of a dissolved company shall be responsible for the honesty and accuracy of the dissolution dossier and shall
be held jointly liable within 5 years following the submission of dossier to the business registration authority for the payment of any
unsettled debts or other financial obligations of such company if the dossier is proved to be inaccurate or fraudulent:
Any member of the Board of Management of a JSC
Any member of the Members Council of a MLLC or a SLLC with a Members Council
The company owner of a SLLC or a private company
Any unlimited liability partner of a partnership
The director or general director
The legal representative(s)

How does dissolution procedure link to investment procedure in case the dissolved
company was initially established to carry out an investment project?
In the case where investors decide to simultaneously terminate their investment project and dissolve the company that was initially
established under such project, the investors should carry out (i) the procedure for termination of operation of investment project
as well as (ii) the dissolution procedure for the company.
How can a company terminate the operation of its branches, representative offices?
The operation of a branch or representative office of a company can be terminated in either of the following circumstances:
Upon the decision of the company
pon a decision of a competent State authority on revocation of the Operation Registration Certificate of such branch
U
or representative office
Upon the termination of operation of its branch or representative office, the company shall submit to the business registration
authority of the locality where such branch or representative office is located a notification together with the following documents:
The decision of the company on termination of operation of its branch or representative office
List of creditors and unsettled debts as well as outstanding tax liabilities and social insurance contribution
List of employees and their respective interests
The Operation Registration Certificate of the branch or representative office
The seal of the branch or representative office (if any)
The relevant business registration authority shall issue the announcement on termination of operation of a branch or representative
office within 5 working days following the date of full submission of the above documents.
What is the procedure for termination of operation of a business location?

When a company decides to terminate the operation of one of its business location, such company shall submit a notification to the
business registration authority of the locality where such business location is located. The business registration authority shall then
issue the announcement on termination of operation of such business location to the company.
Who can initiate bankruptcy proceedings?

Under the 2014 Law on Bankruptcy, the following persons can initiate bankruptcy proceedings against an insolvent company by
submitting a petition to the competent court, either as an obligation or as entitlement:
The company itself upon its insolvency, as the obligation of:
a. The legal representative(s)

b. The owner (if the company is a private company or a SLLC)/ the chairperson of the Board of Management (for a JSC)/ the
chairperson of the Members Council (for a MLLC)/ any unlimited liability partner (for a partnership)
ny creditor of unsecured or partly unsecured debt, in case the company fails to meet its payment obligation at the
A
end of a 3-month period following the due date of such debt
ny employee or the relevant trade union, in case the company fails to meet its obligation of salary payment at the
A
end of a 3-month period following the due date of such salary payment
ny shareholder or group of shareholders owning at least 20% (or a smaller ratio if so prescribed by the company
A
charter) of the total ordinary shares of a JSC upon its insolvency

& BANKRUPTCY
When is a company deemed insolvent under Vietnamese law?
A company is considered insolvent by law if such company fails to meet any of its payment obligations within 3 months following
the due date of such payment. A claim for payment of a creditor is no longer required to justify the insolvent status of a company.
Are there any fees when filing a petition for bankruptcy?

Yes, except for employees, any other petitioner for bankruptcy must advance to the court (i) the bankruptcy fee in the amount of
VND 1,000,000 (equivalent to around USD 50) and (ii) the costs estimated by the court to cover for press announcement, advance
payment for asset management officer/asset management and liquidation enterprise.
What are the typical stages of a bankruptcy proceeding in Vietnam?

In general, the bankrupt procedure shall go through the following stages:
Chart 16 - Typical Steps of Bankruptcy Proceedings in Vietnam
Filing of Acceptance
of courts Decision
bankruptcy Meeting of
1 petition to 2 jurisdiction over 3 on start of 4 creditors
the bankruptcy bankruptcy
the court procedure
petition
Implementation Declaration Liquidation of

5 of business 6 of bankruptcy 7 assets
recovery plan by the court
The court, however, can decide to apply the brief procedure to declare the insolvent company as bankrupt without the need to
proceed with the meeting of creditors and all of the following stages if the company has no remaining assets.
What are the effects of a court-accepted petition for bankruptcy?

The court acceptance of a petition for bankruptcy shall not automatically lead to the commencement of a bankruptcy procedure.
However, it is important to note that within 5 days following such acceptance, any and all of the following proceedings against an
insolvent company must be suspended by the relevant competent authorities or entities:
E nforcement of a civil judgment over asset against the insolvent company, except for those about compensation for
life, health or self-honor and payment of salary for an employee
ourt proceedings or arbitration proceedings of a civil, business, commercial or labor matter in relation to a property
C
obligation to which the insolvent company is a concerned party
ourt proceedings of the civil part of a criminal or administrative case in relation to a property obligation to which the
C
insolvent company is a concerned party
isposition of collateral being assets of the insolvent company (in this case, the court might later decide on immediate
D
disposition of secured assets subject to risk of destruction or considerable decrease in value upon the request of the
asset management officer/asset management and liquidation enterprise)

Apart from the above mandatory cases of suspension, a creditor or the insolvent company itself can, within 5 days following the date
of acceptance of bankruptcy petition, ask the court to decide on further suspension of performance of valid contracts which might
cause harmful effects to such insolvent company. Upon the decision of the court on commencement of bankruptcy procedure, the
suspended performance of contracts might either be resumed or permanently terminated.
Which transactions might be deemed invalid upon the court decision on commencement
of a bankruptcy procedure?
The 2014 Law on Bankruptcy provides that any of the following transactions to which the insolvent company is a party shall be
deemed invalid if they were conducted within 6 months prior to the date of the courts decision to commence the bankruptcy
procedure (18 months if transacted with the companys related persons):
Transactions concerning asset assignment not at market price
Conversion of an unsecured debts into a debt secured or partly secured by the asset(s) of the company
Payment or offset in favor of the creditor of an undue debt or with a sum exceeding the due amount
Donation of assets
Transactions other than those serving the business activities of the company
Other transactions for the purpose of dispersing the companys assets
The court shall declare any of the above transactions invalid upon its own finding or upon the request of the asset management
officer/asset management and liquidation enterprise or any participant in the bankruptcy procedure.
Who manages the bankruptcy process?

Following its decision to commence bankruptcy procedure, the court shall appoint an asset management officer or an asset
management and liquidation enterprise to be responsible for asset management, supervision of business activities and asset
liquidation of the insolvent company. The appointed asset management officer/asset management and liquidation enterprise shall
also (i) act as the legal representative of the insolvent company in case such position has become vacant; (ii) report on the status of
assets, debts and business activities of the company and participate in establishing the business recovery plan; and (iii) propose to
the court on implementation of certain necessary actions in the bankruptcy procedure.

Foreign Currency
EXCHANGE / CONTROL
Are there any foreign currency exchange regulations in Vietnam?
Yes. Vietnams prevailing foreign currency exchange regulations (the FX Regulations) require that all transactions, payments,
listings, advertisements, quotations, setting prices and recording prices in contracts and agreements and other similar forms of both
residents and non-residents within the territory of Vietnam be effected in Vietnamese Dong subject to certain permitted exceptions
permitted by the regulations of the SBV (see further discussion below on these permitted exceptions).
When can foreign currency be used in transactions in Vietnam?

Under the FX Regulations, the permitted exceptions to the use of VND for transactions within Vietnam are as follows:
Transactions with institutions permitted to provide foreign exchange services
T ransactions with customs offices, public security police office, borderguard forces and other State agencies at border
gates of Vietnam, and bonded customs warehouses with respect to various types of taxes, entry/exit visa fees, fees for
provision of services and other types of fees and charges
I nternal capital transfer between a resident organization and a dependent accounting entity (e.g., a branch of the
resident organization in Vietnam)
Capital contribution by a resident for implementation of a foreign investment project in Vietnam
Price recording and making or receipt of payments by a resident pursuant to an import/export contract
S ubmission of tenders and receipt of payments by resident (domestic and foreign) contractors from investors or head
contractors in order to make payment and disbursement transactions to overseas subcontractors or suppliers
uoting, setting and recording of prices, receipt of insurance premiums and/or insurance indemnities by resident
Q
institutions providing offshore reinsurance services
Listing of prices and receipt of payments by residents being institutions conducting business in duty free goods
L isting, quoting, fixing and recording prices and receiving payments by residents being organizations providing services
in separated areas at international border gates or conducting business in bonded warehouses
uoting, setting and recording prices and remitting payments by residents being organizations acting as agents for
Q
foreign transportation firms
Transactions with export processing enterprises
L isting and advertising prices of goods and services by resident organizations conducting business in the aviation
transport, hotel and tourism sectors
Payment of salaries, bonuses and allowances to both resident and non-resident foreign employees
Listing of and collecting entry/exit visa fees and other charges by non-residents being diplomatic offices and consulates
Transactions with non-residents for the export of goods and services
Other cases permitted by the SBV Governor based on actual situation and necessity in each case
Can a foreign investor purchase foreign currency in Vietnam?

Yes, foreign investors and FIEs can purchase foreign currency from licensed credit institutions for certain permitted transactions
such as payments for imports and services abroad, repayment of certain loans and the payment of interest accrued thereon and
repatriation of investments from Vietnam, subject to submission to the remitting bank of supporting documents evidencing the
legitimate purpose of purchasing and remitting foreign currency.

Can FIEs remit profits overseas?
Yes. Under the 2014 Law on Investment and the FX Regulations, a FIE is allowed to remit dividends in foreign currency to its foreign
members/ shareholders overseas. There is no profit remittance tax imposed on the same but the foreign investor or the FIE in
Vietnam is required to notify the tax authorities of the plan to remit profits at least 7 working days prior to the scheduled remittance.
Generally, foreign investors are permitted to remit their profits annually at the end of the financial year but cannot do so if the FIE in
Vietnam has accumulated losses.
What else can a foreign investor repatriate from Vietnam?

In addition to profits derived from business activities in Vietnam, a foreign investor may also remit the following from Vietnam, after
meeting financial obligations to the State and presenting satisfactory supporting documentation to the remitting bank:
ayments derived from the provision of technology and services and from intellectual property (e.g., transfers of
P
technology and royalties)
Any remaining invested capital and the proceeds from liquidation of investments
Other sums of money and assets legally owned by the investor

Land and
REAL ESTATE
Is there private ownership of land in Vietnam?
Technically, no. In Vietnam, land belongs to the people, with the State as the administrator of the land for the people. Vietnamese
law, however, recognizes and grants ownership of the right to use land (so-called land use right) as evidenced in a consolidated legal
document called a certificate of land use right and ownership of house and other assets attached to the land (commonly referred to
as the pink book or the Ownership Certificate) issued to a land user.
Can a FIE own the right to use land in Vietnam?

Yes. Under the 2013 Land Law in relation to the 2014 Law on Investment, FIEs may acquire land use rights for the purpose of
implementing investment projects in Vietnam, as follows:
y allocation of land by the State with collection of land use fees but only to implement investment projects for
B
construction of residential housing for sale and lease
y lease of land by the State with collection of annual rent or with collection of a one-off or lump sum payment of rent
B
for the entire lease term to implement investment projects in agricultural production, forestry, aquaculture or salt
production, non-agricultural business and production, and residential housing for the purposes of leasing out
By obtaining land use rights as capital contribution by a Vietnamese party into a JV with a foreign company
y obtaining land use rights by way of acquiring a part or the entirety of the project (attached to land) from other
B
investors
I n the case of land in IZs, EPZs or industrial complexes, either (i) by lease of land by the State to invest, construct and
commercially operate infrastructure therein or (ii) by sub-lease of land by the infrastructure developer and operator
to invest in production or business in the IZ, EPZ or industrial complex (e.g., factory or building use)
Foreign individuals with an entry visa in Vietnam can now acquire land use right to a residential house in real estate projects under
the 2014 Housing Law.
Is an Ownership Certificate similar to a deed in most countries?

Yes, in that an Ownership Certificate officially evidences a record of a land users ownership of the land use right to a certain parcel
of land.
No, in that there are some notable differences between an Ownership Certificate and a property deed. For instance, the LUR may be
used only for the specific purpose for which it is granted and failure to do so can lead to withdrawal of the LUR, which under certain
circumstances the State is not required to compensate. Of note also, Vietnam does not have a concept of equitable interests in
property.
Is there any duration or term limit to a FIEs right to use allocated or leased land?
Yes. Generally, the duration of allocation or lease of land to economic organizations in Vietnam (including FIEs) is considered and
decided on the basis of the investment project or the application for allocation or lease of land, but shall not exceed 50 years. With
respect to investment projects with large investment capital but a slow capital recovery rate and investment projects in areas with
difficult or specially difficult socio-economic conditions which require a longer investment period, the duration of allocation or lease
of land shall not exceed 70 years.
If upon expiry of the duration, the company wishes to continue using the land, then the State shall consider extension of the land use
term but not exceeding the duration discussed above.

Can a FIE own improvements or other assets on land in Vietnam?
Yes. When a FIE builds assets on the land for which it has land use rights, it has an ownership interest in the assets upon registration
of the same in the consolidated Ownership Certificate. A FIE can also have ownership in the assets it acquires for its own use. A FIE,
however, is not permitted to directly purchase real properties for re-selling or leasing, although it may sub-lease such assets.
Can land use rights be mortgaged?

Yes, provided that in the case of a foreign investor leasing land from the State, the land use rights may only be mortgaged if the land
rental for the entire lease term is paid in advance or in lump sum, and land use rights may only be mortgaged to credit institutions
licensed to operate in Vietnam and not to offshore lenders or shareholders.
Are there any formal requirements for the perfection of a mortgage of real estate?
Yes, mortgages of real estate (i.e., land use rights; houses, buildings and structures built on land; and other property annexed to
the land) must be written, notarized at the notary office where the real estate is located, and registered with the local Office for
Registration of Land Use Rights of the local Department of Natural Resources and Environment in the locality where the property is
located, in order for the transaction to be valid.
What are the costs relating to land? How are they calculated and when are they payable?
Property costs generally include:
Land use fee for land allocated by the State for long term stable use
Land rental for land leased from the State, which is settled either through one off payment or annually
Non-agricultural land use tax on residential land and non-agricultural land used for business purposes
Land use fees and land rentals are calculated based on land area, land use purpose (in case of land allocation) or lease
term (in case of land lease) and land price or land rent unit price issued by the Peoples Committee of each city and
province. If at the time of allocation or lease, the published price is not considered to reflect the lands market value
then the land use fee or land rental will be based on what the relevant Peoples Committee considers to be the actual
market value. Meanwhile, non-agricultural land use tax is charged on a square meter basis with progressive tax rates
ranging from 0.03% to 0.15%.
Land use fees and land rentals are calculated and collected at the time when the State makes a decision allocating
land, leasing land, permitting to convert land use purpose or recognizing the land use right. The non-agricultural land
use tax is collected annually.

Lending and
SECURITY
Who can borrow loans from credit institutions?
Qualified Vietnamese and foreign organizations and individuals can be granted onshore loans in local and foreign currencies (subject
to compliance with prevailing FX Regulations) by Vietnam-based credit institutions.
Vietnamese enterprises and FIEs can also access offshore loans by obtaining credit lines from foreign credit institutions or from their
foreign shareholders, subject to certain conditions set forth in the relevant regulations.
To date, there are no specific regulations on lending to Vietnamese individuals by offshore lenders.
What is the general structure of loans in Vietnam?

There are three different types of loans in Vietnam, namely:
Short-term loans, with a tenor of less than 12 months
Medium-term loans, with a tenor ranging from 12 months to 36 months
Long-term loans, with a tenor of more than 36 months
Depending on the purpose of the loans proposed by the borrower (as normally reviewed by the lender), the credit institution can
offer the borrower a loan(s) with appropriate tenor.
While a short-term loan is usually for purposes of meeting working capital requirements, a medium- or long-term loan can be used
for other long-term purposes such as formulating fixed assets, developing investment projects and implementing business plans in
accordance with the borrowers ERC/IRC or as approved by the competent authorities or by the management levels of that entity.
Is there any limitation on borrowing?

Yes, depending on the tenor of the loan. For medium-term and long-term loans, a FIEs balance of the same (including domestic loans)
must not exceed applicable loan limits or the total investment capital amount registered on its IRC. Short-term loans meanwhile are
generally exempt from such limitations unless the borrower is developing a project at the construction stage.
Can local enterprises grant loans to offshore borrowers?

No, unless prior approval from the Prime Minister has been procured and the offshore loan has been registered with the SBV.
What types of loans must be registered?

Under Vietnamese law, the following loans must be registered with SBV:
Loans granted to a Vietnamese enterprise by an offshore lender (foreign loans) with a tenor of more than 12 months
Loans approved by the Prime Minister to be granted by a Vietnamese enterprise to an offshore borrower
Is there any tax on interest payment in relation to a foreign loan?

Interest payments received from Vietnam by an offshore lender may be subject to foreign contractor withholding tax at the current
rate of 5%, subject to exemption or reduction if the offshore lender registers its head office in a jurisdiction that signed a DTA with
Vietnam.

What types of assets can be used as security in Vietnam?
Security can be created over the following types of assets under the ownership of a securing party:
eal estate such as land, houses and apartment buildings and structures built on the land, other property annexed to
R
the land and other property as codified in law
Tangible movable property such as machinery and equipment, trading stock or inventories and aircraft and ships
F inancial instruments such as shares and equity interests, bonds, certificates of deposit and other valuable papers,
which are monetizable and tradable according to law
elated property rights such as copyrights and intellectual property rights and agricultural patents, the rights to claim
R
debt, contractually defined property rights and property insurance contracts
F uture assets formed from loan capital, assets in the process of creation at the time of the secured transaction is made
and assets already formed which must be registered for ownership
Are there are any formal requirements for the creation and perfection of security over
assets in Vietnam?
Yes, depending on the form of security and the type of asset over which the security is created (see Table 17 on the following page).

Lending and
SECURITY
Table 17 - Security Transaction Formalities
Common Form
Security Asset Formalities
of Security
Real estate Mortgage Mortgages involving real estate must be written, notarized at the notary office
were the real estate is located, and registered at the local Office for Registration of
Land Use Rights of the local Department of Natural Resources and Environment in
the locality where the property is located.
Tangible movable Mortgage and Mortgages and pledges over moveable property must be made in writing. Other
property pledge than this requirement, there are no other mandatory legal formalities unless the
transaction involves a ship or an aircraft.
Registration with the NRAST is not required, although in practice, it is advisable

that the mortgage be registered to ensure priority and enforceability against third
parties.
Financial In practice, A security agreement over financial instruments must be in writing and expressed
instruments mortgage for either in a separate contract or incorporated into the underlying transaction
unlisted securities document (e.g., a loan or credit agreement). Although registration is not required,
and pledge for registration with the NRAST is strongly advisable in order for the security to be
listed securities enforceable against third parties.
In the case of listed securities, all transactions involving the same (including shares
and bonds) must be conducted through a licensed custodian, which will either be
a securities company licensed by the SSC or a bank that is specifically licensed by
the SSC and SBV.
Claims and Mortgage Mortgages must be in writing and can either be expressed as a separate contract
receivables or incorporated into the underlying transaction.
For the mortgage to be valid, the person whose payment obligation is being
secured must be informed in writing of the relevant claim or receivable. While the
obligors acknowledgment and consent to the mortgage is not legally required,
to the extent practicable, obtaining the same provides additional comfort to the
mortgagee.
Registration with the NRAST is not required, although in practice, it is advisable

that the mortgage be registered to ensure priority and enforceability against third
parties.
Cash deposits Mortgage The mortgage must be in writing. The law does not require the consent of the
bank with respect to enforcement of cash deposits, however, its is advisable that
consent is obtained to ensure enforcement. No registration is required but in
practice, the mortgage is typically registered with the local office of NRAST to
ensure priority and enforceability against third parties.
Intellectual Mortgage The mortgage must be in written form either as a separate agreement or as
property rights incorporated in the main transaction agreement. Registration is not required,
but registering the agreement is preferable as it protects the secured party from
enforcement issues.

Can lenders take all of borrowers assets as security?
Yes, but only if the lender is Vietnam-based. Thus, while a Vietnam-based credit institution can take security over either movable or
immovable assets, an offshore lender can only take security over movable assets.
What are the circumstances in which a lender can enforce its security interest?
A lender can enforce a security interest if the conditions for such enforcement are explicitly stated in the contract and these
conditions are met. For instance:
The securing party fails to perform or incorrectly performs the obligations by a specific date
The securing party is in breach of its obligations under the agreement or as required by law
Other circumstances as agreed by the parties
A lender or secured party must enforce the secured assets within a time frame agreed by the parties; in the absence of which, the
lender or secured party can decide the time for enforcement, which shall not be earlier than 7 days for movable property and 15
days for immovable property.
How are security interests enforced?

Secured property can be enforced in a number of different ways as agreed by the parties, such as:
Sale of the mortgaged property (by way of auction or private sale)
Take-over of the mortgaged property in satisfaction of the secured obligations in certain instances
Receipt of direct payments from third parties
Other enforcement methods
Are there any taxes or fees paid on the granting and enforcement of a loan, guarantee or
security interest?
Documentary taxes There are no documentary taxes, such as a stamp duty, in Vietnam.
Registration fees The registration fee is a nominal amount, less than VND 100,000 (equivalent to USD 4,5).
Notaries fees Notaries fees depend on the value of the property or contract.

Labor and
SOCIAL SECURITY
What are the main laws regulating employment relationships in Vietnam?
The 2012 Labor Code serves as the main law governing employment relationships in Vietnam, and applies to:
Both Vietnamese and foreign employees, trainees and apprentices working in Vietnam
Employers (whether Vietnamese owned or FIEs) in Vietnam
Other agencies, organizations and individuals directly related to the labor relationship
Are there any hiring requirements in Vietnam?

Yes. Under the 2012 Labor Code:
When hiring employees in Vietnam, priority should be given to hiring Vietnamese citizens and expatriates should only
be employed if there are no suitably qualified Vietnamese available.
E mployees should be over 18 years unless consent is obtained from the employees legal representative for
employment to commence from the age of 15.
S pecial provisions apply to junior workers (aged 15-18 years old), senior employees (60 years old for men and 55 years
old for women), the disabled and those with highly specialized skills.
Is a written contract of employment required, and if so, must it contain any particular
language?
A contract of employment in Vietnam shall generally be entered into in writing (in 2 copies) except for temporary work of less than 3
months, and is generally made in accordance with MOLISAs standard form.
Under Vietnamese labor law, a labor contract is classified based on its term as follows:
An indefinite term labor contract with no fixed term nor time of termination
A definite term labor contract for a period between 12-36 months
A seasonal or specific job labor contract with a duration of less than 12 months
Any labor contract for employment relations in Vietnam must be consistent with Vietnamese labor law and cannot grant to
employees fewer benefits than due under Vietnamese labor law. As abovementioned, mandatory rules and requirements under
Vietnamese labor law may apply to foreign nationals working in Vietnam regardless of the choice of law in the labor contract.
Besides labor contracts, are there any other agreements likely to govern the employment
relationship?
In addition to the labor contract, certain aspects of the employment relationship are also covered by the following agreements:
E mployers employing more than 10 employees must establish internal labor regulations (commonly referred to as the
Employee Handbook or the Employee Code of Conduct), which determine, among other matters, working hours
and breaks, labor safety rules, protection of assets and business secret and disciplinary labor procedure, and are
subject to (i) prior consultation with the ECGTU (e.g., within the concerned enterprise) or its direct superior level, (ii)
registration with the DOLISA at provincial level and (iii) posting or display within the company premises.
lso, a collective labor agreement can be signed between the ECGTU and the employer. This agreement sets out
A
working conditions and employee benefits, which must be no less favorable than those stipulated by law, and must
meet the following conditions: (i) all matters subject to collective negotiations have been agreed and recorded in the
minutes of the collective negotiation sessions executed by the ECGTU and the employer and (ii) 50% of the employees

have voted in favor of the negotiated matters. The agreement, when signed, is required to be publicly announced to
all employees for information purposes.
Do foreign employees require work permits and/or residency permits to work in Vietnam?
Yes. Under the 2012 Labor Code and Decree No. 102/2013/ND-CP, any foreigner working in Vietnam must obtain a work permit,
unless such foreigner is any of the following:
n intra-corporate transferee in any of the following 11 service sectors under Vietnams WTO commitments: business,
A
communications, construction, distribution, education, environment, finance, health, tourism, recreational culture,
and transport services, in accordance with provisions of an international treaty of which Vietnam is a member
A capital contributing member of a MLLC or the owner of a SLLC
A member of the board of management of a JSC
ead of a representative office or of a project of an international organization or non-governmental organization in

H
Vietnam
foreigner entering Vietnam for a period under 3 months in order to offer services or to participate in activities
A
relating to the representation of a service supplier in order to negotiate the sale or consumption of services of such
supplier, on condition that he does not directly sell such services to the public and does not directly participate in the
provision of services
foreigner entering Vietnam for a period under 3 months to resolve an incident breakdown or technically or
A
technologically complex situation arising and affecting, or with the risk of affecting production or business with which
Vietnamese experts or foreign experts currently in Vietnam are unable to deal
A foreign lawyer issued with a foreign lawyer practicing certificate in Vietnam
foreigner exempted from procuring a work permit in accordance with provisions of an international treaty to which
A
Vietnam is a member
A foreigner studying in Vietnam is permitted to work in Vietnam
foreigner coming to Vietnam to provide expert and technical consultancy services or to undertake other tasks in the
A
research, formulation, evaluation, monitoring and assessment, management and implementation of a program or a
project using ODA in accordance with the provisions of the relevant ODA agreement
foreigner issued with an operational license in the information and press sector in Vietnam by the Ministry of
A
Foreign Affairs
teacher in a foreign agency or organization who is appointed by the competent authority of a foreign country to come
A
to Vietnam to teach in an international school managed by a foreign diplomatic office or international organization in
Vietnam
foreign volunteer working in Vietnam without entitlement to a salary in order to implement an international treaty
A
to which Vietnam is a member
foreigner with a masters degree or higher or similar qualification providing consultancy, teaching, or conducting
A
scientific research at a university or vocational college for a period not exceeding 30 days
foreigner coming to Vietnam to implement an international agreement by a central or provincial State agency or a
A
central socio-political organization
A foreigner covered by other cases as decided by the Prime Minister on a proposal from MOLISA

Labor and
SOCIAL SECURITY
In the above cases of foreign employees not required to obtain a work permit, Decree No. 102/2013/ND-CP now requires employers
to submit, at least 7 days before the date on which a foreign employee will commence work in Vietnam, a request to the local DOLISA
to confirm that such foreign employee is not required to procure a work permit to work in Vietnam.
What is the procedure for obtaining a work permit in Vietnam?

The employer must lodge an application file requesting issuance of a work permit with the DOLISA where the foreign employee will
work on a regular basis or where the employer has its head office, at least 20 days prior to the date on which it is proposed that the
foreigner will commence working in Vietnam. By law, the DOLISA shall issue a work permit within 15 working days from submission
of a valid application file. In practice, however, the process may take longer.
What is the maximum duration of a work permit in Vietnam?

Work permits currently have a shorter maximum duration of 2 years with a possibility of renewal for the same term (compared to the
previous maximum duration of 36 months which could only be renewed for further term(s) subject to certain conditions).
Are there any sanctions for foreign employees working in Vietnam without the requisite
work permit?
Yes. Foreigners working in Vietnam without the requisite work permit may be penalized (e.g., by way of administrative fines) or, if
unable to meet work permit requirements, deported back to their home countries.
Are employees entitled to management representation and/or to be consulted in relation

to the employers management of labor force (e.g., redundancies and disposals)?
Yes. In general, an employer must hold discussions at the workplace once every 3 months or on one-off occasions at the request of
one of the parties. In particular, the 2012 Labor Code requires an employer to notify in advance and seek the opinion of its employees
or the organization representing the labor collective of its employees in the following cases:
Retrenchment of employees in cases of restructuring, change of technology, or changes for economic reasons
Formulation of wage scales, wage tables and labor rates; and promulgation of rules on payment of bonuses
Fixing of a timetable for annual leave
Drafting or amending internal labor rules
Dealing with a breach of labor discipline including temporary suspension of an employee
Formulation and implementation of occupational safety and hygiene plans
Decisions on matters relevant to the rights and interests of women or disabled employees
Issuing other regulations relevant to the rights and obligations of employees
Are there any employment protection laws (such as minimum wage law and/or maximum
working hours law)?
Yes. The wage rate of private employees may not be lower than the minimum wage rates stipulated by the Government based on the
recommendations from the National Wage Council, which are classified according to areas and industries and determined according
to minimum living conditions of employees and family households, socio-economic conditions and wage rates on the labor market.
Article 104.1 of the 2012 Labor Code meanwhile requires normal working hours not to exceed 8 hours in a day and 48 hours in a
week except for workers who perform extremely heavy, toxic or dangerous work whose work hours shall not exceed 6 hours in a day.
Where work is agreed to be stipulated on a weekly basis, Article 104.2 of the 2012 Labor Code provides that working hours must not

exceed 10 hours in a day and 48 hours in a week.
Overtime working hours shall not exceed 50% of the normal working hours in one day, except for the following cases: (i) manufacturing
or processing of export textiles, leather, footwear, agricultural, forestry and aquatic products; (ii) power generation and supply,
telecommunications, oils refinery, water supply and water discharge; and (iii) other cases where urgent work must be resolved.
However, in such cases, the maximum overtime working hours may not exceed 300 hours per year.
Is there any social insurance and/or pension system in Vietnam? Is it on a mandatory

or voluntary basis?
Yes. Employers and employees in Vietnam are by law required to participate in compulsory social (including retirement and
survivorship allowance regimes), health, and unemployment or job loss insurance at the following rates:
Table 18 - Insurance Contributions and Other Labor-Related Fees
Social Health Unemployment Trade Union

Total
Insurance Insurance Insurance Fee
Employee 8% 1.5% 1% N/A 10.5%
Employer 18% 3% 1% 2% 24%
Previously, foreign expatriates in Vietnam were only required to make unemployment insurance contributions. Now, pursuant to
the 2014 Law on Social Insurance (which took effect on 1 January 2016), foreign employees (possessing work permits or practice
certificates or licenses issued by Vietnams competent authorities) can also participate in the compulsory social insurance scheme
following further instruction to be set out by the Government. Also from 1 October 2009, foreign employees (with employment
contracts for 3 months or more with an entity in Vietnam) must make statutory health insurance contributions at the same rates
applicable to Vietnamese employees. These statutory contributions do not constitute a taxable benefit to the employee but are
instead deductible for personal income tax purposes.
With respect to pension, employees who have paid social insurance contributions for 20 years or more and being of retirement age
(in general, 60 years old for men and 55 years for women) shall be entitled to a monthly retirement pension equal to 45% of the
average monthly salary on which social insurance premiums are based, corresponding to 15 years of having paid social insurance
premiums, plus an additional 2% for men or 3% for women for each further year of having paid social insurance premiums; with the
maximum rate equaling 75% and the lowest monthly retirement pension being equal to the general minimum salary or wage.
Employees who have paid social insurance premiums for more than 30 years in the case of men and 25 years in the case of women
shall also, upon retirement, be entitled to a lump sum allowance in addition to their retirement pension. This lump sum social
insurance benefit shall be calculated on the number of years of the period of having paid social insurance premiums, for each year
of which period, employees shall be entitled to 1.5 times the average monthly salary or remuneration on which social insurance
premiums are based.

Labor and
SOCIAL SECURITY
How is the termination of individual employment contracts regulated in Vietnam? Under
what circumstances is the dismissal of an employee unlawful?
Termination of employment is strictly regulated under Vietnamese labor law. An employer can only unilaterally terminate an
individual labor contract under the following specific circumstances provided by the 2012 Labor Code:
Employees repeated failure to perform work in accordance with his labor contract
E mployees inability to work after having been ill or injured and treated for 12 consecutive months (for indefinite term
labor contracts), or for 6 consecutive months (for definite term labor contracts) or for more than half the duration of
the contract (for seasonal or specific job labor contracts of less than 12 months)
E mployers need to narrow the production and reduce the number of jobs as a result of a natural disaster or force
majeure
E mployees failure to attend the workplace on the 15th day from expiry of the term of suspension of performance of
his labor contract
An employer that unilaterally terminates a labor contract must provide advance notice to the employee according to the prescribed
period under the law (from 3 to 45 days depending on the term of the labor contract and the circumstances under which the labor
contract is terminated). In case of an illegal unilateral termination by an employer (i.e. termination other than according to the
abovementioned grounds), the employer must:
Receive the employee back to work in accordance with the signed labor contract
ay wages, social insurance and health insurance for the period during which the employee did not work, plus
P
at least 2 months wages (the severance compensation)
ay a severance allowance equal to 1/2 of 1 months wage for each year of employment (if the employee has regularly
P
worked for 12 months or more) or at least 2 months wages (if so agreed by the parties in order to terminate the labor
contract) in case the employee does not wish to continue to work
ay the severance compensation and amend or supplement the labor contract of the employee concerned in case
P
there is no longer the working position or job for which the labor contract was signed and the employee wishes to
continue to work
I n addition to the severance compensation and the severance allowance, pay the employee an amount equivalent to
his wage for the period during which advance notice was not provided in accordance with the prescribed period
Are redundancies and mass layoffs regulated in Vietnam?

Yes. Employers can only make redundancies and layoffs as a result of restructuring, change of technology, for economic reasons, or
due to merger, consolidation or separation of the enterprise.
In case of retrenchment due to restructuring, change of technology, or economic reasons:
T he employer must formulate and implement a labor usage plan and if new jobs are created, then the employer must
prioritize retraining for employees in order to continue to employ them.
I f the employer is unable to resolve new jobs but must retrench employees, then the employer may only retrench
employees after (i) discussion with the organization representing the labor collective at the grassroots level, (ii) 30
working days advance notice of its planned retrenchment to the DOLISA, and (iii) payment of severance allowance for
job loss to employees equivalent to 1 months wages for each working year but at least 2 months salary.
In case of merger, consolidation, division or separation of an enterprise:
The succeeding employer shall be responsible to continue to employ the current employees.

When the succeeding employer is unable to employ all current employees, then such employer must prepare
and implement a labor usage plan.
n transfer of ownership or right to use assets of an enterprise, the previous employer must prepare a labor usage
O
plan.
I n case of retrenchment of employees, the employer must pay severance allowance for job loss equivalent 1 months
wages for each working year but at least 2 months salary.

Personal and
CORPORATION TAX
In relation to individuals, what is the basis of taxation (i.e., whether territorial source
principle, tax residency principle or other principle) in Vietnam?
Individuals who are considered as tax residents of Vietnam are taxed on their worldwide income (subject to the provisions of any
DTA entered into by Vietnam with the relevant country) while non-tax resident individuals are only taxed on their Vietnam-source
income.
Under what circumstances are individuals subject to taxation in Vietnam?

An individual is considered to be a Vietnamese tax resident and thus taxable on his worldwide income if he or she:
S pends 183 days or more in the aggregate in Vietnam within 1 calendar year or within 12 consecutive months starting
from the date of his arrival in Vietnam
Maintains a residence in Vietnam (e.g. has been granted a permanent or temporary residence card)
Has leased a residential housing in Vietnam for a total term of 183 days or more
A non-tax resident is an individual who does not meet the abovementioned criteria for tax residency in Vietnam. However, if an
individual has a permanent living place available for more than 183 days but has actually been present in Vietnam for less than 183
days, and can prove to be a tax resident of another country, he shall be considered as a non-tax resident in Vietnam for such tax
assessment year.
What income tax must be paid by individuals?

PIT is paid on an individuals taxable income, comprising:
Employment income: income from salaries, wages, and most employment benefits, whether in cash or in kind; and
Non-employment income: comprising
(i) Business income: income from activities of production and business in goods and services and independent professional
practice; and
(ii) Income from capital investment, capital and real property transfers, royalties and franchising, winnings or prizes, and
inheritance and gifts.
For employment income, progressive rates (see below Table 19) ranging from 5% to 35% apply to individual tax residents (i.e., both
Vietnamese and expatriate resident employees).
Table 19 - PIT Rates for Residents Employment Income
Annual Taxable Income Monthly Taxable Income

Tax Rate
(million VND) (million VND)
0 60 05 5%
60 120 5 10 10%
120 216 10 18 15%

Annual Taxable Income Monthly Taxable Income
Tax Rate
(million VND) (million VND)
216 384 18 32 20%
384 624 32 52 25%
624 960 52 80 30%
More than 960 More than 80 35%
Non-employment income meanwhile is taxed (depending on whether the individual is a resident or non-resident of Vietnam for tax
purposes) at rates ranging from 0.1% to 20%, as follows:
Table 20 - PIT Rates for Residents Non-employment Income
Type of Taxable Income Tax Rate
0.5% - 5% based on the type

Business income in excess of VND 100 million per year
of business income
Interests/ dividends 5%
Sale of shares 0.1% of sales proceeds
216 384 20% of net gain
Capital assignment 2% of the sales proceeds
Sale of real estate 52 80
Income from copyright exceeding VND 10 million per contract 5%
Income from franchising/ royalties exceeding VND 10 million per contract 5%
Income from winning prizes exceeding VND 10 million per contract 10%
Income from inheritance/ gifts exceeding VND 10 million per contract 10%

Personal and
CORPORATION TAX
Individual non-tax residents meanwhile are subject to a flat rate of 20% on their Vietnam-sourced employment income and at
various other rates on their non-employment income, subject to relevant provisions of any DTA that may apply.
Table 21 - PIT Rates for Non-Residents
Type of Taxable Income Monthly Taxable Income (million VND)
Employment income 20%
Business income 0.5% - 5% based on type of business income
Interests/ dividends 5%
Sale of shares/ capital assignment 0.1% on sales proceeds
Sale of real estate 2% of sales proceeds
Income from royalties/ franchising 5%
Income from inheritance/ gifts/ winning prizes 10%
Are there any deductible expenses for PIT purpose?

Yes. Vietnams PIT Law allows, among other tax deductions:
Contributions to mandatory social, health and unemployment insurance schemes
p to VND 1 million or approximately USD 50 for contributions to voluntary pension schemes set up in accordance
U
with the guidance of the Ministry of Finance
Contributions to certain approved charities
Personal tax allowance per taxpayer of VND 9 million or approximately USD 450 per month
ependent tax allowance of VND 3.6 million or approximately USD 180 per month per dependent effective July 1,
D
2013, subject to the registration by the taxpayer of, and procurement of a tax code for, such qualified dependent(s)
with the relevant tax authority
F or foreigners working in Vietnam: a one-off relocation allowance for moving to Vietnam as determined based on the
terms of the labor contract, cost of 1 return air ticket paid by the employer for a foreign employee to return home
for holiday once a year, and school fees in Vietnam paid by the employer for the children of a foreign employee from
primary school up to high school level. Accommodation paid by the employer on behalf of a foreign employee is
taxable based on the actual rental but not exceeding 15% of total other taxable income excluding the rental.
In respect of tax residents who have overseas income, PIT paid in a foreign country would be creditable subject to the DTA between
Vietnam and the relevant country/territory.

When are PIT finalizations due?
For employment income, tax has to be declared and paid provisionally on a monthly basis by the 20th day of the following month or
on a quarterly basis by the 30th day following the reporting quarter. The amounts paid are reconciled to the tax liability at the year-
end. An annual personal income tax return must be submitted and any additional tax must be paid within 90 days of the year end
(i.e., by 30 March of the year following the assessment year). Expatriate employees are also required to carry out a PIT finalization
on termination of their Vietnamese assignments before exiting Vietnam.
For non-employment income, the individual is required to declare and pay PIT in relation to each type of taxable non-employment
income. The current PIT regulations require income to be declared and tax paid on a regular basis, upon each time income is received.
In relation to corporations, what is the basis of taxation (i.e., whether territorial source
principle, tax residency principle or other principle is adopted) in Vietnam?
In relation to business vehicles, taxation is based on the principle of tax residence in Vietnam. Residence is not defined under
Vietnamese tax regulations but a corporation is generally considered to be a resident if it is incorporated in Vietnam, or if it is
incorporated under foreign law but has a permanent establishment in Vietnam and/or if it conducts production and business
activities that generate taxable income in Vietnam.
When and under what form can a presence in Vietnam of a foreign entity be treated as a
permanent establishment in Vietnam?
A permanent establishment of a foreign enterprise in Vietnam means a place for production and/or the entitys business activities,
which can be in the form of:
ranches, operational offices, plants, workshops, mines, gas fields, other locations in Vietnam where natural resources
B
are mined
Construction sites
Establishments providing services, including consultancy services
A gents of foreign enterprises
epresentatives in Vietnam that either have the authority to sign contracts in the name of the foreign enterprise or
R
regularly deliver goods or provide services in Vietnam
However, if provided otherwise by a tax treaty, the notion on permanent establishment of the tax treaty will prevail.
Under what circumstances are incorporations subject to taxation in Vietnam?

An enterprise established under the law of Vietnam must pay tax on its worldwide income. Foreign-source income derived by
residents is subject to tax in the same way as Vietnamese-source income.
A foreign enterprise with a permanent establishment in Vietnam must pay tax on all income arising in Vietnam (including income not
relating to the operation of the resident establishment but arising in Vietnam) and on foreign income that relates to the permanent
establishment. A foreign enterprise without a permanent establishment in Vietnam must pay tax only on income arising in Vietnam.
How is CIT imposed?

CIT is currently imposed on a resident companys taxable profit (i.e., the difference between total revenue (whether domestic or
foreign sourced) and deductible expenses, plus other assessable income) at the standard reduced rate of 20% as from 2016 in
Vietnam.

Personal and
CORPORATION TAX
What expenses may be deducted for CIT purposes?
Expenses are tax deductible if they relate to the generation of revenue, are properly supported by suitable documentation including
bank transfer vouchers where the invoice value is VND20 million or above and are not specifically identified as being non-deductible.
Examples of non-deductible expenses under prevailing regulations include:
Depreciation of fixed assets which is not in accordance with the prevailing regulations
E mployee remuneration expenses which are not actually paid, or are not stated in a labour contract or collective
labour agreement
S taff welfare (including certain benefits provided to family member of staff) exceeding a cap of one months average
salary
rovisions for severance allowance (except for companies not subject to mandatory unemployment insurance
P
contributions) and payments of severance allowance in excess of the prescribed amount per the 2012 Labor Law
verhead expenses allocated to a PE in Vietnam by the foreign companys head office exceeding the amount under a
O
prescribed revenue-based allocation formula
Interest on loans corresponding to the portion of charter capital not yet contributed
I nterest on loans from non-economic and non-credit organizations exceeding 1.5 times the interest rate set by the
SBV
nrealized foreign exchange losses due to the year-end revaluation of foreign currency items other than account
U
payables
onations except certain donations for education, health care, natural disaster or building charitable homes for the
D
poor
Administrative penalties, fines, late payment interest
ontributions to voluntary pension funds and the purchase of voluntary pension and life insurance for employees
C
exceeding VND 1 million per month per person
Certain expenses directly related to the issuance, purchase or sale of shares
From 2015, the cap on the tax deductibility of advertising and promotion expenses has been abolished.
For certain businesses such as insurance companies, securities trading and lotteries the MOF provides specific guidance on deductible
expenses for CIT purposes.
Business entities in Vietnam are allowed to set up a tax deductible Research and Development Fund to which they can appropriate
up to 10% of annual profits before tax. Various conditions apply.
When are CIT filings made?

Provisional quarterly CIT returns are no longer required. Instead, enterprises are now required to make quarterly provisional CIT
payments based on estimates. If the provisional quarterly payments account for less than 80% of the final CIT liability, the shortfall
in excess of 20% is subject to late payment interest (currently at 18% per annum), counting from the deadline for payment of the 4th
quarter CIT liability.
Final CIT returns are filed annually. The annual CIT return must be filed and submitted not later than 90 days from the fiscal year end.
The outstanding tax payable must be paid at the same time.

What other taxes potentially apply to a resident corporation and what are their tax rates?
A tax resident corporation may also be subject to the following other taxes:
Table 22 - Other Taxes Applicable to Resident Corporations
No Tax Description Tax Rate
Form of excise tax applicable to the production

Rates range from 7% to 75%
or import of certain commodities (cigarettes,
1 Special sales tax depending on the commodity
liquor, beer, etc.) and provision of certain service
or service activity
activities (massage, casinos, etc.)
20% of net gain (to be included in

Imposed on gains from transfers of interests
2 Capital assignment profits tax the companys taxable income for
and securities
CIT purpose)
Applies on the required registration of ownership

Rates vary between 0.5% and 20%
3 Registration fee of certain assets (e.g. land, buildings, etc.) but
not on transfer of shares
Land use fees (allocated land) and land rental Rates vary depending on location
(leased land) of land, lease term, etc.
4 Property taxes
Charged on a per square metre
on-agricultural land use tax on residential land and
basis with progressive tax rates
non-agricultural land used for business purposes
ranging from 0.03% to 0.15%
Rates range from 35 to 35%

Imposed on the exploitation and use of natural
Natural resources tax or depending on the specific
5 resources (e.g., petroleum, minerals, crude oil,
production royalty classification of natural resources
natural gas, forest products, etc.)
and/or production output
Rates vary from VND 1 million

Imposed on enterprises in Vietnam upon tax to VND 3 million per year based
6 Business license tax
registration and subsequently, annually on the amount of enterprises
registered capital
EPT imposed on the production and importation

of goods that may cause damage to the Rates range from VND300 to VND
environment (e.g. ,certain types of petroleum 40,000 per relevant unit based
and lubricants, coals, HCFCs, certain types of on the goods being produced or
Environmental protection tax plastic bags, restricted herbicides, pesticides, imported
7 and fee preservatives for forest products, etc.)
EPF imposed on businesses engaging in the EPF rates range from VND 35 to
exploitation of natural resources such as crude VND 270,000 per relevant unit of
oil, natural gas, minerals, etc. the exploited natural resource

Personal and
CORPORATION TAX
No Tax Description Tax Rate
Duty rates vary depending on

Applicable to goods imported to and the category of goods and any
8 Import and export duties
exported from Vietnam applicable international treaty
or agreement
How may foreign entities without a licensed presence in Vietnam be taxed in Vietnam?
Where a foreign entity not having a licensed presence in Vietnam contracts with a Vietnamese party (including FIEs), a FCWT shall
apply, in general to payments derived from Vietnam, except for the pure supply of goods (i.e. where the responsibility, cost and risk
relating to the goods passes at or before the border gate of Vietnam and there are no associated services performed in Vietnam),
services performed and consumed outside Vietnam and various other services performed wholly outside Vietnam (e.g. certain
repairs, training, advertising, promotion, etc.).
In addition, certain distribution arrangements where foreign entities are directly or indirectly involved in the distribution of goods or
provision of services in Vietnam are subject to FCWT e.g., where the foreign entity retains ownership of the goods, bears distribution,
advertising or marketing costs, are responsible for the quality of goods or services, make pricing decisions, or authorizes/hires other
Vietnamese entities to carry out part of the distribution of goods/provision of services in Vietnam.
For foreign contractor entities, FCWT comprises a combination of CIT and VAT at the following varying rates.
Table 23 - Foreign Contractor Withholding Tax Rates for Entities
Deemed
Industry Deemed VAT Rate
CIT Rate
Supply of goods in Vietnam or associated with services rendered

1%
in Vietnam (including in-country import-export and import,
(VAT will not be payable where
distribution of goods in Vietnam or delivery of goods under 1%
goods are exempt from VAT or
Incoterms where the seller bears the risk relating to goods in
where import VAT is paid)
Vietnam)
5%
Services 5%
Services together with supply of machinery and equipment

(where the contract does not separate the value of goods and 3% 2%
services)
Restaurant, hotel and casino management services

5% 10%
Construction, installation without supply of materials, machinery

or equipment 5% 2%

Deemed
Industry Deemed VAT Rate
CIT Rate
Construction, installation without supply of materials, machinery

3% 2%
or equipment
Leasing of machinery and equipment 5% 5%
Exempt (where aircraft/vessels

Leasing of aircraft and vessels cannot be manufactured in 5%
Vietnam
3%
Transportation (international transportation at 2%
0%)
Interest Exempt 5%
Royalties Exempt 10%
Insurance Exempt/ 5% 5%
Re-insurance, commission for re-insurance Exempt 0.1%
Transfer of securities Exempt 0.1%
Financial derivatives Exempt 2%
Meanwhile for foreign contractor individuals, FCWT comprises a combination of PIT and VAT at the following varying rates:
Table 24 - Foreign Contractor Withholding Tax Rates for Individuals
Industry Deemed VAT Rate Deemed PIT Rate
Services 5% 5%
Trading of goods N/A 1%

Personal and
CORPORATION TAX
Industry Deemed VAT Rate Deemed PIT Rate
Construction, manufacturing,
2 - 5% 2%
transportation
Other activities 2% 2%
How are dividends paid to foreign members/shareholders taxed in Vietnam?

Dividends paid by a company in Vietnam to foreign members/shareholders are not subject to tax, provided that the paying entity has
fulfilled all tax obligations before payment.
How are dividends from foreign companies taxed in Vietnam?

Gross dividends (before tax) received by a company in Vietnam from a foreign company are treated as taxable income of the
company in Vietnam. Any foreign tax amount that has been paid overseas (i.e., on the worldwide revenue of the foreign company
before distribution of the dividends) would be deductible against the CIT of the company in Vietnam subject to the application of a
DTA between Vietnam and the relevant country/territory.
How are interest payments to foreign companies taxed in Vietnam?

If the recipient foreign company is not a tax resident or does not have a permanent establishment or a licensed presence in Vietnam,
a withholding tax on CIT of 5% shall apply unless the rate is reduced under a tax treaty. There is no withholding tax on VAT on such
paid interest.
How are intellectual property (IP) royalties paid to foreign corporate shareholders taxed
in Vietnam?
If the recipient foreign corporate shareholder is not a tax resident or does not have a permanent establishment or a licensed presence
in Vietnam, a 10% royalty withholding tax shall apply unless the rate is reduced under a tax treaty.
What are goods/services subject to VAT?

VAT applies to goods and services used for production, trading and consumption in Vietnam (including goods and services purchased
from non-residents).
A domestic business must charge VAT on the value of goods or services supplied.
In addition, VAT applies on the duty paid value of imported goods. The importer must pay VAT to customs authorities at the same
time that they pay import duties. For imported services, CAT is levied via the FCWT mechanism.
What are the current VAT rates in Vietnam?

There are 3 VAT rates as set out below. When a supply cannot be readily classified based on the tax tariff, VAT must be calculated for
the particular range of goods which the business supplies.

Table 25 - VAT Rates
Rate Coverage
0% This rate applies to exported goods/services including goods/services sold to overseas/non-tariff

areas and consumed outside Vietnam/ in the non-tariff areas, goods processed for export or in-
country export (subject to conditions), goods sold to duty free shops, certain exported services,
construction and installation carried out for export processing enterprises, aviation, marine and
international transportation services
5% This rate applies generally to areas of the economy concerned with the provision of essential
goods and services. These include: clean water; fertilizer production; teaching aids; books;
unprocessed foodstuffs; medicine and medicinal equipment; husbandry feed; agricultural
products and services; technical and scientific services; rubber latex; sugar and its by-products;
certain cultural, artistic, sport services/ products and social housing
10% This is the standard VAT rate that applies to activities not specified as not-subject to VAT,
exempt or subject to )% or 5%.
Are there any administrative requirements relating to VAT?

Yes. All organizations and individuals producing or trading goods and services in Vietnam that are subject to VAT must register for
VAT. In certain cases, branches of an enterprise must register separately and declare VAT on their own activities.
Taxpayers must file VAT returns on a monthly basis by the 20th day of the subsequent month, or on a quarterly basis by the 30th day
of the subsequent quarter (for companies with prior year annual revenue of VND 50 billion or less).
Are there any thin capitalization rules (i.e. restrictions on loans from foreign affiliates)
in Vietnam?
Currently, there are no specific tax-driven thin capitalization rules in Vietnam. However, certain restrictions to that effect are
provided on foreign loans and CIT (e.g., permitted borrowing capacity and excessive interest rates) and apply to some sectors (e.g.
in the power industry, the leverage ratio for power plants must be at least 70:30 debt-to-equity for the investment project to be
issued with an IRC) ; or the equity of a real estate project developer must be at least 15% or 20% of the total investment capital of
the project if using less or more than 20 ha of land, respectively.
Are there any transfer pricing rules (i.e. restrictions on the pricing of transaction between
a local entity and a foreign entity) in Vietnam?
Yes. Vietnams transfer pricing regulations outline various situations where transactions will be considered as being between related
parties, and the mechanism for determining the market arms length transaction value (e.g. comparable uncontrolled price, cost
plus, resale price, comparable profits and profit split).
Under the wide ranging definition of related parties, the control threshold is lower than in many other countries (20%) (i.e., one
party holds at least 20% of the investment capital in the other party, or the two parties hold at least 20% of the investment capital
of a third party). The definition also extends to certain significant supplier, customer and funding relationships between otherwise
unrelated parties.
Compliance requirements include an annual declaration of related party transactions and transfer pricing methodologies that has
been used, which is required to be filed together with the annual CIT return. Companies with related party transactions must also
prepare and maintain contemporaneous transfer pricing documentation. Where companies fail to do so, the tax authorities have the
right to impose deemed pricing, profits or tax.

Personal and
CORPORATION TAX
Is there a wide network of DTA in force in Vietnam?
Yes. As of 31 July 2015, Vietnam has signed 73 DTAs with various countries and territories, including most of its significant trading
partners, of which 62 DTAs are in effect.

International trade
AND CUSTOMS
Have there been any recent notable trends or developments in customs in Vietnam?
Yes. Vietnam has recently implemented the Vietnam Automated Cargo and Port Consolidated System and Vietnams Customs
Information System (VNACCS/VCIS), the countrys latest electronic customs clearance procedure. Also, to bring the countrys
customs regulations in line with its international commitments along the lines of the Trade Facilitation Agreement under the WTO
Framework, the 2014 Customs Law and Decree No. 08/2015/ND-CP have been issued, providing, among others, the introduction
of the one-stop procedure (or the single window system) where all relevant procedures related to imported/exported goods are
carried out via a single integrated system; specific rules on the Priority Enterprise Regime; and the simplification of administrative
customs procedures, including compulsory use of the e-customs system.
Are imports and exports taxed in Vietnam?

Yes, except for goods stipulated by the Government as non-taxable, goods imported to or exported from Vietnam are subject to
import or export duties, including:
Goods which are imported or exported across the bordergates of Vietnam
oods which pass between the domestic market and a non-tariff zone (e.g. export processing zones and enterprises,
G
bonded warehouses or warehouse zones, special economic or commercial-industrial or other economic zones) and
vice versa
Other goods purchased, sold or exchanged which are deemed to be imported or exported goods.
Which exports are taxed in Vietnam?

Export duties are charged only on a few items such as primarily agricultural products (e.g., rice, forest products and fish) and natural
minerals and other natural resources (e.g., sand, chalk, marble, granite, ore, crude oil, etc.). Rates range from 0% to 37% based on
the free on board (FOB) price (i.e., the selling price of goods at the port of departure as stated in the contract), excluding freight and
insurance costs.
Are there any circumstances where exporting enterprises may be exempted from duties?
Yes. Enterprises that export under the following circumstances are exempt from export tax:
aterials, raw materials, semi-finished products sold by enterprises to EPZs and that are used to produce and/or
M
process exported goods
Products that are exported back to foreign parties under signed processing contracts.
Are there any goods subject to certain restrictions or conditions for export?
Yes. Under the lists attached to Decree No. 187/2013/ND-CP (and summarized on page 67), certain goods are banned from export
or require an export permit and/or are subject to specialized State management. The restrictions apply to exported goods for
commercial or non-commercial purposes, to the export of goods on border areas and to aid goods of governmental and non-
governmental organizations.

Table 26 - List of Goods Banned from or subject to Conditions for Export
Require Export Permit and/or Subject

Banned From Export
to Specialized Management
Weapons, ammunitions, explosives (excluding Under MOIT management

industrial explosives), military technical equipment
Pre-substances used in industries
Relics, antiques, national treasures under ownership
of the State or of political or socio-political Explosives pre-substances, industrial explosives
organizations Goods exported within quotas set by foreign
Assorted publications (including cultural ones) countries or subject to export control in accordance
banned or suspended from dissemination in Vietnam with Vietnams international treaties
Postage stamps banned from trading, exchange, Goods subject to automatic export permit
display and dissemination
Logs, sawn timber from domestic natural forests Under MARD management
Precious and rare wild animals, aquatic species, Precious and rare, endangered, wild, terrestrial
livestock breeds, plants and plant varieties animals and plants which need to be placed under
export control in accordance with CITES
Encrypted products used for protection of State
secrets Ornamental, shade and old trees from domestic
natural forests
Toxic chemicals and banned chemicals
Firewood, charcoal or firewood originating from
domestic natural forests aquatic species subject
to conditional export or which may be normally
exported
Under MOCST management

Relics and antiques not under ownership of the State
or of political and socio-political organizations
Cinematographic works and other audio-visual
products; cultural works; applied art works
How are imports taxed in Vietnam?

Import duty rates are classified into the following 3 categories (see Table 27 on the following page):

International trade
AND CUSTOMS
Table 27 - Categories of Import Duty Rates
Category Description Rate
Ordinary rate Applicable to imported goods that are Based on the MFN treatment (or Normal Trade
not subject to preferential or special Relations) rate plus a 50% surcharge
preferential rates or to imported goods
not accompanied by an appropriate
Certificate of Origin (C/O)
Preferential rate Applicable to imported goods from Based on rates in accordance with Vietnams WTO
countries having MFN status with Vietnam commitments
or from other countries of the WTO
Special preferential Applicable to imported goods from Based on rates in accordance with the relevant treaty or
rate countries having a special preferential trade agreement entered into by Vietnam
trade agreement with Vietnam (e.g.
ASEAN members, Japan, India, China,
Australia and New Zealand)
In principle, Vietnam follows the WTO Valuation Agreement with certain variations. The taxable value of imported goods is typically
based on the transaction value (i.e. the price paid or payable for the imported goods, and where appropriate, adjusted for certain
dutiable or non-dutiable elements). Where the transaction value is not applied, alternative methodologies for the calculation of the
customs value will be used.
Are there any import duty exceptions?

Enterprises shall be exempted from import duty in the following circumstances:
oods imported to create fixed assets of projects in encouraged sectors and of projects in geographical areas with
G
either difficult or specially difficult socio-economic conditions
E quipment imported to create fixed assets for encouraged projects (tax exemption applies to first-time import but
does not apply to replacements)
aw materials, spare parts, accessories, other supplies, samples, machinery and equipment imported for the
R
processing of goods for export and finished products for use in the processed goods
Raw materials and supplies (which cannot be produced in Vietnam) in direct service in the manufacture of software
Plant varieties and animal breeds imported for use in investment projects in agriculture, forestry or fisheries
achinery and equipment, specialized means of transportation and materials (which cannot be produced in Vietnam)
M
for use in oil and gas activities or for shipbuilding
Goods imported for direct use in scientific research and technological development
Movable assets
Goods imported for sale at duty-free shops
Are there any goods subject to certain restrictions or conditions for import?
Yes. Under the lists attached to Decree No. 187/2013/ND-CP and MOIT Circular No. 04/2014/TT-BCT, certain goods are banned from

export or require an export permit and/or are subject to specialized State management, as summarized in Table 28 below:
Table 28 - List of Goods Banned from or Conditional for Import into Vietnam
Require Export Permit and/or Subject to

Banned From Export
Specialized Management
Weapons, ammunitions, Under MOIT management Under MARD management

explosives (excluding industrial
explosives), military technical Goods subject to import control under Veterinary drugs/ materials for
equipment Vietnams international treaties production
Assorted fireworks, sky Goods subject to automatic import Biological/ micro-biological
lanterns, assorted devices permit under the MOITs list preparations, materials used in
causing interference to vehicle Goods subject to tariff quotas (i.e., veterinary medicine/ aquaculture
speedometers salt, material tobacco, poultry eggs, preparations
Used consumer goods and sugar) Pesticides, livestock feeds, fertilizers
Assorted publications (including Chemicals/ products containing Livestock breeds; plant varieties
cultural ones) banned or chemicals; pre-substances used in Gene sources; wild animals and plants;
suspended from dissemination in industries aquatic species
Vietnam Explosive pre-substances, industrial
Postage stamps banned from explosives Under MOCST management
trading, exchange, display and Tobacco and cigarette materials, Cinematographic works and other
dissemination products, and machines audio-visual products; applied art
Non-compliant radio equipment works
and radio-wave appliances Under MOT management
Electronic game machines
Right hand drive means of Signal fires for navigational safety Childrens toys
transport; tampered automobiles
and their spare parts; tampered Under MONRE management Under MOH management
motorcycles and their spare parts Scraps Addictive drugs, psychotropics, pre-
Used supplies and vehicles substances used as drugs
Under MOIC management
Chemicals in Annex III of the Materials for/ finished medicines
Rotterdam Convention Publications for prevention/ treatment of human
Pesticides banned from use in Postage stamps, stamp publications diseases
Vietnam Microwave equipment/ transmitters/ Cosmetics
Wastes and scraps, refrigerating receivers of a certain frequency/ Vaccines and medical biologicals;
equipment using CFC output medical equipment
Products and materials containing Special-use plate-making and type-
asbestos of the amphibole group setting systems of printing Under SBV management
Schedule-I toxic chemicals Printing machines of all kinds and Metals casts/ machines for molding/
color photocopiers minting/ stamping coins; banknote-
printing ink and paper, banknote-
printing presses
Vault doors
Anti-counterfeiting machines and
blank papers

International trade
AND CUSTOMS
Besides the lists discussed above, are there any other specific conditions or restrictions
on the import into or export from Vietnam of goods by FIEs?
Yes. Under the MOIT Circular No. 34/2013/TT-BCT, the following goods are not permitted for implementation of import or export
rights by FIEs.
Table 29 - List of Goods Not Permitted for Implementation of FIE Export or Import Rights
PROHIBITED PROHIBITED
FOR FIE EXPORT FOR FIE IMPORT
RIGHTS RIGHTS
Crude unrefined petroleum and Cigars, double-filter cigars, cheroots

petroleum/oil obtained from bitumen and cigarettes processed from
minerals, including: tobacco leaf or replacement tobacco
leaf
Crude oil
Processed tobacco leaf and other
Condensate processed replacement tobacco
Other types leaf; pure tobacco and reconstituted
tobacco; tobacco extract and tobacco
essence
Petroleum oils and oils obtained from
bituminous minerals (other than
crude) newspapers, journals and
periodicals, whether or not illustrated
or containing advertising material
Discs, tapes, and other media for
the recording of sound or of other
phenomena, including matrices and
masters for the production of discs
Other aircraft (e.g., helicopters and
airplanes); spacecraft (including
satellites) and trajectory aircraft and
means of propulsion for spacecraft.

Competition and economic
CONCENTRATIONS
Is there any competition law in Vietnam? If so, what are the prohibited practices under
such law(s)?
Yes. Vietnams 2004 Competition Law establishes 2 broad categories of prohibited conduct, namely, practices in restraint of
competition and unfair business practices, as follows:
Chart 30 - Prohibited Conduct Under Vietnamese Competition Law
2004 Competition Law
Misleading indications
Competition restriction Infringement of business

agreement secrets
Abuse of dominant or Competition

Unfair Competition Business coercion
monopoly position Restriction
Defamation of another
Economic concentration
enterprise
Causing disruption to
business of other enterprises
Advertising/ sale promotion

aimed at unfair competition
Discrimination by association
Illegal multi-level sale
Other unfair competition

acts

Are there other agreements and practices regulated by competition law in Vietnam?
Yes. The 2004 Competition Law of Vietnam also prohibits the following agreements or collusion irrespective of the market share of
the relevant parties:
To prevent or impede other enterprises to participate in the market or develop business
To exclude from the market other enterprises which are not parties to the agreement
To win a tender for supply of goods and services
Meanwhile parties having a combined market share of 30% or more of the relevant market cannot make agreements to, among
other things:
Directly or indirectly fix the price of goods and services
Allocate between/among them consumption markets or sources of supply of goods and services
Restrict the amount and quantity of goods and services produced, purchased or sold
Restrain technical or technological developments or investment
I mpose on other enterprises conditions for signing contracts for the purchase and sale of goods and services or to
force other enterprises to accept unrelated conditions and obligations (third line forcing).
Which acts of an enterprise or group of enterprises are deemed as abuse of position as

regulated by competition law in Vietnam?
It is unlawful for an enterprise of group of enterprises in a position of market dominance or monopoly to abuse its position in
specified ways, such as:
Selling goods or services below cost in order to exclude competitors
F ixing an unreasonable selling or purchasing price or a minimum re-selling price that causes damage or unfavorable
conditions for consumers
estricting production or distribution or limiting the market or impeding technical or technological development so as
R
to cause loss to consumers
Applying different commercial conditions to similar transactions to create unequal competition
Third line forcing
Preventing market participation by new competitors
The test for a dominant market position is based on market share (of 30% or more in the relevant market for an individual enterprise,
50% or more in the relevant market for 2 enterprises together, 65% or more in the relevant market for 3 enterprises and 75% or more
in the relevant market for 4 enterprises) and, in the case of individual enterprises, the ability to restrain competition.
Are mergers and acquisitions subject to merger control in Vietnam?

Yes. Vietnams Competition Law also regulates economic concentrations, including mergers, consolidations, acquisitions, joint
ventures or other forms of concentration stipulated by law, as presented on the following page.

Competition and economic
CONCENTRATIONS
Table 31 - Required Actions for Economic Concentrations
Type of economic
Condition Action
concentration
Where the parties have Does not satisfy conditions for SME Prohibited by law; cannot proceed with the
a combined market post-concentration enterprise or other economic concentration
share above 50% in the exemptions
relevant market
Post-concentration enterprise is a SME (i.e., Permitted economic concentration; no further action
a company with less than 300 employees required
if in the manufacturing sector or less than
100 employees in the service sector
Where one or more of the parties is at risk File request for exemption to VCAD; approval for
of being dissolved or becoming insolvent exemption to be issued by the MOIT
(the failing firm defense)
Where the economic concentration Permitted economic concentration; no further action

enhances export or socio-economic required
development or technological progress
Where the enterprises Post-concentration enterprise is a SME Permitted economic concentration; no further action
participating in an required
economic concentration
have a combined market
share from 30% to 50%
Other cases Notify VCAD; parties cannot complete the
concentration until they have received notification
from VCAD that it does not consider the
concentration to be prohibited
Are there any competition enforcement bodies in Vietnam?

Yes. The 2004 Competition Law provides for the establishment of the following 2 competition enforcement authorities:
ietnam Competition Administration Department/VCAD under the MOIT, which is tasked to accept complaints on and
V
investigate (by itself or upon a filed complaint) violations under the 2004 Competition Law and deal with/impose fines
in respect of unfair competition practices
ietnam Competition Council/VCC, an independent body regulated by the Prime Minister, which is tasked to decide
V
on cases forwarded by the VCAD following investigation concerning practices in restraint of competition
Violations of the 2004 Competition Law are typically handled as follows (see Table 32 on the following page):

Chart 32 - Procedure in Case of Violations of the Vietnamese Competition Law
Complaint
on alleged Case is suspended
competition Preliminary by VCAD
violation Acceptance of the investigation
case by VCAD initiated by the
VCAD discovers VCAD Head Official
alleged investigation
competition initiated by VCAD
violation Head
Cases involving Cases involving

competition restriction unfair competition
Decision on the Hearing presided VCC establishes an

Decision on the
case by ad hoc by the ad hoc ad hoc council to
case by VCAD Head
council council deal with the case
What sanctions may be imposed in case of breach of competition regulations?

Depending on the nature and seriousness of the breach, one or more of the following forms of penalty may be applied to an individual
or organization in breach of competition regulations:
A warning
monetary fine, and in case of breach involving an agreement in restraint of competition, an abuse of dominant
A
market position or monopoly position or an economic concentration, a monetary fine of up to 10% of the total
turnover of the organization or individual in breach in the financial year preceding the year in which the prohibited
practice took place
dditional sanctions such as withdrawal of ERC, revocation of the right to use a license or practicing certificate and
A
confiscation of exhibits and facilities used to commit the breach
emedial measures to address the consequences of the breach, including (i) restructuring of an enterprise which
R
abuses its dominant market position; (ii) division or separation of merged enterprises; (iii) compulsory re-sale of that
part of the enterprise which was acquired; and (iv) removal of illegal terms and conditions from a contract or business
transaction.

Intellectual
PROPERTY
What laws protect intellectual property in Vietnam?
The 2005 Civil Code and the 2005 Law on Intellectual Property codify the bulk of regulations on intellectual property in Vietnam.
Vietnam is also a signatory to the following international agreements:
Under the WTO:
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Under the WIPO:
Stockholm Convention establishing the WIPO

Paris Convention for the Protection of Industrial Property
Patent Cooperation Treaty
udapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent
B
Procedure
Washington Treaty on Intellectual Property in Respect of Integrated Circuits
Madrid Agreement Concerning the International Registration of Marks
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
ommon Regulations under the Madrid Agreement Concerning the International Registration of Marks and the
C
Protocol Relating to that Agreement
Trademark Law Treaty
Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs (Act 1999)
Berne Convention for the Protection of Literary and Artistic Works
Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite
Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
International Convention for the Protection of New Varieties of Plants
Under the ASEAN:
A SEAN Framework Agreement on Intellectual Property Cooperation

A SEAN Economic Community Blueprint
A SEAN-Japan Comprehensive Economic Partnership Agreement
A SEAN-Australia-New Zealand FTA
Bilateral Agreements:
Vietnam-U.S. Bilateral Trade Agreement

A greement between Vietnam and U.S. on Science and Technology Cooperation
greement between Vietnam and the Swiss Federal Council on the Protection of Intellectual Property and on
A
Cooperation in the Field of Intellectual Property
Vietnam-Japan Economic Partnership Agreement

What are the main intellectual property rights that are capable of protection in Vietnam
and what is the duration of protection for such intellectual property rights?
Table 33 - Protection of Intellectual Property Rights
Qualification(s) for
Type Description Duration of Protection
Protection
Patent A technical solution presenting Novel 20 years from the date of

worldwide novelty; an inventive Of an inventive nature application
step applicable in socio-economic
fields Industrially applicable
Trademark Marks used to distinguish A visible sign in the form of 10 years from the date of
goods or services of different letters, words, drawing or application, renewable for
organizations and individuals images, or a combination of successive 10-year periods
these, represented in one or without limit
more colors
Capable of distinguishing
the goods and services of its
owner from those of other
owners
Industrial design The outward appearance of a Novel 5 years from the date of
patent product embodied in three- Of an inventive nature application, renewable for 2
dimensional configuration, lines, additional periods of 5 years
colors or a combination of such Industrially applicable each, up to a maximum of 15
elements years
Copyright Rights of an organization or Rights arise when a work is Authors life plus 50 years
individual to its created or owned created and fixed in a certain except for movies, photographs,
works (i.e., a creation of the mind material form, irrespective of its plays and applied works of
in the literary, artistic or scientific content, quality, form, mode and fine art, which enjoy 75 years
sectors) language and whether or not protection as from its first
such work has been published or publication, or 100 years from
registered the date of creation if the work
has not been published within
25 years after creation
Trade secret Any valuable information Neither common knowledge Indefinite for so long as it
obtained from financial, nor easily obtainable continues to satisfy all criteria
commercial or intellectual Can be applied in business, to be a trade secret
investment which has not yet and when used, will enable
been disclosed and provides the holder to have more
holder with a competitive edge favorable advance than other
people who do not have or
use such information
Confidentially kept by holder
with necessary measures so
that such information will
neither be disclosed nor easily
accessible

Intellectual
PROPERTY
Qualification(s) for
Type Description Duration of Protection
Protection
Trade name The designation used by an Must be distinctive, that is: Entire duration of use (i.e., for so
organization or individual in long as the owner of the trade
business activities in order to Consists of a proper name name is still conducting business
distinguish it from other business except where the proper name under the name)
entities in the same business is widely known by use
sector and area Is not identical with or
confusingly similar to a trade
name used earlier by another
person in the same business
sector and area
Is not identical with or
confusingly similar to another
persons mark or a geographical
indication that was protected
before the date of use of such
trade name
Is registration required to protect intellectual property?

Generally, registration is required for protection of intellectual property except in the case of copyrights, whose registration only
creates prima facie evidence of protection. As a general principle also, intellectual property rights are protected upon registration
on a first to file basis except for trade secrets, well known trademarks, geographic indications and trade names, which are entitled to
legal protection upon fulfillment of their own conditions for formation and usage.
Applications for registration of a patent, trademark, industrial design and trade name are filed with the NOIP. Applications for
registration of a copyright meanwhile are filed with the Department of Copyright in Literature and Arts or the Department of
Information and Culture where the author or owner of the works resides.
Which bodies are in charge of intellectual property protection and enforcement?

The Vietnamese IP system is divided into 3 administrative areas as follows, with the National Office of Intellectual Property holding
the chief coordinator role:
Copyright and related rights - administered by the Copyright Office of Vietnam

Industrial property rights - administered by the NOIP
Rights to plant varieties - administered by the Plant Variety Protection Office
How is intellectual property protection enforced?

As a general matter, a right holder of a registered intellectual property may choose to pursue any of the following legal recourses to
deal with an intellectual property infringement:
ivil procedures before the competent local peoples courts for adjudication of (i) cases with respect to claims of abuse
C
of intellectual property rights, (ii) disputes concerning royalty or remuneration, (iii) claims on registration right and
the right of authorship and (iv) disputes relating to contracts concerning assignment of ownership right or licensing
contract for the right to use objects of intellectual property rights, and the application of, among other measures,
(aa) compulsory termination of the infringing acts, (bb) compulsory public apology and rectification, (cc) compulsory
performance of civil obligations, (dd) compulsory payment of damages for loss and (ee) compulsory destruction,
distribution or use for non-commercial purposes of goods

dministrative measures by the market control agencies, customs agencies and specialized inspection authorities for
A
intellectual property violations (i) causing losses to consumers or the society; (ii) involving the production, importation,
transportation, or trade of counterfeit goods; or (iii) concerning the production, importation, transportation, of trade
of goods bearing a mark or a geographical indication that is identical with, or confusingly similar to a protected mark
or geographical indication, which include remedies such as (aa) administrative warnings and monetary fines from to 1
to 5 times the value of the discovered infringing goods; (bb) suspension of business activities for a definite term; and
(cc) in the case of counterfeit goods and materials and implements used for manufacturing or trading such goods, the
confiscation, destruction, distribution, and use for non-commercial purposes, or compulsory delivery of transiting
goods out of the territory of Vietnam or re-exportation, after infringing elements had been removed
riminal prosecution for intellectual property violations (i) involving a large amount or number of goods or (ii)
C
constituting criminal acts
order measures by customs agencies such as temporarily detainment of imported or exported goods upon the
B
request of the right holder as accompanied by (i) evidence to substantiate lawful ownership right or use right to the
object, (ii) evidence testifying to the infringement and (iii) deposit of an amount equal to 20% of the value of the goods
or at least VND 20 million in case such value could not be determined, or a guarantee ensuring compensation in case
of a wrongful request
Who has the right to transfer technology?

The following organizations and individuals are entitled to transfer the right to use (by licensing or sub-licensing) or ownership of
technology:
Owner of the technology

ny organization or individual permitted by the owner of the technology to transfer the use or ownership of the
A
technology
What procedures must be complied with to transfer technology in Vietnam?

Technology transfer agreements are not required to be registered by Vietnamese law. However, any entity planning to receive or to
transfer restricted technology must submit an application to the Ministry of Science and Technology for approval of the transfer of
technology. If the entity receives written approval from MOST, the entity will then be permitted to enter into a technology transfer.
Although not mandatory, parties are recommended to register their agreement on technology transfer with MOST in order to enjoy
certain incentives provided by law as well as to provide protection against third party claims.
What kind of technology may be transferred?

Parties to a technology transfer agreement may agree to transfer:
Technical know-how
T echnical knowledge in the form of technological plans, technical solutions, formulae, technical parameters, design
drawings, technical plans, computer programs, and data or information about the transferred technology
S olutions for rationalization of production and improvements to technology, licenses for special business rights and
other objects as provided in the Law on Technology Transfer
Are there any prohibited technology transfers?

The following technologies are not permitted to be transferred under Vietnamese law:
T echnology that does not meet regulations on occupational safety, occupational hygiene, public health or
environmental protection

Intellectual
PROPERTY
Technology that adversely affects culture, security and social safety
Technology that lacks technical, economic or social efficiency
T echnology that serves national security or defense, if the authorized State body has not given permission for the
transfer.

Commercial
TRANSACTIONS
Trading and Distribution
What are the common commercial/trading agreements in Vietnam?
Common commercial/trading agreements in Vietnam include commercial agency, distribution, and franchising agreements.
Are these marketing agreements regulated, and if so, how?

Yes, as follows:
Commercial agency These agreements must be made in writing or in other forms of equal legal validity. As a general
rule, an agent has the right to contract with various principals, and to require the principal to provide guidelines and
information for and to satisfy other conditions relating to the performance of the agency contract. It is the agents
obligation to sell or purchase goods and to provide services to customers at the price of goods and level of charges for
provision of services fixed by the principal, and to comply strictly with the agreements with respect to the delivery or
receipt of goods or money with the principal.
Distribution agreements Distribution agreements are governed by the 2005 Commercial Law and 2005 Civil Code
and comprise the activities of wholesaling (i.e., selling goods directly to other entities but not to the final consumer),
retailing (i.e., selling goods directly to the final consumer), agency for purchase and sale of goods and franchising.
Franchising Commercial franchise contracts, including related licensing agreements on intellectual property rights (such as
trademarks) or technology transfer agreements), must be made in writing or in other forms of equivalent legal validity. A franchise
contract organizing operations in Vietnam must also be written in Vietnamese. A company is entitled to conduct franchising only
when:
Its business system to be franchised has been in operation for at least 1 year
I t has registered franchising activities with the MOIT (for franchising from overseas to Vietnam or from Vietnam to
overseas) or the DOIT (for domestic franchising) except for domestic franchising activities or franchising from Vietnam
to overseas
The goods and services subject of the franchise are not prohibited for trading
It has been licensed to carry out the activities that are the object of the franchising agreement.
Are there regulations governing multi-level sales in Vietnam?

Yes. Multi-level sales is currently governed and regulated by Decree No. 42/2014/ND-CP and MOIT Circular No. 24/2014/TT-BCT.
Are there any prohibited activities in conducting multi-level sales?

Yes. The following activities are prohibited under the current multi-level marketing regulations:
onduct of business via pyramid model wherein income of participants is primarily derived from the recruitment of
C
new participants, extension of contracts of participants, or the amount of charge or deposit or investment fund of
participants in the network such that income is derived primarily from the money payable by prospective participants
to join the network through recruitment, but not from the sale of products
Requiring participants to pay money to maintain, develop or expand their networks
E xtending contracts for participation in the business with a certain number of participants to have the right to receive
commissions and bonuses
aintaining more than one position in the business, contract for participation in the business, code or other equivalent
M
forms for one participant

S elling and purchasing or transferring the network of participants to other enterprises, except for merger and
acquisition
Collecting charges for issuance or re-issuance of membership cards
Are there any foreign ownership limitations in the retail and distribution sector in
Vietnam?
Since 1 January 2009, WFOES have been allowed by Vietnams WTO commitments to engage in trading and distribution in Vietnam.
Foreign investors engaging in direct investment in this sector will still need to apply for and obtain an IRC, and are still limited in the
ability to freely establish retail outlets.
What are the requirements for establishing a retail outlet?

Under Vietnams WTO commitments, foreign investors are permitted to establish one retail outlet when they obtain an IRC for a
company engaged in distribution. Establishment of additional retail outlets beyond the first one is allowed only upon satisfaction of
an Economic Needs Test, which is based on criteria that include the number of existing service suppliers in the geographic area, the
stability and needs of the local market and geographical scale. In practice, the licensing of a FIEs retail stores beyond the first one is
at the discretion of the Vietnamese authorities.
The ENT requirement for FIEs has recently been relaxed in that under current regulations, establishing additional retail stores beyond
the first one will no longer be subject to ENT if the store has an area of less than 500 m2, is located in an area zoned for goods sale
and purchase activities, and there is an infrastructure system available to facilitate such activities.
Are there any restrictions on what products may be traded?

Yes. Although Vietnams retail and distribution sector has been liberalized, there are still restrictions on the distribution of certain
products listed by the MOIT in accordance with Vietnams WTO commitments. Cigarettes and cigars, books, newspapers and
magazines, video records on whatever medium, precious metals and stones, pharmaceutical products and drugs (excluding non-
pharmaceutical nutritional supplements in tablet or capsule or powdered form), explosives, processed oil and crude oil, rice, cane
and beet sugar have been excluded from Vietnams WTO commitments and are thus subject to Vietnams domestic law.
As to FIEs in particular, MOIT Circular No. 34/2013/TT-BCT prohibits the implementation of distribution rights over the following
goods:
Rice
Cane or beet sugar
Cigarettes and cigars
Crude oil and processed oil
Medicines prescribed under the 2005 Law on Pharmacy
Explosives
Books, newspapers and magazines
Precious metals and precious stones
Items recorded in any material form, including software products, hardware and electronics

Commercial
TRANSACTIONS
E-commerce
Are there any laws regulating e-commerce in Vietnam?
Yes. The 2005 E-Transactions Law and the 2006 Information Technology Law provide specific regulations governing the formation
and performance of contracts by electronic means. These laws, however, must be interpreted in line with the comprehensive legal
framework on commercial transactions in general as embodied in the 2005 Civil Code and 2005 Commercial Law. The MOIT and the
MOIC are responsible for regulating electronic transaction activities in Vietnam.
Do e-documents in commercial transactions have legal validity?

Yes. Under the 2005 E-Transactions Law, where the law requires a document to be in writing, a data message (i.e. information in the
form of electronic data interchange, electronic documents, e-mails, telegrams, telegraphs, facsimiles and other similar form) shall be
deemed to meet such requirement and to have the same validity as the original document if:
T here is reliable assurance of the integrity of the information contained in the e-document from the time that the
information is first generated in the form of an e-document.
Information contained in the e-document is accessible and usable in its complete form when necessary.
Where the law requires a document to be signed, such requirement with respect to a data message shall be deemed to be satisfied if:
T he method of creating the e-signature may identify the signatory and indicate his approval of the contents of the data
message.
T he method of creating the e-signature is sufficiently reliable and appropriate to the purpose for which the data
message was created and sent.
Are there any documents not covered by the E-transactions Law?

Yes. The E-transactions Law do not apply to the issuance of certificates of land use right or ownership of housing and other real
estate, documents on inheritance, certificates of marriage, decisions on divorce, certificates of birth, certificates of death, bills of
exchanges and other valuable papers.
What are the types of e-commerce activities regulated by law?

The following e-commerce activities are regulated in Vietnam:
E -commerce websites for sales activities (i.e., websites where operators deal directly with customers and are
established by traders, organizations or individuals for the sale or promotion of products or services offered by them
directly)
E -commerce services websites (i.e., websites developed by traders or organizations to provide an environment for
commercial activities carried out by traders, organizations or individuals through the following platforms:
E-commerce trading floors
Online auction websites
Online promotion websites
Other types of websites stipulated by MOIT
Are there any procedural obligations for e-traders?

Yes. E-traders directly selling goods or services through online shopping and online sales websites are required to notify MOIT through
its online notification tool on the MOITs Management Portal for E-commerce Activities. Meanwhile, e-traders operating in trade

promotion or enterprise support and having e-commerce websites providing e-commerce exchange services, online promotion
services or online auction services must register with and be certified by the MOIT.
E-traders operating websites in the field of finance, bank, credit insurance or do business or trade in cash, gold, foreign exchange and
other payment facilities are subject to separate requirements from SBV and/or MOF.
Are foreign organizations and individuals subject to Vietnams e-commerce regulations?

Foreign organizations and individuals are only subject to Vietnams e-commerce regulations if they reside in Vietnam or operate
through a FIE or other form of investment in Vietnam (such as branches or representative offices) or where the foreign national
operates a website under a Vietnamese domain (i.e., under the .vn domain).
Product Liability
Are there any laws regulating product liability and product safety?
Yes. Product liability and product safety are generally provided for within the general framework of the 2005 Civil Code and 2005
Commercial Law, and specifically addressed in the 2010 Law on Consumer Protection in relation with the 2007 Law on Product and
Goods Quality.
Do the laws impose any requirements for standard contracts and general trading
conditions between traders and consumers?
Yes. Under the 2010 Law on Consumer Protection, standard contracts used by traders in an unspecified number of transactions with
consumers must meet the following general requirements:
In Vietnamese language
Contents must be clear and simple to understand
Font size must be at least 12 pt
Print must be readable (i.e., paper and ink must ensure sufficient contrast)
onsumers must be allowed time to review standard form contracts while general trading conditions must be publicly
C
announced and displayed at the business location of the seller or service provider
Are standard contracts and general trading conditions required to be registered with
the authorities?
Yes, but only for contracts for goods and services included on the list of essential goods and services issued by the Prime Minister,
such as:
Utilities contracts for personal consumption (e.g., electricity, water)
Pay television (i.e., cable and other pay TV services)
Telephone subscriptions other than prepaid services
Internet connection contracts
Air and rail passenger transport contracts
Purchase and sale of apartments, day-to-day services provided by apartment management bodies
These contracts or general conditions may only be applied to consumers after completion of registration.

Commercial
TRANSACTIONS
Interestingly, banking services, hospital/ medical treatment contracts, other personal transport services (e.g., bus transport) and
postal/delivery contracts are not included in the list of essential goods and services whose standard form contracts and general
trading conditions are subject to mandatory registration.
Registration is made with the MOIT for contracts or general conditions that are applied nationwide or at least in 2 provinces or
municipalities, and with the local Department of Industry and Trade (DOIT) for contracts or general conditions applied only in a
particular province or municipality.
May the authorities review standard contracts and general trading conditions?
Yes, but only in respect of contracts for goods and services included on the list of essential goods and services issued by the Prime
Minister during their registration with MOIT or DOIT, as the case may be. The scope of review of the competent State agency is
quite broad in that it can request traders to amend or delete any provisions that are unclear or in conflict with the 2010 Law on
Consumer Protection. There is, however, no clear basis to define unclear provisions or conflicting provisions, which means that
the authorities will have substantial discretion in requiring amendments to standard contracts and general trading conditions.
Are there any prohibited clauses in standard contracts and general trading conditions?
Yes. The following are some examples of clauses prohibited under the 2010 Law on Consumer Protection:
Clauses excluding statutory liability of the trader
Clauses restricting or excluding consumers right to complaint and take lawsuits
lauses allowing traders to unilaterally change the conditions of the contract with the consumer, to unilaterally
C
determine the consumers failure to perform obligations under the contract, or to unilaterally determine or change
the price upon delivery
Clauses providing that the consumer must discharge its obligation before the trader discharges its own obligations
Clauses allowing traders to transfer rights and obligations to third parties without the consumers consent
What are considered as defective products?

The concept of defective products is quite broad under Vietnamese law. Under the 2010 Law on Consumer Protection, a product
is defective if it is not safe for consumers and can cause death, personal injury or property damage, even if the product has been
manufactured in accordance with current technical standards or norms and even if the manufacturer is not aware of the defects at
the time the product is sold. Thus, even if the product is of good quality, it may still be considered as defective under the 2010 Law
on Consumer Protection in the following cases:
If the defect arises from engineering design of mass-produced products
If the defect arises from the production, processing, transportation and storage of singly manufactured products
I f a product has the potential to deteriorate during use, but no adequate instructions or warning is provided to
consumers
Who is liable for defective products?

Under the 2010 Law on Consumer Protection, traders are liable to compensate for any damage caused by defective products. In this
context, traders are organizations that manufacture or import products, or hold themselves out to be manufacturers or importers
by affixing their own name or trademark to the products (i.e., the brand owners). Sellers may be liable if they fail to identify the
manufacturers, importers, or brand owners of the defective products. These parties must arrange among themselves as to who will
ultimately be liable for defective products in their business contracts.

Are there any defenses that can be invoked by traders for defective products?
Yes. Under the 2010 Law on Consumer Protection, traders can be excused from liability if they prove that the defects could not have
been found by scientific or technical standards at the time the traders supplied the products to consumers. This defense is narrow
and in practice, traders may be unable or unwilling to invoke the defense.
In addition, the 2007 Law on Product and Goods Quality provides that a traders liability for defects may be limited or eliminated in
the following other circumstances relating to separating liability among traders (e.g., manufacturer may be free of liability when the
damage is the fault of the seller and seller in turn may be free of liability when the damage is the consumers fault):
If retailers sell and consumers use products whose shelf-life has expired
I f consumers use products whose shelf-life has expired, or of the damage is caused as a result of the purchasers or
consumers own fault
If the statute of limitations for a complaint or initiation of a lawsuit has expired
I f a notice of a recall of the defective products has already been issued before the products cause damage or if a
notice that the products are defective has been properly issued but the purchaser or consumer still purchase and the
products
If the products are defective because they comply with regulations of competent State agencies
How may conflicts between traders and consumers resolved?

Conflicts between consumers and traders can be resolved through negotiation, mediation, arbitration, or in court. However, a
dispute that relates to damage to the State, the interests of a number of consumers, or the public interest is not subject to negotiation
or mediation.
How are damages assessed in case of defective products?

If consumers and traders have entered into a contract, damages will be assessed according to their contract and applicable law.
In tort claims, damages are calculated based on actual loss. Vietnam law, however, does not apply punitive damages.
Data Protection
Are there any data protection laws in Vietnam?
Yes, although there is currently no unified legal document on data protection in Vietnam. Data protection is governed in general by the
2005 Civil Code, the 2015 Criminal Code, and in particular by the 2006 Law on Information Technology, 2005 Law on E-transactions,
2010 Law on Consumer Protection together with their respective implementing instruments and the recently adopted 2015 Law on
Online Information Safety.
What types of information are covered under data protection regulations?

Personal data are the primary object of data protection under the applicable provisions of the relevant legal instruments. However,
there is no fixed and definitive scope of what constitutes personal data under Vietnamese law. A common reference could be found
in the applicable regulations defines personal data as information which is adequate to identify [or relating to the identification
of] a particular person, including but not limited to at least one of the following details: full name, date of birth, profession, title,
contact address, e-mail address, telephone number, ID/passport number. To some extent, personal secrets being medical records,
tax payment dossiers, social insurance card numbers or credit card numbers, etc. should also be considered personal data. Letters,
telephones, telegraphs, electronic database and other communication means of an individual are also protected by law.

Commercial
TRANSACTIONS
Information about organizations and agencies are also protected under the 2010 Law on Consumer Protection and 2005 Law on
E-transactions but without a defined scope of what information are covered by mandatory data protection.
How are data protected under Vietnamese law?

Article 46.2 of the 2005 Law on E-transactions prohibits agencies, organizations and individuals from using, providing or disclosing
information on private and personal affairs or information of other agencies, organizations and/or individuals which is accessible by
them or under their control in e-transactions without the latters consent, unless otherwise provided for by law.
In addition, Article 21 of the 2006 Law on Information Technology provides that organizations and individuals collecting, processing
and using personal information of another person shall:
otify such person of the form, scope, place and purpose of the collection, processing and use of his personal
N
information
se the collected personal information for proper purposes and store such information only for a certain period as
U
stipulated by law or as agreed upon by the 2 parties
T ake necessary managerial or technical measures to ensure that the personal information shall not be lost, stolen,
disclosed, modified or destroyed
I mmediately take necessary measures upon receipt of a request for re-examination correction or cancellation and not
supply or use relevant personal information until such information is corrected
Similar obligations are also stipulated under the 2010 Law on Consumer Protection requiring trading organizations or individuals who
gather, use and transfer information of the consumers to:
rovide clear and public notification to the consumers on the purpose of gathering and use of information of consumers
P
prior to the actual performance of such acts
Use the information in accordance with the purpose notified to and consented by the relevant consumers
E nsure the safety, accuracy and completeness of the personal data when gathering, using or transferring information
of the consumers
E xecute on their own account or provide the consumers with the measures to update and amend information of the
consumers upon being aware of such informations inaccuracy
Transfer information of consumers to third parties only where so agreed by such consumers
Furthermore, Decree No. 52/2013/ND-CP, requires e-commerce traders, organizations or individuals collecting personal information
from consumers to formulate and publish a policy on protection of personal information. Use of the personal information collected
in e-commerce transactions must be consistent with the purpose for collecting the information as stated in the policy on protection
of personal information of that trader, organization or individual.
Are there any circumstances explicitly stated by the law where collection and use of
personal data without the consent of such data subject are permitted?
Yes. For instance, the gathering of personal information that has already been publicized on e-commerce websites or the gathering
of personal information to sign or perform contracts or to calculate the price of the product or service on network environment is
exempted from the requirement of obtaining prior consent of the consumers. In addition, enterprises providing online services can
provide personal information of their users.

What are the criminal liabilities for violation of data protection under the applicable
regulations?
The 2015 Criminal Code, in force since 01 July 2015, penalizes the following acts in relation to data integrity and secrecy:
I nfringement upon other persons secrecy or safety of letters, telephone, telegraph and/or other private information
communication (Article 159)
Illegal provision or use of information on computer networks or telecommunication networks (Article 288)
Offenders for any of the above crimes shall, depending on the nature and severity of the crime, be subject to warning, administrative
fine, non-custodial reform or imprisonment.

Dispute
RESOLUTION
Litigation
What are the major law courts in Vietnam?
Under the 2013 Constitution, the 2014 Law on Organization of the Peoples Courts and the 2015 Civil Procedure Code (with effect
as from 1 July 2016), there are 4 main Peoples Courts in Vietnam excluding military tribunals, other tribunals provided by law
and special tribunals set up by the National Assembly under special circumstances, namely the Supreme Peoples Court, Superior
Peoples Court, Provincial Peoples Court and District Peoples Court. Except for the District Peoples Court, all other Peoples Courts
have various specialized chambers, including a criminal court, civil court, economic court, labor court, administrative court and court
for minors and family issues.
How is jurisdiction divided in the Vietnamese court system?

Vietnam has a two-tier court system, namely courts of first instance and courts of appeal. However, effective first-instance and
appellate judgments may, in certain cases, be additionally subject to the special review/supervisory procedure. The respective
jurisdiction of each Peoples Court is outlined as follows (see Chart 34 on the opposite page)

Chart 34 - Court System in Vietnam
Supervisory and/or review trial of cases (i) where the appellate

judgment or review decision of the Superior Peoples Court has
SUPREME PEOPLES COURT already taken effect but has been protested against or (iii) (in
Highest judicial body Review court exceptional cases) where other judgments have already taken
effect but have been protested against
REVIEW/ SUPERVISORY
trial of effective appel-
late judgment or review Supervisory and/or review trial of cases (i) where the first-
decision instance judgment of the District Peoples Court has already
taken legal effect (i.e., period to appeal to the Provincial
Peoples Court has lapsed) but has been protested against or (ii)
SUPERIOR PEOPLES COURT where the first-instance or appellate judgment of the Provincial
Review court Appellate court Peoples Court has already taken legal effect but has been
protested against
Appellate trial of cases where the first-instance decision/ruling
of the Provincial Peoples Court has not yet taken legal effect
but has been appealed
REVIEW/ SUPERVISORY APPEAL of first-instance
trial of effective first-in- judgment
stance and appellate
judgment
Appellate trial of cases where the first-instance decision/ruling
of the District Peoples Court has not yet taken legal effect but
has been appealed
First-instance trial of cases involving the following:
Where a party to the dispute is living abroad or the disputed
PROVINCIAL PEOPLES COURT property is located abroad
Appellate court First-instance court Requests for recognition and enforcement in Vietnam of
foreign court judgments and foreign arbitral awards for
commercial disputes
REVIEW /SUPERVISORY APPEAL of first-instance Commercial disputes arising from cargo or passenger
trial of effective first-in- judgment transportation by air or sea, sale of shares and other valuable
papers, investment, financing, banking, insurance and resource
stance judgment
exploration and exploitation
Collective labor disputes which have been resolved by labor
arbitration boards of provinces and centrally-run cities
First-instance trial of civil, commercial, labor and criminal cases

DISTRICT PEOPLES COURT within its competence except when a Provincial Peoples Court
First-instance court deems it necessary to exert jurisdiction over a particular matter

Dispute
RESOLUTION
To elaborate, cases in Vietnam generally go to both first instance and appeal as parties are entitled to appeal against a first-instance
judgment within 15 days from the date of judgment. First-instance judgments are not enforceable until the 15-day period for appeal
has expired and there has been no request for appeal by either party, or the case has been disposed of by the appellate court, in
which case, the appellate judgment is immediately enforceable.
Within 1 year from the effective date of a judgment (i.e., after the lapse of the 15-day period for appeal and no appeal is made, or on
the date of the appellate judgment, as the case may be), either of the parties involved has the right to lodge a request to the Chief
Judge of a competent court or the Chief Prosecutor of a competent Procuracy for the latters consideration and decision on initiation
of a supervisory procedure on the grounds of legal errors. The competent Chief Judge or Chief Prosecutor will then have the right
to decide on a supervisory trial of the case within 3 years following the date of effect of the judgment, subject to an extension of 2
more years in certain circumstances.
Meanwhile, upon discovery of certain types of new facts which might reverse an effective judgment on a case, either of the parties
involved and/or other agencies, organizations and individuals have the right to notify the Chief Judge of a competent court or the
Chief Prosecutor of a competent Procuracy of such new facts in writing, which may then be grounds for the initiation of a review of
such case. The Chief Judge or the Chief Prosecutor will decide whether to initiate review proceedings on such case within 1 year
following the date when the notifying party became aware of the said new facts.
In circumstances where a review or supervisory procedure applies to an effective judgment, accompanying orders to suspend the
enforcement of such judgment will usually also be made.
Is there any particular formality that a civil petitioner or claimant is required to comply
with before initiating court proceedings?
In general, no, however for the following types of disputes, claimants are required to comply with a particular formality before
initiating civil court proceedings:
S ome types of labor disputes: conciliation formality with involvement of a labor conciliator and/or the relevant
chairperson of the district peoples committee
Some types of disputes involving land use rights: conciliation by the local peoples committee
Non-compliance with such particular formalities, as required by law, will lead to a refusal by the Vietnamese courts to accept
commencement of court proceedings.
What is the process for first-instance trials?

The main stages in civil proceedings before a first instance court are as follows (see Chart 35 on the opposite page)

Chart 35 - Main Stages of Civil Proceedings before a First Instance Court
Preparation for the first

Submission of Temporary instance court, including
Payment of Conciliation
statement of acceptance by lodging of defendants Court decision
advanced (where Trial
claims to the the court for opinion, counterclaim/ for trial
court fee applicable)
court handling evidence; confrontation
until decision for trial
What is the process for appellate trials?

The following are the main stages in civil proceedings before an appellate court:
Chart 36 - Main Stages of Civil Proceedings before an Appellate Court
Conciliation Preparation
Submission of Court decision
(where for appeal Appeal trial
Appeal for trial
applicable) court
What may be the subject of an administrative case?

Under the 2015 Law on Administrative Procedure, an individual, agency or organization may institute an administrative lawsuit over
the following:
n administrative decision or act except those pertaining to State secrets in the fields of national defense, security and
A
foreign affairs as classified by the Government and those of internal nature of agencies and organizations
The list of voters to elect deputies to the National Assembly or to the Peoples Councils
disciplinary decision on dismissal of a civil servant holding the post of general director of a general department or
A
equivalent or lower posts
A decision on settlement of complaints about decisions on handling of competition cases action
What are commonly instituted administrative lawsuits in Vietnam?

Administrative lawsuits are more commonly instituted for tax disputes In Vietnam.

Dispute
RESOLUTION
How does the court conduct a hearing in civil cases?
Although Vietnam traditionally and generally adopts the inquisitorial system where judges are actively involved in investigating
the facts of a case, the 2015 Civil Procedure Code strengthens the guarantee for active participation of the involved parties by
providing for such engagement as one of its fundamental principles. First-instance courts shall directly determine the facts of a case
based on pleadings of the involved parties of such case as well as statements of other related entities at the hearing in addition to
consideration and examination of the collected and/or submitted evidence.
At the first-instance court, the panel shall consist of 1 judge and 2 peoples jurors, except for some special cases where 2 judges and
3 peoples jurors shall form the panel. At the appellate court, the case shall be heard by a panel consisting of 3 judges. Where brief
procedure applies, hearing at first-instance and appellate court shall be respectively conducted by 1 judge only, who is not the same
judge for both first-instance and appellate hearing for such case.
Under the 2015 Civil Procedure Code, the period from the courts acceptance of jurisdiction to its decision on trial shall not in any
case exceed 5 months. Subsequently, the actual hearing shall be conducted within 2 months following the date of decision on trial.
In practice, the proceedings may last more or less depending on the case.
What happens if the defendant does not defend the claim?

If the defendant fails to defend the claim (subject to evidence of notification to defendant), the court shall decide the case based on
claims with information and evidence lodged by the claimant and collected and investigated by the court itself. Normally, in such a
case, the judgment may be entered against the defendant.
Can the defendant dispute the courts jurisdiction?

Yes. Within 15 days as from the date of service of notification on the courts acceptance of jurisdiction over the case, a defendant can
dispute the courts jurisdiction by lodging a complaint or appeal with supporting information and evidence (if any) to the court under
the general framework for complaints in civil proceedings.
Do the courts in Vietnam have any particular case management power?

Yes, the courts have powers to manage civil proceedings cases by themselves, including the powers, among others, to:
Decide on filing a request for the application, change or cancellation of preliminary injunctive relief measures
Summon the parties to participate in conciliation meetings
Request parties, individuals, bodies and organizations to provide evidence
Take necessary measures to preserve evidence
Collect evidence by itself
Take testimonies of concerned parties and witnesses
Take cross-examination
What interim applications can the parties make?

The concerned parties can make their own request or appeal the applications of the courts exercise of case management powers,
including:
To request the court to apply preliminary injunctive relief measures
To amend the statement of claims

Do the courts in Vietnam have any powers to discontinue or stay the proceedings?
Yes. Vietnamese courts have the power to discontinue or stay proceedings with respect to a part or the entirety of the initial claim
in the following circumstances:
The claimant or respondent is a deceased individual with no beneficiary to his or her rights and obligations
body or organization has been dissolved or declared bankrupt with no individuals, bodies or organizations to take
A
over its rights and obligations in the proceedings
The petitioner withdraws his or her application for initiation of a legal action
The claimant who has been properly summoned fails to appear twice
The court has issued a decision to commence bankruptcy procedure against an enterprise or cooperative which is
a party to the case, while the resolution of the case is related to the obligations or property of such enterprise or
cooperative
The claimant fails to pay an advance for asset valuation or for other litigation costs and expenses
ny of the involved parties requests for application of statute of limitation (as to the filing of a petition) prior to the
A
courts issuance of first-instance judgment and such statute of limitation has expired
T he court finds that the case falls into the circumstances where at first the petition should have been rejected but
instead has been accepted
Other circumstances as prescribed by law
What types of judgments and orders are the Vietnamese civil courts empowered to issue?
Vietnamese civil courts have the power to make different types of judgments, including:
Judgments of first instance courts
Judgments of appellate courts
Judgments of courts of review/ supervision
Vietnamese civil courts also have the power to issue a wide variety of orders (or decisions), including:
Decisions on application of preliminary injunctive relief measures
Decisions on acknowledgment of the conciliation of the concerned parties
Decisions on termination of court proceedings
What powers do Vietnamese courts have to make rulings on damages /costs of the
litigation?
The courts have the power to decide whether a claim for damages and the compensation for such damages are acceptable or not. A
court award on compensation for damages is based on the actual losses suffered by the claimant as supported by justifiable evidence
provided by the claimant or an evaluation conducted by appointed independent valuation firms or experts. Vietnamese courts do
not award punitive damages.
The courts also have the power to decide costs of litigation. In principle, the losing party shall bear all the costs of litigation.

Dispute
RESOLUTION
Arbitration
What are the available forms of arbitration under Vietnamese law?
Vietnamese law allows both ad hoc and institutional arbitration. Whereas the use of an arbitral institution is becoming more
common as an alternative mode of dispute resolution, ad hoc arbitration however remains very rare due to its lack of a formal
presence and relatively restricted enforcement of awards.
There are currently 11 arbitration centers in Vietnam, among which the Vietnam International Arbitration Center at the Vietnam
Chamber of Commerce and Industry appears to be the most preferred arbitral institution for commercial disputes in Vietnam.
What legislation governs international arbitration in Vietnam?

Commercial arbitration in Vietnam both domestic and international is mainly governed by the 2010 Law on Commercial
Arbitration, of which detailed regulations and implementing guidelines are further provided for by the Governments Decree No.
63/2011/ND-CP and by the Supreme Peoples Courts Resolution No. 01/2014/NQ-HDTP.
What types of dispute may be settled by commercial arbitration?

Under the 2010 Law on Commercial Arbitration, resort to arbitration is limited to disputes between parties (i) arising from commercial
activities (i.e., for profit-making purposes); (ii) arising between parties at least one of whom is engaged in commercial activities; or (iii)
that are permitted under Vietnamese law to be resolved by arbitration.
Although the 2010 Law on Commercial Arbitration does not specifically set out types of non-arbitrable disputes, disputes arising
in connection to matters which belong to the exclusive jurisdiction of national courts such as criminal matters, marriage and
matrimonial matters, employment disputes and administrative matters cannot be resolved by arbitration.
For disputes arising between foreign or domestic investors/ FIEs on one side and State authorities on the other side, resort to
Vietnamese arbitration are provided for under the 2014 Law on Investment to the extent that such resort is not contrary to the
relevant investment contracts and/or international treaties to which Vietnam is a party. With respect to disputes arising between a
goods/service supplier and their consumer, the supplier can only initiate arbitration proceedings where it is provided in the general
conditions on supply of goods/services between the parties and the consumer so agrees.
The arbitral tribunal will decide in the first instance whether a matter is arbitrable when they consider their jurisdiction. The court
can review this matter when there is an appeal to the court against the decision of an arbitral tribunal with respect to the validity of
the arbitration agreement and jurisdiction of the arbitral tribunal or when a party wants to set aside an arbitral award.
What has been the approach of the Vietnamese courts with respect to the enforcement
of arbitration agreements?
Vietnamese courts must refer parties to arbitration upon the prima facie existence of an arbitration agreement, and they can
only refuse to accept jurisdiction if the arbitration agreement is void pursuant to the provisions of the 2010 Law on Commercial
Arbitration or where the arbitration agreement is valid but is incapable of being enforced, the circumstances for which are provided
in the Supreme Peoples Courts Resolution No. 01/2014/NQ-HDTP.
Are there any required qualifications to be an arbitrator in Vietnam?

Yes. The 2010 Law on Commercial Arbitration requires that an arbitrator possess the following qualifications:
Has full capacity for civil acts under the 2005 Civil Code
ossesses a university qualification and at least 5 years of working experience in the discipline of his/her study , unless
P
in special cases, he or she is an experts with highly specialized qualifications and considerable practical experience

I n special cases, is an expert with highly specialized qualifications and considerable practical experience even if he/she
does not satisfy the requirements on university qualification and relevant experience
I s not prohibited from acting as an arbitrator by virtue of being an incumbent judge, prosecutor, investigator,
enforcement officer or civil servant of the peoples courts, peoples prosecution, investigative agencies or judgment
enforcement agencies; and of being a person under a criminal charge or prosecution or is serving a criminal sentence
or who has fully served the criminal sentence but whose criminal record has not yet been cleared.
Of note, since the 2010 Law on Commercial Arbitration does not impose any restriction on the nationality of arbitrators, foreign
nationals meeting the above requirements could thus serve as arbitrators.
Are there provisions governing the challenge or removal of arbitrators?

Yes. Pursuant to the 2010 Law on Commercial Arbitration, an arbitrator to a particular dispute shall be replaced to ensure the
impartiality and objectiveness of the arbitration if:
The arbitrator is a relative or representative of a party
The arbitrator has interest related to the dispute
There are clear grounds proving that the arbitrator is not impartial or objective
T he arbitrator was a mediator, representative or lawyer for either party prior to the dispute being brought to
arbitration for resolution, unless otherwise provided for by the parties in written consent.
Can a court intervene in the selection of arbitrators and, if so, how?

As a general rule, courts cannot intervene in the selection of arbitrators except only in case of dispute resolution by an ad hoc
arbitrational tribunal. In particular, unless otherwise agreed by the parties, a competent court could participate in the selection of
ad hoc arbitrators in any of the following circumstances:
I n the appointment of an arbitrator for the respondent, upon request of the claimant, if the respondent has failed
to notify the claimant of the name of its selected arbitrator within 30 days from the date on which the respondent
received the statement of claim and there is no further agreement between the parties on appointment of an
arbitrator
I n the appointment of an arbitrator for the respondents in a dispute involving multiple respondents, upon request
of the claimant, if the respondents have not notified the claimant of the name of their selected arbitrator within 30
days from the date on which the respondents received the statement of claim and accompanying materials from the
claimant and there is no further agreement between the parties on appointment of an arbitrator
I n the appointment of the chairman of the arbitral tribunal, upon request of the parties, if the selected arbitrators
have failed to elect a third arbitrator to act as chairman of the arbitral tribunal within 15 days from the date of their
selection by the parties or appointment by the court
I n the appointment of a sole arbitrator, upon request of one or all the parties, if the parties have not agreed on the
selection of a sole arbitrator within 30 days from the date on which the respondent received the statement of claim
and there is no agreement between the parties to request an arbitration center to appoint such sole arbitrator
Within 7 days from the date of receipt of a request from a party or the parties concerning the appointment of an arbitrator as
mentioned above, the chief of the competent court must assign a judge to appoint an arbitrator and notify the parties thereof.

Dispute
RESOLUTION
May an arbitral tribunal rule on a partys challenge to the tribunals own jurisdiction?
Under what circumstances can a court address issues of jurisdiction of an arbitral
tribunal?
Yes, an arbitral tribunal may rule on a partys challenge to the tribunals own jurisdiction. As a general matter, the principle of
competence-competence is recognized and applied by the 2010 Law on Commercial Arbitration. Accordingly, the arbitration tribunal
must, prior to dealing with the merits of a dispute, consider whether the arbitration agreement is valid, whether the arbitration
agreement is capable of being performed, and whether the tribunal has jurisdiction. If it is discovered during the dispute resolution
process that the arbitration tribunal has exceed its jurisdiction, any of the parties may lodge a complaint with the tribunal, and the
tribunal shall then be responsible to hear such issue and make a decision of it.
A Vietnamese court could address issues of jurisdiction of an arbitral tribunal in general (i) when deciding the validity of an arbitration
agreement or (ii) when examining the decision of the arbitral tribunal on their jurisdiction over a dispute upon request of any of or
all the parties to that dispute.
Enforcement
What legislation governs enforcement of judgments and arbitral awards in Vietnam?
The enforcement of domestic judgments and arbitral awards is generally governed by the 2008 Law on Enforcement of Civil
Judgments (as amended in 2014) and the 2010 Law on Commercial Arbitration.
Meanwhile the enforcement of foreign judgments and arbitral awards is covered under the 2008 Law on Enforcement of Civil
Judgments (as amended in 2014), Part Seventh (VII) of the 2015 Civil Procedure Code which incorporates into Vietnamese law certain
provisions of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and the Supreme
Peoples Courts Practice Note No. 246/TANDTC-KT regulating the recognition and enforcement of foreign arbitral awards in Vietnam.
How can a domestic judgment or arbitral award be enforced in Vietnam?

Under Vietnamese law, an effective domestic judgment or arbitral award is normally enforced by an initial amicable and voluntary
arrangement between the concerned parties. In the failure of reaching an amicable and voluntary arrangement for execution, a
domestic judgment or arbitral award can be brought by the winning party to the Civil Judgment Enforcement Agency (under the
Ministry of Justice) or to private bailiffs (in case of enforcement of a domestic judgment). Generally, enforcement in Vietnam is time-
consuming due to the overload of cases that need to be enforced.
Of note, awards granted by an ad hoc arbitral tribunal must first be registered with the competent court prior to its enforcement by
the Civil Judgment Enforcement Agency.
Can a foreign arbitral award be enforced in Vietnam?

Yes, subject to the recognition and enforcement of such foreign arbitral award by the competent Vietnamese court.
Since Vietnam is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, an award
rendered by another member country is enforceable in Vietnam while an award rendered from a country which is not a party to the
convention may be enforced in Vietnam on a reciprocal basis.
In particular, a foreign arbitral award may not be recognized and could thus not be enforced in Vietnam based only on any of the
following legal grounds under the 2015 Code of Civil Procedure:
The parties to the arbitration agreement lacked authority to enter into such agreement under the law applicable to
each party
The arbitration agreement is invalid under the law chosen by the parties or the law where the award was issued
The losing party was not timely and properly notified of the appointment of arbitrators and of procedures for resolution

of the dispute by foreign arbitration or could not perform its procedural rights during the course of arbitration due to
legitimate reasons
The foreign arbitrators have exceeded their jurisdiction in granting the award
T he composition of the foreign arbitral tribunal or the procedure for dispute resolution referred to by such tribunal
was not consistent with the arbitration agreement or the law where the award was issued
The award is not yet legally binding on the parties
T he foreign arbitral award has been set aside or suspended from enforcement by a competent authority of the State
where the award was issued or of the state of the applicable law
The dispute at issue is not permitted to be referred to arbitration for resolution under Vietnamese law
The recognition and enforcement of the award is contrary to the fundamental principles of Vietnamese law
Can a foreign judgment be enforced in Vietnam?

Yes, but in very limited instances since Vietnam only recognizes and correspondingly enforces foreign judgments if the same is issued
in one of the few countries which has a judicial agreement with Vietnam (including France), or otherwise only on a reciprocal basis.
The 2015 Civil Procedure Code provides grounds for both a Vietnamese courts refusal to recognize a foreign judgment as well as for
a losing partys filing of a request for non-recognition of a foreign judgment.

GLOSSARY
Glossary of main acronyms and abbreviations
AEC ASEAN Economic Community
AFAS ASEAN Framework Agreement on Services
AFTA ASEAN Free Trade Area
ASEAN Association of Southeast Asian Nations
ATIGA ASEAN Trade in Goods Agreement
BCC Business cooperation contract
BO Build-operate
BOM Board of management
BOT Build-operate-transfer
BTO Build-transfer-operate
CECA Comprehensive Economic Cooperation Agreement
CEPA Comprehensive Economic Partnership Agreement
CEPT Common Effective Preferential Tariff Scheme
CIT Corporate income tax
CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora
DONRE Department of Natural Resources and Environment
DOIT Department of Industry and Trade
DOLISA Department of Labour, Invalids and Social Affairs
DPI Department of Planning and Investment
DTA Double Taxation Avoidance Treaty
ECGTU Executive Committee of the Grassroots Trade Union
EEU Eurasia Economic Union
EPF Environmental protection fee
EPT Environmental protection tax
EPZ Export processing zone
ERC Enterprise registration certificate
EU European Union
EZ Economic zone
FIE Foreign invested enterprise
FCWT Foreign contractor withholding tax
FTA Free trade agreement
GI Geographical indication
GMS General meeting of shareholders
GSA General State Auditor
HCFC Hydrochlorofluorocarbon
HZ High technology zone
IRC Investment registration certificate
IZ Industrial zone

JSC Joint stock company
JV Joint venture
LLC Limited liability company
LUR Land use right
MARD Ministry of Agriculture and Rural Development
MFN Most favored nation
MLLC Multi-member limited liability company
MOCST Ministry of Culture, Sports and Tourism
MOF Ministry of Finance
MOH Ministry of Health
MOIC Ministry of Information and Communications
MOIT Ministry of Industry and Trade
MOLISA Ministry of Labour, Invalids and Social Affairs
MOT Ministry of Transport
NA National Assembly
NASC National Assembly Standing Committee
NOIP National Office of Intellectual Property
NRAST National Registration Agency for Secured Transactions
ODA Official development aid
PE Permanent establishment
PC Peoples Committee
PIT Personal income tax
PPP Public-private partnership
SBV State Bank of Vietnam
SLLC Single-member limited liability company
SME Small to medium enterprise
SPCC Supreme Peoples Court Chief
SPCJC Supreme Peoples Courts Judicial Council
SPPC Supreme Peoples Procuracy Chief
SSC State Securities Commission
TPP Trans-Pacific Partnership
VAS Vietnamese Accounting System
VAT Value added tax
VCAD Vietnam Competition Administration Department
VCC Vietnam Competition Council
WFOE Wholly foreign-owned enterprise
WIPO World Intellectual Property Organization
WTO World Trade Organization

Tables and
CHARTS
1. Hierarchy of Legal Documents in Vietnam
2. Key Points of Some of Vietnams Multilateral FTAs
3. FTAs entered into or under negotiation by Vietnam
4. Typical Steps of Setting Up a New Entity in Vietnam
5. Mandatory Environmental Planning and Assessment
6. Types of Investment Projects Subject to Investment Policy Approval
7. Levels of Investment Licensing Authorities
8. Key Differences between a LLC and a JSC
9. Rules for Capital Contribution in Vietnamese Enterprises
10. Capital Lock-up Periods in Vietnamese Enterprises
11. Quorum and Majority Requirements of Decision-Making Bodies of Vietnamese Enterprises
12. Quorum and Majority Requirements of a JSC Board of Management
13. Management Structure of Common Forms of Vietnamese Enterprises
14. Mandatory Reporting Requirements of Vietnamese Enterprises
15. Typical Steps of Dissolution Proceedings in Vietnam
16. Typical Steps of Bankruptcy Proceedings in Vietnam
17. Security Transaction Formalities
18. Insurance Contributions and Other Labor-Related Fees
19. PIT Rates for Residents Employment Income
20. PIT Rates for Residents Non-employment Income
21. PIT Rates for Non-Residents
22. Other Taxes Applicable to Resident Corporations
23. Foreign Contractor Withholding Tax Rates for Entities
24. Foreign Contractor Withholding Tax Rates for Individuals
25. VAT Rates
26. List of Goods Banned from or subject to Conditions for Export
27. Categories of Import Duty Rates
28. List of Goods Banned from or Conditional for Import into Vietnam
29. List of Goods Not Permitted for Implementation of FIE Export or Import Rights
30. Prohibited Conduct Under Vietnamese Competition Law
31. Required Actions for Economic Concentrations
32. Procedure in Case of Violations of the Vietnamese Competition Law
33. Protection of Intellectual Property Rights
34. Court System in Vietnam
35. Main Stages of Civil Proceedings before a First Instance Court
36. Main Stages of Civil Proceedings before an Appellate Court

Member of
HO CHI MINH BRANCH HANOI BRANCH

Suite 1108, Sunwah Tower, 115 Nguyen Hue, Suite 2001, The Press Club, 12 Ly Dao Thanh,
District 1, Ho Chi Minh City VIETNAM Hoan Kiem District, Hanoi VIETNAM
(+848) 3821 9525 (+844) 3824 4301
(+848) 3821 9520 (+844) 3824 0899
Indochina Legal is a multi-cultural Vietnam based law firm Indochina Legal acts as a correspondent firm for a number
providing client advocacy of international standards in of international and regional law firms and is a member of
diversified transactional and litigation work. Founded in 2007, Legalink, an international network of independent law firms.
the firm integrates legal practice of over 15 years in Vietnam.
www.indochinalegal.com Indochina Legal

Legal Guide To Doing Business in Vietnam 2016

Cargado por

Información del documento

Título original

Derechos de autor

Formatos disponibles

Compartir este documento

Compartir o incrustar documentos

Opciones para compartir

¿Le pareció útil este documento?

¿Este contenido es inapropiado?

Copyright:

Formatos disponibles

Legal Guide To Doing Business in Vietnam 2016

Cargado por

Copyright:

Formatos disponibles

2016

Nguyen Quoc Tuan

Le Thi Quynh Thu

This Legal Guide is current as at January 2016.

chapter 2 FREE TRADE AGREEMENTS 06 - 09

chapter 3 FOREIGN INVESTMENT AND LICENSING 10 - 19

chapter 4 BUSINESS VEHICLES 20 - 31

chapter 5 SUSPENSION, DISOLUTION & BANKRUPTCY 32 - 39

chapter 6 FOREIGN CURRENCY EXCHANGE AND CONTROL 40 - 41

chapter 7 LAND AND REAL ESTATE 42 - 43

chapter 8 LENDING AND SECURITY 44 - 47

chapter 9 LABOR AND SOCIAL SECURITY 48 - 53

chapter 10 PERSONAL AND CORPORATION TAX 54 - 65

chapter 11 INTERNATIONAL TRADE AND CUSTOMS 66 - 71

chapter 12 COMPETITION AND ECONOMIC CONCENTRATIONS 72 - 75

chapter 13 INTELLECTUAL PROPERTY 76 - 81

chapter 14 COMMERCIAL TRANSACTIONS 82 - 89

chapter 15 DISPUTE RESOLUTION 90 - 101

2 Indochina Legal 2016

TABLES AND CHARTS 104 - 105

Indochina Legal 2016 3

What is/are the official language(s)?

4 Indochina Legal 2016

CODES and LAWS of the NA RESOLUTIONS of the NA

ORDINANCES of the NASC RESOLUTIONS of the NASC

ORDERS and DECISIONS of the State President

DECREES of the Government

DECISIONS of the Prime Minister

MINISTRY SPCJC SPCJC / SPPC JOINT GSA

Indochina Legal 2016 5

What is the difference between a FTA and a Comprehensive Economic Cooperation

What are the major FTAs/ CECAs/ CEPAs of Vietnam?

TPP negotiation finished, subject to ratification by the respective members

Japan-Vietnam Economic Partnership Agreement in effect

6 Indochina Legal 2016

Table 2 - Key Points of Some of Vietnams Multilateral FTAs

TPP (10 countries : US, Australia, Brunei, Canada, EU-Vietnam FTA

Indochina Legal 2016 7

Chart 3 - FTAs entered

EU Vietnam FTA (EVFTA)

ASEAN FTAs/ RCEP and TPP (Japan, Australia New-Zealand)

ACE and TPP (Malaysia, Singapore and Brunei)

8 Indochina Legal 2016 Indochina Legal 2016 9

Is there any ownership limitation for foreign investors in Vietnam?

10 Indochina Legal 2016

Residency requirement for certain corporate executives

Certain foreign employment restrictions

What are the common forms of investment in Vietnam?

Establishment of a wholly foreign owned economic organization

Establishment of and implementation of investment activities through a joint venture

Investment in the form of capital contribution or purchase of shares or portion of capital

Investment in the form of PPP

Investment in the form of BCC

Establishment of a representative office or a branch

Is an approval or permit required if a foreign individual or company wants to enter a

Is the licensing process different between foreign and local investors?

Indochina Legal 2016 11

INVESTMENT PROJECT CHECK PROPOSED NEW ENTITY INVESTMENT POLICY

INVESTMENT PROJECT ENTERPRISE REGISTRATION POST-LICENSING

Is the application dossier Is the application dossier Have the post-licensing

12 Indochina Legal 2016

Table 5 - Mandatory Environmental Planning and Assessment

Indochina Legal 2016 13