Legal & Regulatory

Sealing the Deal in Vietnam: Company Chops Necessary

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OKIn Vietnam, an official company seal or chop is used for legally authorizing documentation. A seal gives legal validity to any documents or papers issued by companies, organizations or agencies. Any paper or document showing an official act of a company that contains only a signature of its general director is still considered insufficient. Indeed, the use of seal in any organizations or companies in Vietnam is essential.

Under the Government decree No.58/2001/ND-CP and No.31/2009/ND-CP, issued in August 2001 and April 2009, respectively, each company or organization is permitted to use only one seal. In case the company or organization needs another seal with content identical to the first one, such second seal must have a specific mark that is distinctive from the original one. Ink for all seals must be red. The Ministry of Public Security has the right to grant seal engraving permits, uniformly prescribe specimens of all seal types, and manage seal engraving activities.

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Vietnam Regulatory Brief: Investments in Public-Private Partnerships, Agriculture, and Construction Cost Management

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Requirements for Public-Private Partnership (PPP) Investments

Decree No. 15/2015/NĐ-CP came into effect on April 10, 2015 and provides more transparent guidance on the requirements for the selection of investment projects in the form of Public-Private Partnerships (PPP).

To be more specific, projects proposed by ministries, provincial people’s committees and regulatory bodies have to fulfill the following requirements:

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Setting up a Representative Office in Vietnam

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Dec mag illustrationThe representative office (RO) is an effective tool for foreign traders to monitor Vietnamese market trends and engage in cooperation with local companies. However, an RO offers much more limited functions compared to a fully fledged company. It is typically a dependent unit of its parent company, forbidden to generate its own profits and enter directly into contracts unless a legally authorized power of attorney is granted. ROs are strictly forbidden to issue invoices, easing the accounting and tax compliance burden for foreign traders.

An RO is permitted to recruit local and foreign employees directly or through an agency, lease office space – restricted to only one office in a province or city, equip itself with facilities necessary for its operation, obtain its own company seal and open its local bank accounts for operational purposes.

Licensing Procedures

RO establishment shall be granted only if the parent company meets requirements of possessing an authorized business registration certificate in its country of incorporation and being in operation for at least one year since the effective date of incorporation. An application dossier for an RO license must be submitted to the Provincial Department of Industry and Trade. An RO license, valid for five years of maximum with an option for renewal, shall be issued within 15 working days of receipt of valid application documents, excluding any time spent amending or supplementing the application.

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Vietnam Regulatory Brief: Tax, Bidding Guidance and Tariff Lines

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Tax Guidance

Decree No. 12/2015/NĐ-CP dated February 12 has further provided guidance on key changes to the implementation of the new Tax Law, which is outlined below.

Corporate Income Tax (CIT)

In line with existing withholding tax provisions and other relevant regulations, foreign entities shall be additionally subjected to CIT on transferring capital, investment projects and rights.

Expenses to be fully deductible include:

  • Life insurance benefits for employees;
  • Professional or technical training expenses in accordance with regulations;
  • Interest incurred on loans to invest in other companies once charter capital is fully contributed;
  • Cap on the deductibility of advertising and promotion expenses
  • Advertising and promotion expenses

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Vietnam Adds New Forms of Public-Private Partnership

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HANOI – Starting April 10, 2015, the forms of build, own, and operate (BOO); build, transfer, and lease (BTL); build, lease, and transfer (BLT); and, operate and manage (O&M) will be added to the list of acceptable types of Public-Private Partnership (PPP) allowable in Vietnam.

The Vietnamese Government announced the new changes in Decree No. 15/2015/NĐ-CPI, which consolidates the two previous regimes which were laid out in Decree 108 and Decision 71. The new partnership forms will be in addition to the existing forms: build, operate, and transfer (BOT); build, transfer, and operate (BTO); and build-transfer (BT).

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Understanding Vietnam’s Import and Export Regulations

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By Hoang Thu Huyen and Edward Barbour-Lacey

Once an investor has set up their trading company within Vietnam, it is important that their workers gain a strong understanding of the country’s import and export regulations and procedures. Below we lay out the key takeaways that companies must be aware of before starting their trading activities in Vietnam.

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How to Establish a Trading Company in Vietnam

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By Hoang Thu Huyen and Edward Barbour-Lacey, HCMC Office

HCMC – If a business wishes to engage in import and export activities as well as domestic distribution (i.e., retail, wholesale, and franchising trade activities) in Vietnam, the most common method chosen is establishing a trading company.

Generally, a trading company is inexpensive to establish and can be of great assistance to foreign investors by combining both sourcing and quality control activities with purchasing and export facilities, thus providing more control and quicker reaction times compared to sourcing purely while based overseas.

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Vietnam Regulatory Brief: Tax, Customs, and Bankruptcy

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 By Charles Small

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Of the many laws and regulations which came into effect at the beginning of 2015, Vietnam Briefing has selected three with significant relevance to foreign investors in the country or who are interested in entering. Wide-scale tax reforms have been implemented, along with changes to customs and bankruptcy procedures.

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Hanoi Reduces Application Time for Business Registration Certificates

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HANOI – Vietnam’s capital, Hanoi, has implemented a plan to reduce the time needed to obtain a Business Registration Certificate to within three days of receiving the application, instead of the previous 10 days. Although this change will only initially apply to Vietnamese enterprises, the definition of Vietnamese enterprises was changed recently to allow them to have foreign ownership. Hanoi is the first city in the country to implement this program.

The change in registration time is part of the new regulations laid out in the new Law on Enterprises 2014, which will go into full effect on July 1. Hanoi has taken the bold choice of implementing the changes earlier in hopes of boosting its attractiveness to investors.  In July, the rest of the country will have to follow suit and shorten their registration times. 

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State Bank of Vietnam Issues New Regulations for 2015

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HANOI – The State Bank of Vietnam (SBV) has issued a number of regulations for 2015. These new laws, which seek to help the country achieve its economic growth targets in 2015, touch on areas such as foreign currency loans, reducing bad debts, and money laundering.

Through Circular 43/2014/TT-NHNN, the SBV has extended permission for credit institutions to offer short-term foreign currency loans until the end of 2015. Circular 43 replaces Circular 29/2013/TT-NHNN, which expired at the end of 2014.

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