Legal & Regulatory

Vietnam Regulatory Brief: U.S.-Vietnam DTA, VAT, and Online Payment of Import-Export Tax

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In this Vietnam Regulatory Brief, we look at some of the important regulatory changes taking place in Vietnam during the month of July, including a U.S.-Vietnam double tax agreement, a VAT update, and online payment of import-export duties.

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Starting a Business Under the New Law on Enterprises: Company Seals and Bank Accounts

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Saigon-VietnamThe Law on Enterprises 2014, which came into effect on July 1, 2015, has altered the processes associated with one of the most intriguing features of doing business in Vietnam – the company seal, affixed by using a “chop”.

The chop will be familiar to those who have done business in China, where it is also an essential part of starting a business. The company seal must be affixed to official company documents, where it is similar to the place of a signature in other markets.

The new law allows enterprises to decide on the contents, form and quantity of its company seals. The seals must specify the name of the enterprise and it’s identification number. The business registration authorities in Vietnam must receive a copy of the seal design before the seal is used in an official capacity. The authority then posts the seal design onto the National Business Registration Portal.

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Impact of the New Law on Enterprises on Vietnam’s Corporate Governance

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board_meetingBy Charles Small and Thao Dang, Dezan Shira & Associates

The foundations of Vietnam’s corporate governance system are the Law on Enterprises, the Law on Securities, and companies’ charters, constructed based on the Law on Enterprises.

The Law on Enterprises 2014, which came into effect on July 1, 2015, sets out obligatory governance structures for different types of companies. In particular, the internal governance structures of enterprises in Vietnam depend on the legal form of the companies, the number of shareholders when the Control Board was established, and the status of ownership. For example, the governance structure of a single-member Limited Liability Company (LLC) owned by an organization is different from that of a single-member LLC owned by an individual.

At the time of writing, the necessary implementing regulations have not been released for either the Law on Enterprises or the Law on Investment, which came into effect simultaneously. As implementing regulations under the old laws are no longer valid, and new regulations have not been issued, corporate establishment in Vietnam is on hold for now. Situations like this, all too common in Vietnam’s developing legal system, show why you need to employ a consulting firm on the pulse of regulatory changes.

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China, India & Vietnam: Setting Up in Asia’s Investment Hotspots – New Issue of Asia Briefing Magazine

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Cover 250 x 350The newest issue of Asia Briefing magazine, titled “China, India & Vietnam – Setting Up in Asia’s Investment Hotspots“, is out now and available as a complimentary download in the Asia Briefing Bookstore.

Contents:
  • Comparing Asia’s FDI Caps and Restrictions
  • Setting up an Office in China, India and Vietnam
  • China, India & Vietnam Tax Comparisons

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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.

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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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