Vietnam Strives to Reform Business Procedures, Ease of Business: Decree 122
- The Vietnamese government issued Decree 122, effective October 15, on coordinating and linking several government agencies for business registration.
- The Decree is expected to further reduce business procedures and improve the ease of doing business in Vietnam.
- Vietnam Briefing highlights the key points of the Decree where the business registration authority will play a key role.
The Vietnamese government on October 15 issued Decree 122/2020/ND-CP on coordinating and linking several government agencies on registration procedures while forming new companies.
The decree is expected to further ease procedures and reduce inefficient processes.
The decree will apply to the registration of businesses such as enterprises, branches, and representative offices.
As per the decree, the Business Registration Authority (BRA) will serve as the main focal point for receiving documents and coordinating procedures. Thus, the BRA will coordinate with the labor ministry, the social insurance agency, and the tax authorities.
Decree 122 highlights
We review key highlights of the new Decree:
- Once an enterprise is established or there is a change to the business registration, the BRA and the social insurance agency will update each other on information about employees, business lines, and payment methods for social insurance;
- The BRA will also be responsible for sharing the full name, enterprise code, address, legal representative, business line, and the number of employees with the labor ministry;
- The BRA and tax authorities will share information on the enterprise code and relevant registration information;
- The local labor ministry and social insurance agencies will share information on any changes in the number of employees. This will be done through the National Public Service portal; and
- Enterprise/tax code will be used as the social insurance code of a company.
The sharing of information between state agencies is in line with the government’s push to go digital. This will be done through digital data and secure IT public systems.
The Decree also states that government agencies in charge of labor, social insurance, and tax will not request the enterprise for copies of the enterprise registration certificate but will rather approach the BRA. However, state agencies would be allowed to ask for the enterprise name, identification number, and any administrative procedures.
In addition, there have also been additional forms for business registration, which are included in the Decree.
Ease of business
According to the BRA, the new Decree will reduce the time and procedures involved to start a business, improving Vietnam’s business climate. This includes time for business registration, opening bank accounts, and issuing invoices. As a result of the aforementioned procedures, the BRA noted that businesses would have to only submit one set of documents to the BRA rather than four at four separate government agencies.
While the World Bank’s ‘Ease of Doing Business’ report was temporarily suspended in August, Decree 122, along with Vietnam’s National Industrial Policy will aid in further improving Vietnam’s business environment. In addition, the government in February exempted the Business License Tax (BLT) for newly established businesses in the first year.
The authorities are likely to issue further guidance on the implementation of this Decree and as such readers should follow our alerts for any additional updates.
Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Hanoi and Ho Chi Minh City. Readers may write to firstname.lastname@example.org for more support on doing business in Vietnam.