Liberty Law Firm

12/01/2022

𝗖𝗥𝗬𝗣𝗧𝗢-𝗥𝗘𝗟𝗔𝗧𝗘𝗗 𝗜𝗡𝗩𝗘𝗦𝗧𝗠𝗘𝗡𝗧 𝗥𝗘𝗚𝗨𝗟𝗔𝗧𝗜𝗢𝗡𝗦 𝗜𝗡 𝗩𝗜𝗘𝗧𝗡𝗔𝗠
QUY ĐỊNH VỀ ĐẦU TƯ TIỀN ẢO TẠI VIỆT NAM

The laws of Vietnam on cryptocurrency and cryptocurrency-related activities are unclear. There is no legal definition of cryptocurrency, and cryptocurrency-related business/investment is neither expressly prohibited nor permitted under the relevant regulations. Despite this ambiguity, the State Bank of Vietnam (SBV) seems to take a cautious approach towards cryptocurrency-related transactions and services and has prohibited all cryptocurrency-related transactions via the banking system. Furthermore, there are also risks of penalty if an entity issues, supplies, or uses cryptocurrency as a means of payment. Specifically as follows:

- Cryptocurrency is not defined under Vietnamese legislation

There is no definition of cryptocurrency under the laws of Vietnam. Cryptocurrency has not been recognized as a legitimate means of payment, neither does it fall within the legal definitions of property/assets, goods/services, or foreign currency.

As such, cryptocurrency-related business/investment falls within a grey area where its legality remains uncertain.

- The legality of cryptocurrency-related business/investment in Vietnam

First, there is no company which is licensed to provide cryptocurrency-related products or services in Vietnam.

Second, it is unclear whether cryptocurrency-related business/investment is permitted in Vietnam. Specifically, a foreign investor who would like to invest in Vietnam must go through several legal procedures such as applying for an investment registration certificate and enterprise registration certificate. These certificates record, inter alia, the registered business lines of the foreign-invested company. The business lines must not be prohibited under the Law on Investment 2020 and must conform to the system of economic branches of Vietnam as stipulated in Decision No. 27/2018/QD-TTg (promulgating Vietnam Standard Industrial Classification).

In the present case, although cryptocurrency-related business/investment does not fall under the list of prohibited business lines under the Law on Investment 2020, it is not a permitted business line in the system of economic branches of Vietnam as stipulated in Decision No. 27/2018/QD-TTg either. There is thus a lack of legal bases for the licensing authorities to permit and license cryptocurrency-related companies to operate in Vietnam. If the investors still desire to invest in this area, they would need to apply for official guidance from the competent authorities.

Notwithstanding the above, blockchain technology has been applied in some areas, such as agriculture (e.g. application of blockchain technology in the traceability of agricultural products) or finance (e.g. application of blockchain technology in securities trading). In addition, while there are some cryptocurrency-related companies operating in Vietnam, we take the view that their cryptocurrency-related business may not have been legally registered due to the lack of legal bases governing this activity. That said, there is no public record of any entity that has been penalized for conducting cryptocurrency-related business without a valid license.

28/10/2020

𝗔 𝗖𝗢𝗠𝗣𝗔𝗡𝗬, 𝗔 𝗕𝗥𝗔𝗡𝗖𝗛, 𝗢𝗥 𝗔 𝗥𝗘𝗣𝗥𝗘𝗦𝗘𝗡𝗧𝗔𝗧𝗜𝗩𝗘 𝗢𝗙𝗙𝗜𝗖𝗘?
LẬP CÔNG TY, CHI NHÁNH, HAY VĂN PHÒNG ĐẠI DIỆN?

A foreign company planning to setup an office or expand their business in Vietnam has several options that they may consider for their company structure. The table below compares the three types of business entity to help a foreign company decide the structure that best suit their particular needs.

Công ty nước ngoài dự định thành lập văn phòng hoặc mở rộng kinh doanh tại Việt Nam có lựa chọn một số phương án phù hợp với cơ cấu công ty hiện tại. Bảng dưới đây so sánh ba loại hình kinh doanh để giúp một công ty nước ngoài quyết định cơ cấu phù hợp nhất với nhu cầu cụ thể của họ.

Please note that foreign investors being individuals have only one option of setting up a company.

Lưu ý rằng các nhà đầu tư nước ngoài là cá nhân chỉ có một lựa chọn duy nhất là thành lập công ty.

22/09/2020

𝗪𝗛𝗔𝗧'𝗦 𝗡𝗘𝗪 𝗢𝗡 𝗧𝗛𝗘 𝗟𝗔𝗪 𝗢𝗡 𝗘𝗡𝗧𝗘𝗥𝗣𝗥𝗜𝗦𝗘𝗦 𝟮𝟬𝟮𝟬?
LUẬT DOANH NGHIỆP 2020 CÓ GÌ MỚI?

Please have a look at the table below and feel free to contact us should you have any questions:
Vui lòng xem bảng bên dưới và liên hệ chúng tôi nếu bạn có bất kỳ thắc mắc nào:

11/09/2020

𝐖𝐇𝐀𝐓’𝐒 𝐍𝐄𝐖 𝐈𝐍 𝐓𝐇𝐄 𝐋𝐀𝐖 𝐎𝐍 𝐈𝐍𝐕𝐄𝐒𝐓𝐌𝐄𝐍𝐓 𝟐𝟎𝟐𝟎?
(continuing the previous article)

𝟴. 𝗖𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗻𝗴 𝗰𝗮𝗽𝗶𝘁𝗮𝗹, 𝗽𝘂𝗿𝗰𝗵𝗮𝘀𝗶𝗻𝗴 𝘀𝗵𝗮𝗿𝗲𝘀 𝗮𝗻𝗱 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗰𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀 𝗯𝘆 𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀

This is a completely new regulation compared to the Law on Investment 2014. Foreign investors are allowed to contribute capital, buy shares and capital contributions of economic organizations when they fully satisfy the following regulations and conditions:

• Market access conditions under Article 9 of the Law on Investment 2020;

• Complying with the regulations about national defense and security under the Law on Investment 2020;

• Complying with the regulations about land use.

𝟵. 𝗔𝗻𝗼𝘁𝗵𝗲𝗿 𝗰𝗼𝗺𝗽𝗲𝘁𝗲𝗻𝘁 𝗮𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝘆 𝘁𝗼 𝗵𝗮𝗻𝗱𝗹𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻

According to the Law on Investment 2014, the Department of Planning and Investment and the Management Board of Industrial Parks, Export Processing Zones, Hi-Tech Zones, and Economic Zones are the two types of agencies that are authorized to handle the investment approval application and investment registration application regardless of project size and type.

However, this has been changed under the Law on Investment 2020, specifically:

• The Ministry of Planning and Investment will directly handle investment approval application of projects subject to approval of the National Assembly and the Prime Minister (Articles 34 and 35).

• After being granted the investment approval by National Assembly and the Prime Minister, the investor will submit the investment registration application to one of the two above-mentioned agencies for issuing investment registration certificate.

𝟭𝟬. 𝗖𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗴𝗿𝗮𝗻𝘁𝗶𝗻𝗴 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗰𝗲𝗿𝘁𝗶𝗳𝗶𝗰𝗮𝘁𝗲𝘀 𝗳𝗼𝗿 𝗽𝗿𝗼𝗷𝗲𝗰𝘁𝘀 𝗻𝗼𝘁 𝘀𝘂𝗯𝗷𝗲𝗰𝘁 𝘁𝗼 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗮𝗽𝗽𝗿𝗼𝘃𝗮𝗹 𝗮𝗽𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻

An investment registration certificate will be issued to investors if the following conditions are met:

• The investment project is not prohibited => Referring to the list of prohibited business lines.

• A location for implementation of such project is ready=> The investors need to prove their legal use or ownership right to the location.

• Project implementation is in conformity with local plans => The investors need to compare between the project's objectives and relevant development plans.

• Meeting the condition of investment rate per land area, number of employees used (if any) => The investors need to compare between investment parameters of the project and specific local decisions on these issues.

• Satisfying the market access conditions for foreign investors
=> Referring to the the list of business lines not open to foreign investors and the list of business lines open to foreign investors with conditions.

𝟭𝟭. 𝗖𝗹𝗲𝗮𝗿𝗹𝘆 𝗿𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗹𝗶𝗻𝗲𝘀 𝗯𝗮𝗻𝗻𝗲𝗱 𝗳𝗿𝗼𝗺 𝗼𝗳𝗳𝘀𝗵𝗼𝗿𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁

They are:

• Lines of business prohibited under Article 6 of the Law on Investment 2020 and relevant international treaties.

• Lines of business with technologies and products banned from export in accordance with the law on foreign trade management.

• Lines of business prohibited in accordance with the law of the host country.

𝟭𝟮. 𝗖𝗲𝗿𝘁𝗮𝗶𝗻 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗹𝗶𝗻𝗲𝘀 𝗮𝗹𝗹𝗼𝘄𝗲𝗱 𝘁𝗼 𝗶𝗻𝘃𝗲𝘀𝘁 𝗼𝗳𝗳𝘀𝗵𝗼𝗿𝗲 𝗯𝘂𝘁 𝘄𝗶𝘁𝗵 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀

They are:

• Banking business;

• Insurance business;

• Security business;

• Newspapers, radio and television business;

• Real estate business.

26/08/2020

𝐖𝐇𝐀𝐓’𝐒 𝐍𝐄𝐖 𝐈𝐍 𝐓𝐇𝐄 𝐋𝐀𝐖 𝐎𝐍 𝐈𝐍𝐕𝐄𝐒𝐓𝐌𝐄𝐍𝐓 𝟐𝟎𝟐𝟎?

𝟭. 𝗣𝗿𝗼𝗵𝗶𝗯𝗶𝘁𝗶𝗼𝗻 𝗼𝗳 𝗱𝗲𝗯𝘁 𝗰𝗼𝗹𝗹𝗲𝗰𝘁𝗶𝗼𝗻 𝘀𝗲𝗿𝘃𝗶𝗰𝗲𝘀

Debt collection service is one of the conditional investment lines under the Law on Investment 2014 (Appendix 4).

However, the Law on Investment 2020 (Article 6) has officially banned the business of this service from January 1, 2021. Accordingly, the debt collection service contracts which were signed before the effective date of this Law will terminate from such effective date; and the parties to those contracts are required to liquidate the contracts in accordance with Civil Code and other relevant laws.

𝟮. 𝗥𝗲𝗱𝘂𝗰𝘁𝗶𝗼𝗻 𝗼𝗳 𝘁𝗵𝗲 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗹𝗶𝗻𝗲𝘀

There are 243 conditional business lines under the amended and supplemented Law on Investment 2014 (Appendix 4).

However, the Law on Investment 2020 (Appendix IV) has reduced the number of conditional business lines from 243 to 227. The lines have been removed such as commercial franchise, logistics business, sea shipping agency services, and cosmetic surgery services.

In addition, the Law on Investment 2020 (Appendix IV) also adds a number of new conditional business lines, such as clean water business (domestic water), architecture services, or fishing shipping registry services.

𝟯. 𝗔𝗱𝗱𝗶𝗻𝗴 𝗮𝗻𝗼𝘁𝗵𝗲𝗿 𝗴𝘂𝗮𝗿𝗮𝗻𝘁𝗲𝗲 𝗺𝗲𝘁𝗵𝗼𝗱 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗶𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗽𝗿𝗼𝗷𝗲𝗰𝘁𝘀

The Law on Investment 2014 (Article 42) requires investors to ensure the implementation of an investment project by means of placing an amount in escrow. However, the Law on Investment 2020 (Article 43) allows investors to opt for placing an amount in escrow or being guaranteed by a bank for such amount.

The Law on Investment 2020 also stipulates 04 cases in which the investor does not need to guarantee project implementation. However, these are not completely new regulations, but an "upgrade" of the similar provisions specified in Decree No. 118/2015/ND-CP guiding the Law on Investment 2014.

𝟰. 𝗔𝗱𝗱𝗶𝗻𝗴 𝗮𝗻𝗼𝘁𝗵𝗲𝗿 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗶𝗻𝗰𝗲𝗻𝘁𝗶𝘃𝗲 𝗳𝗼𝗿𝗺

In addition to the investment incentives specified in the Law on Investment 2014 (Article 15.1), including corporate income tax incentives, import tax exemption, and exemption and reduction of land rent, land use fee, and land use tax, the Law on Investment 2020 (Article 15.1) adds another incentive form of "rapid depreciation, increase of deductible expenses when calculating taxable income".

𝟱. 𝗦𝘆𝘀𝘁𝗲𝗺𝗮𝘁𝗶𝘇𝗶𝗻𝗴 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝘀𝗲𝗰𝘁𝗼𝗿𝘀 𝗮𝗻𝗱 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗰𝗰𝗲𝘀𝘀 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀

To guide the implementation of the Law on Investment 2020, the Government will promulgate the list of business lines that limit to foreign investors, including:

• List of business lines are not open to foreign investors;
• List of business lines are open to foreign investors with conditions.

This means that before investing in Vietnam, foreign investors will refer to these lists to evaluate the possibility of being licensed for investment in Vietnam and select a suitable investment plan.

𝟲. 𝗘𝘅𝗰𝗲𝗽𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗽𝗿𝗼𝗷𝗲𝗰𝘁 𝗿𝗲𝗴𝗶𝘀𝘁𝗿𝗮𝘁𝗶𝗼𝗻 𝗯𝘆 𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀

The Law on Investment 2014 (Article 22) currently requires all foreign investors to register for an investment project before establishing an economic organization in Vietnam.

However, there is an exception in the Law on Investment 2020 (Article 22). Specifically, in case of establishing a small and medium-sized creative start-up and a creative startup investment fund in accordance with the Law on SME support, this procedure is not required. Thus, when falling into this exception, investors can immediately register to establish a company to start doing business in Vietnam.

𝟳. 𝗜𝗻𝗰𝗿𝗲𝗮𝘀𝗶𝗻𝗴 𝘁𝗵𝗲 𝗻𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗳𝗼𝗿𝗲𝗶𝗴𝗻-𝗶𝗻𝘃𝗲𝘀𝘁𝗲𝗱 𝗲𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗼𝗿𝗴𝗮𝗻𝗶𝘇𝗮𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗮𝘁 𝗺𝘂𝘀𝘁 𝗮𝗽𝗽𝗹𝘆 𝘁𝗵𝗲 𝘀𝗮𝗺𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀 𝗮𝘀 𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀

The Law on Investment 2014 (Article 23.1) stipulates that an organization having from or more 51% of foreign owned capital will have to apply the same investment conditions as foreign investors. However, this ratio has been reduced to 50% in the Law on Investment 2020 (Article 23.1). The reduction of this ratio has led to the increase of the number of foreign-invested economic organizations that have to apply investment conditions as for foreign investors.

(To be continued)

14/08/2020

𝐓𝐨 𝐰𝐡𝐚𝐭 𝐞𝐱𝐭𝐞𝐧𝐭 𝐟𝐨𝐫𝐞𝐢𝐠𝐧 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐚𝐫𝐞 𝐚𝐥𝐥𝐨𝐰𝐞𝐝 𝐭𝐨 𝐝𝐨 𝐥𝐨𝐠𝐢𝐬𝐭𝐢𝐜𝐬 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐢𝐧 𝐕𝐢𝐞𝐭𝐧𝐚𝐦?

Logistics business is one of the lines commonly opted for by foreign investors to do in Vietnam. Investing in this business, the foreign investors may consider establishing a new entity or acquiring shares of an existing logistics company. Opting for this way but the other one seems to depend on the investment strategy of each investor. However, either of the ways is subject to the same foreign ownership limitations.

Under Vietnam’s commitments in the WTO, Vietnam set forth a road map to gradually remove foreign ownership limitations in logistics enterprises. Until 2020, there are two logistics services completely open to foreign investors as follows:

☑ Storage and warehouse services (CPC 742)

☑ Freight transport agency services (CPC 748) - Including freight forwarding services. (These services mean the activities consisting of organizing and monitoring shipment operations on behalf of shippers, through the acquisition of transport and related services, preparation of documentation and provision of business information.)

This means that the foreign investors are allowed to set up a 100% foreign-invested company when investing in these logistics services. Other committed logistics services require the establishment of joint ventures with Vietnamese partners with the capital contribution of foreign side not exceeding 49%, or 50% or below 100%.

Besides WTO’s commitments, the laws of Vietnam, Decree No. 163/2017/ND-CP also regulates in detailed foreign ownership limitations for each specific logistics service. This Decree however states that the regulation of WTO’s commitments will prevail when there is a difference between them.

Notwithstanding the foregoing, foreign investors from countries that are members of such international treaties as EVFTA (Vietnam-EU Free Trade Agreement), or VKFTA (Vietnam-Korea Free Trade Agreement), or VJEPA (Vietnam-Japan Free Trade Agreement) are entitled to investment incentives provided in the corresponding agreement.

The foreign investors need to thoroughly check all relevant regulations of the laws of Vietnam, the Vietnam’s commitments in the WTO, and bilateral or multilateral free trade agreements in which their countries are members to find the most suitable investment incentives.

07/08/2020

𝐍𝐂𝐍𝐃𝐀 𝐚𝐧𝐝 𝐈𝐌𝐅𝐏𝐀 𝐈𝐧 𝐈𝐧𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐒𝐚𝐥𝐞 𝐨𝐟 𝐆𝐨𝐨𝐝𝐬

🌍 What is an NCNDA (Non-Circumvention, Non-Disclosure & Working Agreement)?

An NCNDA is a type of agreement used in the early stages of a business transaction arranged by brokers (intermediaries).

The main purpose of an NCNDA is to protect the rights and efforts of intermediaries in relation to finding and connecting buyers with sellers. Accordingly, the buyers and the sellers are obliged to keep the information provided by the intermediaries confidential for a certain term. Neither party may disclose such information to any other third party without the written consent of those intermediaries.

🌍 What is an IMFPA (Irrevocable Master Fee Protection Agreement)?

An IMFPA is a type of agreement used in international sales of goods. It is noticeable that this is a binding and irrevocable agreement between the buyers, the sellers and the intermediaries (the focal point).

The purpose of an IMFPA is to protect the right of intermediaries to receive fees for connecting and assisting buyers and sellers in reaching purchase agreements. The buyers and the sellers will agree to pay a commission fee (either a fixed amount or a certain percentage) to the intermediaries after the transaction is completed.

Commission payment term is specified by the parties in the IMFPA. Usually, the commission is automatically transferred from the buyer's or the seller's account to the intermediary's account immediately after the buyer has paid to the seller.

🌍 NCNDA and IMFPA under the view of the laws of Vietnam

There are some important points that the Vietnamese parties need to pay attention to when entering into an NCNDA and/ or an IMFPA.

𝟭. 𝗔𝗽𝗽𝗹𝗶𝗰𝗮𝗯𝗹𝗲 𝗹𝗮𝘄

The parties in international sales of goods usually choose laws other than Vietnamese law to govern the NCNDA and IMFPA. This is allowed under the Civil Code of Vietnam when:

• there is at least a party being a foreign natural person or a foreign legal entity;
• the transaction object is not real estate in Vietnam;
• the transaction does not adversely affect lawful rights of related persons in Vietnam.

𝟮. 𝗡𝗼𝗻-𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗹𝗶𝗺𝗶𝘁𝗮𝘁𝗶𝗼𝗻

The intermediaries usually require the sellers and the buyers to maintain complete confidentiality of business sources provided by them during a time limit.

However, under the laws of Vietnam, there are many regulations that individuals and organizations are obliged to provide information related to their business to competent authorities in Vietnam. For example, providing information to a tax inspection agency during tax inspection, or providing information to police agencies, investigating agencies, and security agencies under the law on prevention of money laundering.

These exceptions should be agreed between parties and stated in the NCNDA so that the disclosing party is not deemed to breach of the agreement in case of providing confidential information upon the request of Vietnamese competent authorities.

𝟯. 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗽𝗮𝘆𝗺𝗲𝗻𝘁

Vietnamese organizations and individuals are permitted to transfer money (foreign currency) overseas to pay commissions to the intermediaries. Accordingly, this payment will be based on the final consent of the licensed banks in the process of reviewing and evaluating documents relating to such international transaction. Well-prepared documentation in this case is obviously crucial.

𝟰. 𝗙𝗖𝗧 (𝗳𝗼𝗿𝗲𝗶𝗴𝗻 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝗼𝗿 𝘁𝗮𝘅) 𝗽𝗮𝘆𝗺𝗲𝗻𝘁

The foreign parties in international sales of goods may be subject to paying FCT. The final answer should be based on specific circumstances. Two important elements to be considered are who will receive the payment and where the products are delivered or the services are provided.

23/07/2020

𝐅𝐑𝐄𝐄 𝐓𝐑𝐀𝐃𝐄 𝐀𝐆𝐑𝐄𝐄𝐌𝐄𝐍𝐓 𝐁𝐄𝐓𝐖𝐄𝐄𝐍 𝐕𝐈𝐄𝐓𝐍𝐀𝐌 𝐀𝐍𝐃 𝐄𝐔 will take effect on 𝟏 𝐀𝐮𝐠𝐮𝐬𝐭 𝟐𝟎𝟐𝟎.

EU-Vietnam Free Trade Agreement (EVFTA) is a new generation FTA between Vietnam and 28 European Union member states. EVFTA and Trans-Pacific Partnership (TPP) are two of the largest new generation free trade agreements that Vietnam's largest ever negotiated.

On December 1st, 2015, the negotiation rounds of EVFTA was officially announced to be concluded, and its official full text was published on February 1st, 2016. On 26 June 2018, EVFTA was divided into two Agreements in terms of trade and investment. At the same time, the legal review of Investment Protection Agreement (IPA) and EVFTA’s final text was formally concluded.

Both Agreements were signed on 30 June 2019. EVFTA and EVIPA were ratified by the European Parliament on February 12, 2020, and approved by the Vietnamese National Assembly on June 8, 2020.

For EVFTA, after ratification, this Agreement will enter into force on August 1, 2020. For EVIPA, on the EU side, the Agreement will still need to be further ratified by the Parliament of all 27 EU member states (after the UK completes Brexit) to take effect.

Vietnam - EU (EVFTA)

15/07/2020

𝐂𝐚𝐧 𝐚 𝐟𝐨𝐫𝐞𝐢𝐠𝐧𝐞𝐫 𝐬𝐞𝐭 𝐮𝐩 𝐚 𝐬𝐨𝐥𝐞 𝐩𝐫𝐨𝐩𝐫𝐢𝐞𝐭𝐨𝐫𝐬𝐡𝐢𝐩 𝐢𝐧 𝐕𝐢𝐞𝐭𝐧𝐚𝐦?

Under Article 183.1 of the Law on Enterprises, a sole proprietorship (Doanh nghiệp tư nhân) is an enterprise owned by an individual who is responsible for its operation with all of his/her property. No regulation on nationality of such individual is set forth. There is room to argue that a foreigner is allowed to set up a sole proprietorship in Vietnam.

However, we find no further guidance on the formation of a sole proprietorship owned by a foreigner in Vietnam and no regime to control and enforce property of a foreigner. In addition, Article 3.17 of the Law on Investment regulates that “Foreign-invested business organization means a business having a foreigner is a member or shareholder” while the Law on Enterprises does not name the owner of a sole proprietorship as member or shareholder.

The term “member(s)” and “shareholder(s)” are used for limited liability companies, joint stock companies, and partnership companies. Besides, practicality shows that the Vietnam competent authorities have never approved the establishment of any foreign sole proprietorship here.

Therefore, until now a single-member limited liability company is the simplest company form that a foreigner may consider to establish in Vietnam for a small business.

08/07/2020

𝐐𝐔𝐈𝐂𝐊 𝐐&𝐀 𝐀𝐁𝐎𝐔𝐓 𝐅𝐎𝐑𝐄𝐈𝐆𝐍-𝐈𝐍𝐕𝐄𝐒𝐓𝐄𝐃 𝐂𝐀𝐏𝐈𝐓𝐀𝐋

❶ Is a foreigner allowed to transfer capital from his/her payment account at a licensed bank in Vietnam to his/her company’s Direct Investment Capital Account?

=> Yes, he/she is allowed to do this in accordance with Article 6.2(b) and 7.2(b) of Circular No. 16/2014/TT-NHNN, and Article 6.1(a) and 7.1(a) of Circular No. 06/2019/TT-NHNN.

❷ How to handle the capital transferred to Vietnam in pre-investment stage?

=> There are 03 ways to handle pre-investment capital under Article 8.2 of Circular No. 06/2019/TT-NHNN, including:

• Converting part or total of such capital into stake;
• Converting part or total of such capital into foreign loan;
• Returning to the foreign investor.

❸ Which organization must open a Direct Investment Capital Account?

• Foreign-invested organizations wherw foreign investor(s) hold from 51% of charter capital or more.
• Project enterprise in PPP investment.

❹ What about if an organization switches over from a company having 51% of foreign-invested capital to below, and vice versa?

• If switching from 51% or more to below, it is required to close the Direct Investment Capital Account and the foreign investor opens an Indirect Investment Capital Account for its capital transaction.
• If switching from below 51% to 51% or more, it is required to open a Direct Investment Capital Account.

05/07/2020

𝐈𝐬 𝐢𝐭 𝐫𝐢𝐠𝐡𝐭 𝐭𝐨 𝐜𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐰𝐢𝐭𝐡 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥𝐬 𝐭𝐨 𝐩𝐫𝐨𝐯𝐢𝐝𝐞 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬?

There are many cases where a company and individual sign a service contract to perform specific tasks. The thing is such individual has not yet made his/her business registration. Is this true or false under the laws of Vietnam?

The right answer would depend on each specific circumstance and various legal perspectives, as follows:

Article 7 of the Commercial Law stipulates that: Traders are obliged to register their business in accordance with the law. Accordingly, an individual conducting commercial activities in an independent and regular manner and having business registration is considered a trader under Article 6.1 of this Law. Thus, individuals who conduct commercial activities (for profit-making purposes) must conduct business registration in order to legalize their business in reality.

However, there are certain exceptions to the provisions mentioned-above. Specifically, Article 3.1 of Decree 29/2007/ND-CP allows a number of individuals to conduct commercial activities in an independent and regular manner but without business registration, including:

☑ Street vendors;
☑ Petty vendors;
☑ Snack vendors;
☑ Consignment vendors;
☑ Shoe shiner, lottery ticket sellers, car repairman, car keeper, car wash, barber, painter, photographer, and other service providers with or without having a fixed location;
☑ Other excepted commercial activities.

We have found no further guidance for “Other excepted commercial activities”. It is therefore understandable that, except in the case of commercial activities within the above-mentioned profession, any organization or individual conducting a profitable activity on a regular basis must register for business.

However, from the perspective of the Law on Personal Income Tax, there are many cases where an organization can still sign a service contract with an individual regardless of how long the contract lasts, how frequency it is signed, how many times it is renewed. Article 2.2 (c) and Article 25.1 (i) of Circular 11/2013/TT-BTC indirectly implies that: Organizations are still allowed to sign service contracts with individuals and pay wages, remuneration to individuals in the following forms:

☑ Commissions for sales agents;
☑ Brokerage commissions;
☑ Wages for participating in scientific and technical research projects;
☑ Wages for participation in projects or schemes;
☑ Royalty in accordance with the law on royalties;
☑ Wages for participation in teaching activities;
☑ Wages for cultural, arts, physical, and sport performance;
☑ Wages for advertising services; Other wages and remuneration.

Individuals in this case are obliged to pay 10% of personal income tax and the corresponding contracting organizations are responsible for withholding taxes before paying such wages and remuneration to individuals.

With the above provisions, each authority will have different interpretations and require the individuals and organizations under their management to comply with that explanation. However, my personal opinion is that the current Law on Personal Income Tax is facilitating individuals who do not intend to run her/his own business or to work permanently for a specific organization, so the parties can consider signing a service contract to provide the service effectively. But once such service contracts are regularly signed and prolonged, then create a stable income to that individual, he/she should register business in accordance with the law.

-----------Vietnamese below----------

𝐊𝐲́ 𝐡𝐨̛̣𝐩 đ𝐨̂̀𝐧𝐠 𝐝𝐢̣𝐜𝐡 𝐯𝐮̣ 𝐯𝐨̛́𝐢 𝐜𝐚́ 𝐧𝐡𝐚̂𝐧? Đ𝐮́𝐧𝐠 𝐡𝐚𝐲 𝐬𝐚𝐢?

Hiện nay có nhiều trường hợp công ty ký hợp đồng dịch vụ với cá nhân để thực hiện một số công việc cụ thể. Tuy nhiên, cá nhân đó chưa thực hiện đăng ký kinh doanh. Vậy việc ký hợp đồng dịch vụ như thế này là đúng hay sai và vì sao?

Hiện nay dưới các góc nhìn khác nhau mà có nhiều ý kiến trái chiều về vấn đề này, cụ thể như sau:

Điều 7 Luật Thương mại quy định rằng: đã là thương nhân thì phải có trách nhiệm đăng ký kinh doanh theo quy định của pháp luật. Theo đó, một cá nhân có tiến hành hoạt động thương mại một cách độc lập, thường xuyên và có đăng ký kinh doanh thì được xem là thương nhân theo quy định tại Điều 6.1 Luật này. Như vậy cá nhân có tiến hành hoạt động thương mại (hoạt động nhằm mục đích sinh lợi nhuận) thì phải tiến hành đăng ký kinh doanh để hợp pháp công việc kinh doanh.

Tuy nhiên, quy định trên có một số ngoại lệ nhất định. Cụ thể, Điều 3.1 Nghị định 29/2007/NĐ-CP cho phép một số trường hợp cá nhân có tiến hành hoạt động thương mại một cách độc lập thường xuyên nhưng không phải đăng ký kinh doanh, bao gồm:

☑ Buôn bán rong (buôn bán dạo);
☑ Buôn bán vặt;
☑ Bán quà vặt;
☑ Buôn chuyến;
☑ Đánh giày, bán vé số, chữa khóa, sửa chữa xe, trông giữ xe, rửa xe, cắt tóc, vẽ tranh, chụp ảnh và các dịch vụ khác có hoặc không có địa điểm cố định;
☑ Các hoạt động thương mại không phải đăng ký kinh doanh khác.

Hiện nay không có bất kỳ quy định nào hướng dẫn thêm về “Các hoạt động thương mại không phải đăng ký kinh doanh khác”. Do vậy có thể hiểu rằng, ngoại trừ trường hợp hoạt động thương mại trong phạm vi các công việc nêu trên, bất kỳ cá nhân tổ chức có tiến hành hoạt động sinh lợi một cách thương xuyên đều phải đăng ký kinh doanh.

Mặc dù vậy, đứng dưới góc nhìn của Luật Thuế thu nhập cá nhân thì có nhiều trường hợp tổ chức vẫn có thể ký hợp đồng dịch vụ với cá nhân bất kể hoạt động đó kéo dài trong bao lâu, có thường xuyên hay không, và số lần lý kết là bao nhiêu. Điều 2.2(c) và Điều 25.1(i) Thông tư 11/2013/TT-BTC một cách gián tiếp thừa nhận rằng: Các tổ chức vẫn được phép ký kết hợp đồng với cá nhân và trả tiền công, tiền thù lao cho cá nhân dưới các hình thức như:

☑ Tiền hoa hồng đại lý bán hàng hóa;
☑ Tiền hoa hồng môi giới;
☑ Tiền tham gia các đề tài nghiên cứu khoa học, kỹ thuật;
☑ Tiền tham gia các dự án, đề án;
☑ Tiền nhuận bút theo quy định của pháp luật về chế độ nhuận bút;
☑ Tiền tham gia các hoạt động giảng dạy;
☑ Tiền tham gia biểu diễn văn hoá, nghệ thuật, thể dục, thể thao;
☑ Tiền dịch vụ quảng cáo; tiền dịch vụ khác, thù lao khác.

Các cá nhân trong trường hợp này có nghĩa vụ trả 10% thuế thu nhập cá nhân và các tổ chức ký hợp đồng tương ứng có trách nhiệm khấu trừ thuế trước khi trả các khoản tiền công, tiền thù lao đó cho cá nhân.

Với các quy định như trên, mỗi cơ quan thẩm quyền sẽ có những cách giải thích khác nhau và yêu cầu cá nhân, tổ chức nơi mình quản lý thực hiện theo cách giải thích đó. Tuy nhiên, ý kiến cá nhân tôi cho rằng, hiện nay Luật Thuế thu nhập cá nhân đang tạo điều kiện cho trường hợp cá nhân không có ý định tự doanh hoặc làm việc cố định cho một tổ chức cụ thể nên các bên có thể xem xét ký hợp đồng dịch vụ nhằm giải quyết công việc một cách nhanh chóng. Nhưng một khi các dạng hợp đồng dịch vụ như vậy mang tính thường xuyên và kéo dài, tạo ra nguồn thi nhập ổn định thì cá nhân đó nên tiến hành đăng ký kinh doanh theo đúng quy định của pháp luật.