What Are Tax Obligations of a Representative Office in Vietnam?

  Vietnam-based representative office of a foreign trader means a dependent unit of the foreign trader, which is established under the provisions of Vietnamese law to conduct market survey and a number of commercial promotion activities permitted by Vietnamese law.

Representative office of foreign trader in Vietnam has the rights and obligations in accordance with the law of Vietnam. Foreign trader is responsible before the law of Vietnam for all operations of its representative office in Vietnam

Accordingly, representative office in Vietnam is not allowed to conduct business activities, nor carry out other activities for profit-generating purposes. The representative office in Vietnam only performs the activities for the right purposes, scope and duration specified in the certificate to establish the representative office. Besides, the representative office in Vietnam has the right to rent the head office, rent and buy the facilities and materials necessary for the operation of the representative office; to recruit Vietnamese and foreign employees to work at the representative office in accordance with the provisions of Vietnamese law; to use an account in foreign currency, in Vietnam dong of foreign currency origin opened by a foreign trader at a bank licensed to operate in Vietnam and only use this account for the operation of the representative office; to have a seal bearing the name of the representative office according to the provisions of Vietnamese law. Representative office in Vietnam can sign contracts, perform transactions with partners when authorized by the enterprise.

Hence, due to the limited scope of activities, the tax liability of a foreign representative office in Vietnam is narrower than that of an enterprise. As the representative office does not produce or trade in goods and services, it is not required to pay license fees as prescribed. Representative office of foreign trader in Vietnam is dependent unit of foreign trader, established to investigate the market and carry out some trade promotion activities permitted by Vietnamese law, does not carry out production and business activities, so it is not required to pay license fees.

The fact that the representative office has the right to recruit Vietnamese or foreign employees to work at the office is the basis for arising personal income tax obligation. At the same time, representative office of foreign organization is subject to personal income tax registration. For employees working at foreign representative office in Vietnam, the taxable incomes are based on salaries and wages. Declaring, withholding, paying taxes and settling personal income tax of employees working at foreign representative office is the responsibility of such representative office.

ANT Lawyers, a law firm in Vietnam with offices in Hanoi, Da Nang and Ho Chi Minh City could help client to set up representative office in Vietnam and advise on the compliance on regular basis.

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Vietnam Sets to Develop E-commerce and Target 55% of the Population to Shop Online

 On May 15, 2020, the Prime Minister issued Decision No. 645/QD-TTg approving the National Master Plan on e-commerce development in the 2021-2025 period aiming to develop e-commerce business area through changing in policy, creating favourable environment, increasing government spending, and attracting investors participating and setting up business in developing e-commerce in Vietnam to transform the economy toward industry 4.0.

Specifically, the Vietnam Prime Ministers set the following goals to be achieved by 2025: 55% of the population participate in online shopping, the average purchase value is 600 USD/person/year; e-commerce revenue increases by 25%/year, reaching 35 billion USD, accounting for 10% of the total retail sales of goods and revenue of consumer services nationwide; non-cash payment in e-commerce reached 50%, of which payments made through intermediary payment service providers accounted for 80%; the average cost for delivery and final order completion accounts for 10% of the product cost in e-commerce; 70% of purchases on e-commerce applications have e-invoices.

Regarding e-commerce applications in enterprises: 80% of e-commerce websites have integrated online ordering function; 50% of small and medium enterprises conduct business activities on e-commerce trading floor, including social network with function of e-commerce trading floor; 40% of businesses participate in e-commerce activities on mobile applications; 70% of electricity, water, telecommunications and communication service providers deploy electronic contracts with consumers.

To accomplish the above objectives, the Prime Minister proposed specific groups of solutions, including: perfecting mechanisms and policies to meet the needs of e-commerce development in the context of technology revolution 4.0; improving the management and organization of e-commerce activities, online dispute resolution (ODR), fighting against commercial frauds, intellectual property violations.

The Prime Minister’s policy shows the role of e-commerce in the present era. E-commerce is one of the pioneering areas of the digital economy, where the advanced technologies of the Industrial Revolution 4.0 are widely applied to increase the efficiency of the business cycle, contribute to modernizing the distribution system, improve the competitiveness of enterprises, promote the development of the domestic market and export. Besides, identifying the overall goal when developing e-commerce in Vietnam is support and promote the widespread use of e-commerce in businesses and the community; to bridge the gap between major cities and localities on the level of e-commerce development; to build a healthy, competitive and sustainable e-commerce market; to expand consumption markets for Vietnamese goods at home and abroad through e-commerce applications; to promote cross-border e-commerce and transactions; to become a country with a developed e-commerce market among the top 3 countries in Southeast Asia.

This is an opportunity for domestic and foreign investors in the field of e-commerce as well as an auxiliary service for e-commerce to promote business and investment activities in Vietnam through establishment of companies providing services.

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What Are Conditions to Clean Up Criminal Records?

 Offenders who have completely served their penalties shall be given conditions to do business, live honestly and integrate with the community, and when they meet all the conditions prescribed by law, their conviction may be expunged and their criminal records will be cleaned. A person whose criminal record is removed is considered as having not been convicted. There are three cases of conviction expungement, including: Automatic conviction expungement; Conviction expungement under a Court’s decision; Special cases of conviction expungement.

Automatic conviction expungement applies to people convicted not for crimes of infringing upon national security and crimes of undermining peace, against humanity and war crimes when they have completed their main penalty, the probationary period of the suspended sentence, the person has served the additional penalty, other decisions of the judgment or has expired and does not commit any new crime during the periods specified below: (i) 01 year in case of a warning, fine, community sentence or suspended imprisonment; (ii) 02 years in case of imprisonment of up to 05 years; (iii) 03 years in case of imprisonment from over 05 years to 15 years; (iv) 05 years in case of imprisonment of over 15 years or commuted life imprisonment. A convict serving an additional punishment that is mandatory supervision, prohibition from residence, prohibition from holding certain positions, prohibition from doing certain jobs, deprivation of certain citizenship rights for a period longer than those specified in points (i), (ii), (iii) above, automatic conviction expungement shall be granted when he/she finishes serving the additional punishment.

Conviction expungement under a Court’s decision is applicable to persons convicted of crimes of infringing upon national security and crimes of undermining peace, against humanity and war crimes. The Court shall decide the conviction expungement of convict based on the nature of the crimes committed, the law-observing attitude, the convicted person’s labor attitude and the following conditions:

The Court shall grant conviction expungement if the convict, after serving the primary sentence or probation period as well as additional sentences and other decisions of the judgment, does not commit any new crime over the following periods: (i) 01 year in case of warning, community sentence, or suspended imprisonment; (ii) 03 years in case of imprisonment of up to 05 years; (iii) 05 years in case of imprisonment of between more than 5 years and 15 years; (iv) 07 years in case of imprisonment of more than 15 years, life imprisonment or death sentence that is commuted.

If the convict is serving an additional sentence which is mandatory supervision, prohibition from residence, or deprivation of certain citizenship rights for a longer period than that specified in points (i), (ii) above, conviction expungement shall be considered when he/she finishes serving the additional sentence.

If an application for conviction expungement is rejected for the first time, it may only be resubmitted after 01 year from the day on which it is rejected; if the application for conviction expungement is rejected for the second time, it may only be resubmitted after 02 years from the day on which it is rejected.

Where a convict shows remarkable improvements and has made reparation in an effort to atone for the crime and conviction expungement is requested by his/her employer or local authority, the court shall decide to grant conviction expungement if has served at least one third of the above period.

In order to be automatically expunge conviction or expunged conviction according to the decision of the Court, the convict must fully comply with the decisions in the judgment including the payment of court costs and not commit any new crime within the prescribed time limit. For special cases of conviction expungement, convict must have at least one-third of the time limit for conviction expungement according to regulations and the Court shall decide to expunge conviction at the request of agencies or organizations where the person works or the local government where the person resides.

The period after which a conviction may be expunged depends on the primary sentence. If the convict who has not had the conviction expunged commits a new crime which leads to a conviction under an effective judgment, the period after which the conviction may be expunged shall start over from the day on which the primary sentence has been served or the end of the probation period of the new judgment or from the deadline for execution of the new judgment. If the convict has committed more than one crime and one of which is automatically eligible for expungement, one of which is eligible for expungement under a court’s decision, the Court shall decide expungement pursuant to the prescribed time limit for conviction expungement under the Court’s decision.

A convicted corporate legal entity shall automatically have its conviction expunged if it does not commit any new criminal offence for 02 years from the day on which the primary punishments, additional punishments, other decisions of the judgment are served or from the expiration of the time limit for execution of the judgment.

Criminal record card can be obtained at authority to reveal the current criminal conviction situation or changes of situation of such conviction.

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How Foreigners Could Buy Real Estate in Vietnam?

 Regulations on foreigners owning real estate in Vietnam are regulated in Civil Code 2015, Law on Land 2013, Law on Housing 2014, Decree no. 99/2015/ND- CP on guidelines the Law on Housing and related documents.

For land, foreign individuals are not eligible to use land assigned or leased by the State, recognized land use rights, received transfer of land use rights. However, a foreign-invested enterprise could be allocated or leased land by the State, recognized land use rights, or received a land use right transfer. Foreign-invested enterprises that are assigned land by the State with the collection of land use levies to execute investment projects on the construction of houses for sale or for sale in combination with lease.

For housing, foreign entities eligible for the homeownership in Vietnam include: foreign entities who invest in project-based housing construction in Vietnam as prescribed in this Law and corresponding regulations of law; foreign-invested enterprises, branches, representative offices of foreign enterprises, foreign-invested funds and branches of foreign banks operating in Vietnam (hereinafter referred to as foreign organization); foreign individuals who are allowed to enter Vietnam.

The foreign entities are eligible for the homeownership in Vietnam if they invest in project-based housing construction in Vietnam as prescribed in this Law and corresponding regulations of law; or buy, rent and purchase, receive, or inherit commercial housing including apartments and separate houses in the project for housing construction, except for areas under management relating to national defense and security as prescribed in regulations of the Government.

Foreign organizations and individuals must have documents proving being the eligible subjects and meeting conditions to own houses in Vietnam. A foreign individual must have an unexpired passport bearing the entry seal of the Vietnam’s immigration authority and not given diplomatic immunity and privileges according to Ordinance on diplomatic immunity and privileges of diplomatic missions, consular offices, and representative authorities of international organizations in Vietnam. Foreign organizations must be subjects of owning houses in Vietnam which have investment registration certificate or a permission issued by a Vietnam’s competent authority for operation in Vietnam which is still unexpired at the time of housing transaction (hereinafter referred to as investment registration certificate).

A foreign entity shall not be granted a Certificate of the house and may only sell or offer it to another entity eligible to own housing in Vietnam in the case being: a foreign organization or individual receives a house as an inheritance or a gift which is located in an area in which foreign entities must not own houses, or the quantity of which exceeds the permissible limits; a foreign organization that does not operate in Vietnam, or a foreign individual who is not permitted to enter Vietnam, receives a house in Vietnam as a gift or an inheritance.

For specific situations, to avoid future dispute in house ownership arisen from the purchase, lease of property, house, land from the state, developer or other seller, or lessor it is important that the client check with property lawyers for eligibility, conditions and other relevant matters.

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What Are Rights and Obligations of Foreigners Owning Properties in Vietnam?

  According to the current Vietnamese law, the ownership of houses in Vietnam by foreigners has changed significantly towards more openness. However, home ownership of foreigners and Vietnamese citizens are still different.

Foreign house ownership is allowed in commercial housing construction projects only (i.e., only in newly formed residential areas), not an area of national defense and security purpose. In case of house donation or inheritance of house not subject to this regulation, the foreigner only receives the value of that house.

The foreigners combined may not buy, rent and purchase, receive, inherit and own more than 30% of apartments in an apartment building; or not more than 250 houses of separate houses including villas, row houses in an area whose population is equivalent to a ward-administrative division

In an area whose population is equivalent to that of a ward, if there is a commercial housing construction project for sale or lease-purchase, the quantity of detached houses that may be owned by foreigner is specified below: where the quantity of detached houses of an project is fewer than 2,500, foreigner may own up to 10% of the houses of such project; where there is only one project whose quantity of detached houses is equivalent to 2,500 houses, foreigners may own up to 250 houses of them; where there are two or more projects where the total quantity of detached houses does not exceed 2,500 houses, foreigners may own up to 10% of the houses of each project. In case a house is donated or inherited in excess of the number of houses under this regulation, only the value of that house is entitled.

The foreigners are eligible for the homeownership as agreed in agreements on housing sale, lease purchase, gifting, or inheritance for not more than 50 years from the date of issuance of the Certificate and have can be extended further according to the Government’s regulations if the need arises; house ownership period must be specified in the Certificate.

In case a foreign individual marries a Vietnamese citizen or an overseas Vietnamese, he/she can own a stable, long-term house and has the same rights as a Vietnamese citizen.

The foreign organization are eligible for the homeownership as agreed in agreements on housing sale, lease purchase, gifting, or inheritance for not longer than duration stated in their Certificate of investment, including extension duration, the duration of the homeownership shall be determined from the day on which the organization is granted the Certificate and stated in such Certificate.

In addition, foreign organizations and foreign individuals permitted to enter Vietnam have the same obligations as Vietnamese citizens but must comply with the following provisions:

If the homeowner is a foreign individual, he/she is entitled to lease house for lawful purposes provided that he/she notifies the agency of district in charge of housing where the house is located of housing lease as prescribed in regulations of the Minister of Construction and pays taxes on housing lease as prescribed before leasing houses. If a foreign individual gets married to a Vietnamese citizen or an oversea Vietnamese, he/she qualifies for stable and long-term homeownership and has all rights of homeowner similarly to Vietnamese citizens.

If the homeowner is a foreign organization, its house is/are only provided for their employees but it is not allowed to use their house for lease, offices, or other purposes.

The above are provisions on rights and obligations of foreign organizations and individuals when owning properties in Vietnam. For specific matters, please consult with property, real estate lawyers for legal advice for the property transaction from deposit agreement, house sales and purchase agreement, and registration of ownership with authorities for certificate of land use right, or house owership certificate of to avoid property disputes in Vietnam, where the house ownership, land use rights are restricted for foreigners.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang, will help customers conveniently drafting contracts, Debt Recovery, Set up business, Foreign invest, Real estate ....

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What Rights Shareholder Holds in Joint Stock Company?

 Shareholders are individual or organization that owns at least one share of the joint-stock company and also are owner of the joint-stock company. Along with these roles, their interests are tied to business operations although they may not directly manage the day-to-day company affairs. In order to implement governance, the powers and responsibilities of each interest group such as shareholders, the board of directors, managerial personnel, etc. should be assigned based on the statutory principles and procedures.

According to the regulations on shareholders in the Law on Enterprise 2020, the rights of shareholders can be categorized into the following groups: economic rights, governance rights, information rights, and litigation rights.

Economic rights

Economic right is the right to gain all pecuniary interest with respect to the shares. The purpose of starting a business or investing in securities comes mainly from earning income or gaining profits. Economic rights accordingly include:

-Right to entitlement to dividends

-Right to transfer ownership

-Priority right to acquire the newly issued shares

-Right to entitlement to a portion of the assets after dissolution or bankrupt

-Appraisal Right

Among these above rights, right to entitlement to dividends and right to transfer ownership are the fundamental economic rights of a shareholder.

Dividend of common shares is determined according to the realized net profit and the dividend payment from the company’s retained earnings. Despite right to entitlement to dividends, shareholders are still subject to a number of limitations in law and in fact. Dividend entitlement is determined by the General Meeting of Shareholders based on the recommendation of the Board of Directors, after the company has fulfilled tax obligations and other financial obligations, contributed to reserve fund, paid for previous losses and met the solvency for all due debts and other property obligations. Dividend is not required to be distributed annually. Depending on the business situation, the General Meeting of Shareholders may decide to retain profits for reinvestment.

Besides dividend entitlement from the company’s operating results, shareholders can also gain profits by share transfer. This kind of investment is popular with respect of shares or securities of public companies, investors do not aim for corporate governance rights as well as dividend, they intend to earn benefits by the difference of the market values of stocks, especially when the stock value increases.

Governance rights

Modern corporate governance has two principles, one is to separate ownership and governance and to separate governance and management. It means that the major shareholders should not hold senior managerial positions in the company and Chairperson of the Board of Directors should not be assigned to other senior managerial positions such as General Director and/or Director.

Shareholders may be an individual or organization which they have their own different interests, goals and abilities. The separation between ownership and management makes the situation of whom the owner is and how the share get transferred not to affect the business operation. In the meantime, the separation helps gather professional managers to implement target intended by the company. According to the laws, members of the Board of Directors of a public company concurrently holding several executive titles must be reduced to the minimum to ensure the independence of the Board of Directors, specially the Chairperson of the Board of Directors shall not be the Director/General Director in a public company as of August 1st, 2020. There are no similar rules applicable to joint stock companies which are not public company.

Attendance, speaking and voting at General Meeting of Shareholders are fundamental in governance right of common shareholders, applicable to all shareholders holding at least one share. ty. In principle, being a shareholder who holds shares of the company regardless of the number has equal rights to attend and vote at the General Meeting of Shareholders. By the General Meeting of Shareholders, the shareholders holding a certain number of shares can impact decisions on some matters such as election, dismissal, and removal of members of the Board of Directors and Controllers, amendment and supplementation of internal documents, major transactions, and others as stipulated in law on enterprise or charter. In addition to the above rights, the majority shareholders also have a number of other rights related to governance as follows:

The shareholder or group of shareholders holding at least 5% of the total number of common shares (charter may require a smaller percentage) is entitled to:

-Call a General Meeting of Shareholders

-Request Board of Controllers to inspect each specific matter relating to management, governance of company affairs if necessary

-Recommend matters to be included in agenda of General Meeting of Shareholders

-The shareholder or group of shareholders holding at least 10% of the total number of common shares (charter may require a smaller percentage) is entitled to nominate candidates for the Board of Directors, Board of Controllers

Information rights

Shareholders have the right to access documents and information of the company. In addition to the basic documents such as the charter, list of shareholders, meeting minutes and resolutions of the General Meeting of Shareholders, shareholders have the right to access to reports related to the business affairs.

However, some information is only reviewed by shareholders who own required percentage of share:

-Access and extract information on full name and contact address as specified in list of shareholders having voting right and list of shareholders having right to attend General Meeting of Shareholder; request to adjust his/her inaccurate information

-Access, extract and scan charter of company, meeting minutes of General Meeting of Shareholder and its resolution

-Access, extract and copy partial or whole list of involved persons and their contracts, transaction of which the company is other party, interests of Board of Directors, Controllers, Directors or General Directors and other managerial positions of company

-Access and extract minutes and resolutions of Board of Directors, annual or mid-year financial reports, reports of Board of Controllers, contracts and transaction approved by Board of Directors and other documents, excepting for documents related to company’s know-how and trade secrets (applicable to shareholder and group of shareholders who own at least 5% of total number of common shares, the charter may require a smaller percentage)

-Access profit and loss statements, financial reports, governance and management assessment reports; inspection reports of Board of Controllers (applicable to shareholder who own shares at least 1 consecutive year, the charter may require a smaller percentage)

Different to common joint stock company, a public company must announce fully, accurately and promptly the periodic and extraordinary information on business, finance and governance. Other information must be announced if it influences share price and investment decisions of shareholders and investors.

Litigation rights

The Law on Enterprises has provided a mechanism to request the Court or Arbitration to rescind the resolution of the General Meeting of Shareholders or sue the managerial personnels when they fail to fully and properly implement their tasks, including:

The shareholder or group of shareholders holding at least 5% of the total number of common shares (charter may require a smaller percentage) is entitled to:

-Request to rescind resolutions of the General Meeting of Shareholders when the orders and procedures of calling the meeting and making resolution of the General Meeting of Shareholders seriously violate the regulations of the Law on Enterprises and company’s charter

-However, the resolution of the General Meeting of Shareholders adopted by 100% of the total number of voting shares is legal and effective even when the orders and procedures of calling the meeting and adopting such resolution violates regulations of the Law on Enterprises and company’s charter.

-Request to rescind resolutions of the General Meeting of Shareholders when its provisions violates the laws or company’s charter

-The shareholder, group of shareholders holding at least 1% of the total number of common shares is entitled to:

-Sue members of Board of Directors, Directors, General Directors separately or jointly under certain circumstances

The Chairperson of Board of Directors or the Director or General Director usually acts as the legal representative of the company, representing the company to perform rights and obligations arising from the company’s transactions, representing the company to take proceedings before the court or arbitrator. However, when their interests conflict with those of the shareholders, shareholders have the right to initiate a lawsuit claiming benefits or compensation. The Law on Enterprise also permits shareholders to sue on behalf of the company when the above managerial personnels commit violations, causing damage directly to the company and indirectly to shareholders.

Not all shareholders have the right to sue for the above managerial personnels, only those who own at least 1% of the total number of common shares. This restriction makes sense with respect of public companies, in order to eliminate unfair competition actions conducted by minority shareholders who is controlled by the rival companies because amount of 1% in public company is not a small number.

Similar to a lawsuit against a manager, shareholder or group of shareholders is also required to own at least 5% of the total number of common shares to request rescission of the resolution of the General Meeting of Shareholders if there is violation on substantive law and procedural law. Accordingly, all resolutions of the General Meeting of Shareholders violating the substantive laws or the company’s charter are rescinded at the request of shareholders, but only serious procedural violations may be rescinded. There is no specific instructions for serious procedural violations at this time, the assessment will depend on personal perspective of the court and arbitrator.

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Startup Company in Vietnam

 From 2015 onwards, the wave of small and medium-sized startups in Vietnam has been developing rapidly. This development is followed by government’s support in forming legal corridors, scheme to favour startup ecosystem and encourage science and technology organizations, research institute, technology incubator, etc. To be deemed as a startup, an individual or business must start their own business along with an innovative idea. Currently, startup is the legal term as recognized under the laws, especially on Law on Small and Medium Enterprises Assistance 2017.

For clarification, small and medium startups are small and medium enterprise (“SME”) established to implement its business ideas based on the utilization of intellectual property, technology and new business models and are able to grow rapidly. These enterprises are in the stage of getting a business up and running, attaches to science and technology or find out new business models, provide products and services to new market segmentation, growth rapidly and make a difference to domestic and foreign enterprises.

Directive 9/CT-TTg dated on February 18th, 2020 of the Prime Minister requires relevant ministries and agencies such as the Ministry of Planning and Investment, Science and Technology, etc. to implement solutions, remove barriers and resolve difficulties, issue policies to create favorable conditions for startups. These include the proposal to amend the Law on Investment in the direction of facilitating foreign investors to establish, contribute capital, purchase shares, or contributed capital of startup investment funds in Vietnam. Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for issuance or amendment of the Investment Registration Certificate, except for the establishment of small and medium-sized startups and startup investment funds in accordance with the Law on Small and Medium Enterprises Assistance. Although the Law on Small and Medium Enterprises Assistance 2017 and guiding decrees have taken effect, it is not clear what procedures the foreign investors are required to do to set up a SME startup. It is necessary to wait for specific instructions for startup formation.

Moreover, according to the Law on Investment 2020, startup investment projects are included in the beneficiaries of investment incentives as recently added. Technology and intellectual property exploitation are two of subjects which are considered as startup projects. The technology sector, before the Law on Investment 2020 takes effect, has achieved a number of tax incentives for eligible enterprises, for example: enjoying enterprise income tax at rate of 10% for 15 year or tax exemption for four years, 50% reduction of taxable for the next nine years, not subject to value added tax. Furthermore, SME startups selected for SME support project are entitled to enjoy the following assistances: (i) consultation on intellectual property, intellectual property utilization and development; (ii) procedures for technical regulations and standards, quality measurement, testing and improvement of new products and business model; (iii) technology uses and transfers; (iv) training, information, trade promotion and commercialization; (v) use of technical facilities, incubators, and common working areas according to Decree No. 39/2018/ND-CP.

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers have Attorneys in Hanoi, Attorneys in Ho Chi Minh and Attorneys in Danang, will help customers conveniently drafting contracts, Debt Recovery, Set up business, Foreign invest, Real estate ....

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Why Da Nang is a Place for Setting up Business?

 Da Nang has been creating flexible policies, good environments attracting foreign investors setting up company, building factory, and developing service business.

Da Nang is a social and economic center of central area of Vietnam with the role as the center of industry, trade and tourism and service. It is a seaport city, an important transport hub for the transit of domestic and international transportation. Presently, Da Nang has been rising as a comprehensive and sustainability developing city.

With the advantages of geographical location, people and nature, the leader of Da Nang is planning to build the city becoming a major tourist center of the country, developing tourism industry with entertainment centers and luxury resorts in Vietnam.

In practice, Da Nang has been reducing administrative procedures, creating favorable conditions for investors in obtaining certificate for investment. In the meantime, the city also supports investors understanding the information and maintaining direct dialogue mode with businesses leaders and managers in order to promptly assist any difficulties encountered by investors in the process of project implementation. Da Nang’s leaders are famous in being proactive in providing the latest information about the law in investment, especially information on the process of changing investment certificate… to facilitate the investment plan of the investors whom are investing in Da Nang. For investment projects in infrastructure construction using ODA capital, the city has been quickly implemented the clearance and compensation in time to hand over the project site to the investors as planned.

To ensure the tourism environment and sustainable development, the city focuses on attracting projects in high technology industry, supporting industry and services with high added value i.e. information technology, education, healthcare and logistics…, especially favouring clean and quality projects rather than large projects but are likely to cause environmental issues.

Along with economic development, Da Nang also has activities and measures for environmental protection by investing in building projects to protect and improve the environment such as: modernization the sewer and wastewater treatment system (JICA), building east-west economic corridor (ADB)… to ensure sustainable and long term development of the economy.

An important element for economic development is the local security. Da Nang has done a great job in maintaining public security in order to guarantee investors a stable and safe political, social environment for investors.

It can be seen that Da Nang converges suitable elements and really is a promising land for investors both domestic and international, to invest in entertainment, real estate, tourism, IT, healthcare, education services.

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Mergers and Acquisitions

 Business and legal issues today are intertwined as never before.

The increasing globalisation of competition, the rise of emerging markets including Vietnam, the persistence of volatility, and the sharp increase in global regulatory scrutiny are some of the many factors that have led to an increase in strategic transactional activity—including acquisitions, disposals, mergers, strategic alliances, restructurings, spinoffs, IPOs, and joint ventures in Vietnam.

From a business point of view, today’s environment is more complex, more competitive, and more fast-paced than ever. From a legal point of view, it has never been more important to get the due diligence, tax, structuring, compliance and contracts right, from start to finish. And in this competitive environment, timing is more critical than ever.

That’s why it makes sense to work with a legal network whose service offering is embedded within the powerful capabilities, sector exposure, and footprint of a global business services leader. One who can quickly mobilise a co-ordinated, integrated, highly effective team to help you gain maximum value from your deal.

Innovative, business-focused legal solutions

ANT Lawyers’ legal services bring the best of both worlds to your strategic transactions.

We offer a wide array of integrated legal capabilities, along with deep cross-border deals experience, and the international and Vietnamese proficiency of M&A-focused corporate lawyers,

Whether you are working on the sell side or the buy side, cross-border or nationally, or on a small, midsize or large deal, we offer a full complement of transaction-focused legal services, including world-class due diligence, tax and legal structuring, contract negotiation, regulatory documentation, and advice on management-team incentive schemes.

One network, one global team: A seamless, co-ordinated approach

Our M&A lawyers work alongside leading practitioners from other divisions in tax, transactions, human resource services, corporate finance, investment funds and financial services regulation. Working as a single team, we can bring you innovative, integrated, commercially focused solutions to some of the most challenging business issues a company can face.

From letter of intent to the closing of the transaction, we maintain a rigorous focus on two things: the successful execution of every aspect of your deal, and capturing the maximum value for your organisation.

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10 Questions to Ask Before Setting up Company in Vietnam

 Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firms in Vietnam for advice and service offering.

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding… which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?

Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e. trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

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How Foreign Entity Could Set-up Representative Office in Vietnam

 A foreign business entity or a foreign trader is allowed to establish Representative Office in Vietnam according to the Commercial Law.

Representative office of a foreign business entity in Vietnam (referred as “Representative Office”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to survey markets and to undertake a number of commercial enhancement activities permitted by the law of Vietnam. Representative Office will need to apply and obtain the establishment license; and have a seal bearing the name of the representative office.

Setting up a Representative Office is less complicated than setting up company in Vietnam. The Vietnam Department of Trade will be approving the establishment of Representative Office in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam. The time duration to establish a Representative Office is shorter than to establish a company. There are fewer conditions to meet than conditions in setting up company in Vietnam. The main difference between a Representative Office and a company in Vietnam is that the Representative Office could not directly conduct profit making activities.

Rights of the Representative Office:

To operate strictly in accordance with the purposes, scope and duration stated in the license for establishment of such representative office;

To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the Representative Office;

To recruit Vietnamese and foreign employees to work for the Representative Office in accordance with the law of Vietnam;

To open accounts in foreign currency and in Vietnamese Dong sourced from foreign currency at banks which are licensed to operate in Vietnam, and to use such accounts solely for the operation of the Representative Office.

Obligation of the Representative Office:

Not to directly conduct profit making activities in Vietnam;

Not to enter into commercial contracts of the foreign business entity or to amend or supplement such contracts already signed except where the head of the Representative Office has a valid power of attorney from the foreign business entity;

To pay taxes, fees and charges and to discharge other financial obligations in accordance with the law of Vietnam;

To report on the operation of the Representative Office in accordance with the law of Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Representative Office in Vietnam if this company has real demand to open the market in Vietnam and meet conditions as below:

Being a business entity or trader recognized by the law of the country or the territory (hereinafter referred to collectively as the country) where it has been lawfully established or made its business registration;

Having been operating for at least one year after its lawful establishment or business registration in its country.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

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How to Set-up Travel Services Business in Vietnam

 Foreign investor could only set-up joint venture with Vietnam travel agency to set-up travel services business in Vietnam because transport of passenger belongs to investment areas with conditions applied to foreign investor in Vietnam.

No one could deny that information technology has tremendously changed the way travel services business operates. The use of booking reservation system application on smartphone and internet are widespread that make travel has never been easier. Foreign investor would be interested to explore the travel services market. However, 100% foreign owned company is not allowed to set-up travel services business in Vietnam. As this investment area is conditional, it is advised that a law firms in Vietnam should be consulted to ensure compliance with local regulations.

The application process and documents requirements are briefly as following:

I. Required documents:

Application for the International Travel Business License (form);

Certificate of business registration (copy – certified)

Business plan for the international travel agency;

Tour schedule

Proof of at least 4 years of experience in international travel business operations

Certified copies of the tourist guides’ cards whereby at least 3 international tourist guides are required

Confirmation of bank deposit (as per regulations);

Proof of office premises or legally registered place of business

II. Business License Application Procedure

Submission of the required documents to the correct authority (Department of Culture, Sports and Tourism of the province/city where the business is headquartered).

The Department of Tourism of the province/city completes the records of appraisal and submits a written request with the agency’s records to the Minstry of Culture, Sports and Tourism in Vietnam within ten working days from the date of receipt of a valid application. When cases are not eligible for the proposed permit to the state agencies, the provincial tourism department shall cite the specific reasons for refusal.

The state management agency of tourism (VNAT – Ministry of Culture, Sports and Tourism) is responsible for reviewing and licensing the international travel business within ten working days from the date of both receipt of the file and written request of the state agency of tourism in the province. In case of refusal, the ministry shall state the specific reasons to the state and provincial tourism authorities

III. Number of records

– Submission to the Department of Culture, Sports and Tourism: 01

– Tourism Authority Filed in: 01

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Can Foreigner Authorize Other Person to Perform Transfer of Properties in Vietnam?

 In the complicated situation of the Covid-19 epidemic, the Government continued to implement policies to restrict entry to Vietnam, thus many transactions were canceled or delayed. That has caused many obstacles for foreign individuals and organizations wishing to perform transactions in Vietnam. We refer to the transfer of home ownership for foreign individuals who cannot enter Vietnam to participate in signing transfer contracts and other related transactions i.e. sell or buy an apartment or a house located in Vietnam.

Pursuant to the law on housing, foreign organizations and individuals have the right to own house in Vietnam, before the time limit of the homeownership, the homeowner is entitled to gift or sell their house(s) to entities eligible for the homeownership in Vietnam; if not, their house(s) shall be under ownership of the State. Regarding the house ownership term, if a foreign organization or individual sells or gifted to a domestic organization, household, individual, or a Vietnamese citizen residing overseas, the buyer or recipient will acquire a long-term ownership of the house. If the house is sold to a foreign organization or individual eligible to own housing in Vietnam, the buyer or recipient may own the house for the remaining period. When this period expires, if the owner wishes to have this period extended, the State shall consider granting an extension. The seller or giver must pay tax and other amounts to state budget as prescribed by Vietnam’s law.

In accordance with the law on housing transactions, the seller or transferor of the commercial house sale and purchase contract must meet the following conditions:

He/she is the homeowner, or the person permitted and authorized by the homeowner to enter into housing as prescribed in this Law and law on civil; if the agreement of commercial housing is transferred, he must be the buyer for housing of the investor or the transferee of the agreement on housing sale;

If the entity is a person, he must have full civil capacity to enter into transactions in housing as prescribed in law on civil; if the entity is an organization, it must have legal personality.

Article 195 of the 2015 Civil Code stipulates: “A person who is not an owner of property has the right to dispose of property only under the authorization of the owner or according to the provisions of law.”

Clause 2 Article 55 of the Law on Notarization 2014 stipulates: “In case both the authorizing party and authorized party cannot appear together at the same notarial practice organization, the authorizing party shall request the notarial practice organization of the place of residence of the authorizing party to notarize the authorization contract; the authorized party shall request the notarial practice organization of the place of residence of the authorized party to further notarize the original of this authorization contract and complete procedures for notarization of the authorization contract.”

In order to perform the house purchase and sale transaction or in other words to buy a apartment or sell a house in Vietnam, the parties to the house transaction need to agree to make a sale contract or a document on the transfer of a commercial house sale and purchase contract. In case a foreign house owner cannot enter directly to sign a contract, he/she may authorize another individual or organization in Vietnam to perform instead. However, the authorization document needs to be notarized at the competent authority. In case a power of attorney is notarized at a competent agency in a foreign country, it is required to be notarized, legalized, and authenticated in accordance with regulations of the foreigner country (apostille) before that document can be used in Vietnam.

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Securities and Capital Markets

 From debt and equity issues through to derivatives and structured finance, our capital markets practice advises on the full range of foreign and domestic laws through our global network of affiliate offices.

A key strength of our practice is the ability to offer a global team combining technical expertise and wealth of experience with regular contact with listing authorities and regulators. With experience of across the Euromarkets, the U.S. capital markets and Asia, we work closely with our clients to meet their expectations of, and need for, a full securities law service. We are one of a few Vietnam law firms that could offer services oversea taking advantage of our internaltional law firm networks. whom are familiar with international capital markets.

We advise on all types of international securities transactions, with our practice covering equity, debt, regulatory capital and equity-linked (convertible and exchangeable) bond issues, structured finance and securitisation transactions and the full range of derivative products. We regularly act for local enterprises and foreign invested businesses in Vietnam.

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How to Obtain Business Registration Certificate in Vietnam?

 How to Obtain Business Registration Certificate in Vietnam?

Every organization and individual wishing to set up a foreign owned company in Vietnam shall need to meet some specifics conditions as promulgated under the Law on Investment and Law on Enterprise. In specific areas being considered as conditional investment, the investor shall also need to consult with the law governing the area of investment. Once the investment registration certificate is completed, the investor has the obligation to apply for enterprise registration.

The procedure to register for a certificate of enterprise registration of a joint stock company or limited liability with two or more members are herein mentioned:

Dossiers:

i) Application form for enterprise registration

ii) The company’s charter.

iii) A list of founding shareholders and shareholders being foreign investors/ a list of capital contribution members.

iv) Valid copies of:

Copies of the ID card or other ID papers of founding shareholders and foreign investors/members being individuals; list of authorized representatives of foreign shareholders being organizations.

Decision on establishment, certificate of business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations.

If shareholders are foreign organizations, the copy of the certificate of business registration or an equivalent document must be notarized, legalized and authenticated.

The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

State Authority: Business registration office of the province where the enterprise’s headquarters is situated.

Period: within 03 working days from the full receipt of the dossiers

Result: Business registration office shall issue the certificate of enterprise registration or if the application is not satisfactory, business registration office shall inform the applicant of necessary revisions and supplementation to company.

In general, Vietnam government encourages foreign direct investment. If the investor faces challenges at state authority, whom do not issue notification or request of supplementation to the application for enterprise registration, the investor cold lodge a complaint as prescribed by regulations of law on complaints and denunciation to the state authority to protect its right in doing business and investment in Vietnam. A law firms in Vietnam with expertise in both business registration and dispute resolution could assist the investor in the process.

The enterprise is entitled to do business from the issuance date of the certificate of enterprise registration. For conditional business lines, enterprises are entitled to engage in conditional business lines if they satisfy all conditions and are capable to maintain fulfillment of such conditions throughout their operation.

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Handling Violations of Competition Laws in Vietnam

 Foreign brands are increasingly popular in the Vietnam market as Vietnam economy integrates into world economy. The openings of economy creates opportunities to attract foreign investment into Vietnam through establishment of companies. To continue to protect the fair competition, and interest of consumer, it is important that the Vietnam state authority ensures the business environment. Accordingly, violations related to competition will be handled in accordance with the law.

Acts of violation of competition under Vietnam laws are defined in Article 1 of Decree 71/2014 / ND-CP, including: violations of regulations on control of acts of restraint of competition; acts of violating regulations on acts of unfair competition; violations of other provisions of law on competition. According to the provisions of law, the above acts shall be subject to the forms of punishment and fine. The most common and most powerful impact on businesses and consumers are the violation of unfair competition.

In practice, there are a number of instances where unfair competition acts are associated with intellectual property rights violations, which have a significant impact on business activities of enterprises in the same field; violation of business secrets; activities of advertising that are prohibited i.e. make direct comparison against competitor, provide falsified or confused information to consumers…

If committed acts of unfair competition, the violator will be subject to fine level from VND 10,000,000 to VND 140,000,000. At the same time, additional measures and remedies will be applied, depending on the seriousness of the breach, such as the revocation of the enterprise registration certificate; deprivation of the right to use licenses or practice certificates; confiscation of material evidences and means used to commit the violation, including the confiscation of profits earned from the commission of the violation; to restructure the enterprise, rectify to the public…

From the management of state authority, the detection and handling of unfair competition acts create conditions for enterprises to have equal opportunities in the market economy. From the enterprise’s perspective, it is important to continuously review its business activities in Vietnam to ensure compliance to competition law by its lawyers.

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Startup Company in Vietnam

 From 2015 onwards, the wave of small and medium-sized startups in Vietnam has been developing rapidly. This development is followed by government’s support in forming legal corridors, scheme to favour startup ecosystem and encourage science and technology organizations, research institute, technology incubator, etc. To be deemed as a startup, an individual or business must start their own business along with an innovative idea. Currently, startup is the legal term as recognized under the laws, especially on Law on Small and Medium Enterprises Assistance 2017.

For clarification, small and medium startups are small and medium enterprise (“SME”) established to implement its business ideas based on the utilization of intellectual property, technology and new business models and are able to grow rapidly. These enterprises are in the stage of getting a business up and running, attaches to science and technology or find out new business models, provide products and services to new market segmentation, growth rapidly and make a difference to domestic and foreign enterprises.

Directive 9/CT-TTg dated on February 18th, 2020 of the Prime Minister requires relevant ministries and agencies such as the Ministry of Planning and Investment, Science and Technology, etc. to implement solutions, remove barriers and resolve difficulties, issue policies to create favorable conditions for startups. These include the proposal to amend the Law on Investment in the direction of facilitating foreign investors to establish, contribute capital, purchase shares, or contributed capital of startup investment funds in Vietnam. Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for issuance or amendment of the Investment Registration Certificate, except for the establishment of small and medium-sized startups and startup investment funds in accordance with the Law on Small and Medium Enterprises Assistance. Although the Law on Small and Medium Enterprises Assistance 2017 and guiding decrees have taken effect, it is not clear what procedures the foreign investors are required to do to set up a SME startup. It is necessary to wait for specific instructions for startup formation.

Moreover, according to the Law on Investment 2020, startup investment projects are included in the beneficiaries of investment incentives as recently added. Technology and intellectual property exploitation are two of subjects which are considered as startup projects. The technology sector, before the Law on Investment 2020 takes effect, has achieved a number of tax incentives for eligible enterprises, for example: enjoying enterprise income tax at rate of 10% for 15 year or tax exemption for four years, 50% reduction of taxable for the next nine years, not subject to value added tax. Furthermore, SME startups selected for SME support project are entitled to enjoy the following assistances: (i) consultation on intellectual property, intellectual property utilization and development; (ii) procedures for technical regulations and standards, quality measurement, testing and improvement of new products and business model; (iii) technology uses and transfers; (iv) training, information, trade promotion and commercialization; (v) use of technical facilities, incubators, and common working areas according to Decree No. 39/2018/ND-CP.

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Granting Investment Registration Certificate in Vietnam

 As Vietnam integrates further into the global supply chain, foreigners are more and more encouraged to invest in Vietnam in many areas for pursuing profit. The foreign direct investment of the foreigners is required to be registered at Vietnam state authority to protect the rights of the investor. The investors could then set up company and apply for obtain investment certificate in Vietnam

According to the Law on Investment 2014, investment projects of foreign investors; projects of setting up a economic organization in which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners in a partnership; projects of BCC contract between domestic investors and foreign investors or between domestic investors and economic organization which foreign investors holding 51% of charter capital or more or the majority of the general partners are foreigners shall need to conduct the procedure of applying investment registration certificate as regulations of law.

Preparation of dossier

A written request for permission for execution of the investment project;

A copy of the ID card or passport (if the investor is an individual); a copy of the Certificate of establishment or an equivalent paper that certifies the legal status of the investor (if the investor is an organization).

An investment proposal that specifies: investor(s) in the project, investment objectives, investment scale, investment capital, method of capital rising, location and duration of investment, labor demand, requests for investment incentives, assessment of socio-economic effects of the project;

Copies of any of the following documents: financial statements of the last two years of the investor; commitment of the parent company to provide financial support; commitment of a financial institutions to provide financial support; guarantee for investor’s financial capacity; description of investor’s financial capacity;

Demand for land use; if the project does not use land allocated, leased out by the State, or is not permitted by the State to change land purposes, then a copy of the lease agreement or other documents certifying that the investor has the right to use the premises to execute the project shall be submitted;

Explanation for application of technologies to the project which specifies: names of technologies, origins, technology process diagram, primary specifications, conditions of machinery, equipment and primary technological line;

The business cooperation contract (BCC) (if the project is executed under a BCC).

Order and Procedure

Investors submit the dossier at Department of Planning and Investment (or management of economic zones, high-tech zones);

Within 15 working days from the date of receipt of a complete and valid dossier, the competent authority shall grant the investment registration certificate for investors.

In practice, the time duration would be lengthened due to the time for preparation of documents from investor, getting them notarized, legalized and authenticated before being accepted in Vietnam. The documents in foreign languages shall need to be translated into Vietnamese. The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance to the regulations of Vietnam. It is advised that the client engage professional law firms in Vietnam to assist with advisory and investment registration process.

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