VIETNAM


b) Any investment caps and other legislative restrictions; With its accession to the WTO, Vietnam has opened its economy to foreign investment and reserved only limited sectors where FDI is subject to a phased-out schedule before complete market opening. However, Vietnam does provide more favourable treatment to foreign investors from certain countries, such as Japan, where bilateral investment agreements exist.


c) Which party must notify and when/if notification is mandatory or voluntary; To obtain approval for FDI projects in Vietnam, foreign investors must apply and submit an application dossier at the relevant licensing authority. The licensing authority has a certain level of discretion in approving or rejecting the application.


d) What information must be included with notification and what is the review fee; Information required can be separated into two categories. The first category includes information about the investor, for instance, the investor’s corporate record details, and the individual representing the investor. The second category includes information about the company to be set up, and a description of the project to be implemented by the company. Under the second category, the most important information is the amount of capital to be contributed, and the business lines to be engaged.


The licensing authority does not charge to review the application dossier. 4.1 Tax and grants


e) How long does the review and approval process take, and are there any fast-track options; There is no fast-track option. The time for review and the approval processes vary. For sectors where the FDI project must first obtain the Prime Minister’s approval, it may take up to 6 to 12 months. The registration procedure takes roughly half a month; the evaluation procedure takes roughly four months.


f) Is there the ability to consult on a named or unnamed basis; The investor may consult with Vietnamese relevant authorities. Consultation can be conducted via meeting, telephone, or written documentation.


g) Does notification/review occur pre- or post-closing, and are there any pre-or post-filing requirements unique to FDI; The assessment and review by the authorities are conducted after the full application dossiers have been submitted. If the application is successful, an IC is issued.


h)What is the position if no response is received on an application for approval and are there any rights of appeal from disapproval? Investors may lodge a claim in case no response is received on their application, or in case of disapproval. A response is usually given within 15 business days of receipt.


3.2 Briefly explain the investment restrictions for any special/restricted sectors. For investment projects involving sectors or activities which may affect the environment (for instance, manufacturing) such projects are likely required to be located in an industrial zone, and may require an environmental impact evaluation report.


For certain service sectors listed in the WTO commitments, the approval for an FDI project is subject to a phased-out market opening timeline. From January 2014, most of the restrictions on FDI in service sectors under the WTO commitments will be relaxed or removed entirely.


For projects involving import, export and distribution services, investors must come from WTO member countries, provide proof of financial strength, and have sufficient relevant experience in these sectors.


4.1 Are there tax structures and/or favourable intermediary tax jurisdictions that are particularly useful for FDI into the country? Both domestic companies and foreign invested companies are governed by the same tax framework. Vietnam has bilateral tax avoidance treaties with some countries, of which the treaty with Singapore enables Singapore investors to be exempt from capital gains tax in Vietnam.


4.2 What are the applicable corporate tax rates? A company is generally subject to the corporate tax rate of 22% from January 1 2014 until December 31 2015, and 20% from January 1 2016 onward. Lower tax rates may apply to enterprises meeting specific conditions set forth in the new tax laws.


4.3 Does the government have any FDI tax incentive schemes in place? Projects in encouraged sectors and located in areas of socio-economic difficulty, economic zones, and hi-tech zones, may enjoy the following: (i) exemptions from certain import duties; and (ii) reduction or exemption on corporate income tax.


4.4 Other than through the tax system, does the government provide any other financial support to FDI investors? In addition to tax incentives, qualified investment projects may enjoy lower rates, reduction, or exemption on land rents or land use levies.


5. Operating locally


5.1 What is the most common governing law of contracts and local business language? Vietnamese law remains the most common governing law of contracts.


The most common business language in Vietnam is Vietnamese and, for transactions involving foreign elements, English is the dominant foreign language.


For very special services such as banking, insurance, finance, and securities, FDI approval is subject to higher scrutiny, requiring the satisfaction of more stringent conditions.


3.3 Which authority oversees competition clearance, when is notification mandatory, and briefly explain the merger clearance process? The Vietnam Competition Authority has oversight over competition matters. Save for some exemptions stipulated by law, a merger, acquisition or consolidation which likely results in a combined market share between 30% and 50% of the relevant market must obtain approval. A combined market share greater than 50% is prohibited except in exceptional circumstances.


There are no deadlines or fees to submit a notification of a merger (subject to review). The clearance process requires the submission of a file containing a number of items, including the business details of the relevant companies, financial statements, a list of goods and services, and a report on relevant market share. The entire file must be notarised, consularised, and translated into Vietnamese. A written response will be provided within 45 days after the file has been received, which may be extended twice, for a maximum of 30 days each time, for complex transactions.


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IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014


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