Nowadays, we are welcoming the Foreign Direct Investment (FDI), along with the offshore investment of Vietnamese Companies, typically as Viettel and Hoang Anh Gia Lai in Myanmar and African countries.
In order to clarify the proceeding for Clients, we would like to introduce the legal instrument as follows:
I. Legal foundation:
1. Chapter VIII (Article 74 – Article 79) of Law on Investment No. 59/2005/QH11 dated 29/11/2005;
2.Decree No. 78/2006/ND-CP dated 09/8/2006.
2.1 Applicable investors:
All the Enterprises under the current Vietnamese Law such as:
1. Limited liability companies, joint-stock companies, partnerships and private enterprises, which have been granted business registration certificates under the Enterprise Law.
2. Enterprises established under the State Enterprise Law, which have not yet been re-registered under the Enterprise Law.
3. Foreign-invested enterprises established under the Foreign Investment Law, which have not yet been re-registered under the Enterprise Law and the Investment Law.
4. Enterprises of political organizations or socio-political organizations, which have not yet been re-registered under the Enterprise Law.
5. Cooperatives, unions of cooperatives, which are established under the Cooperative Law.
6. Medical, educational, scientific, cultural or sport service establishments/institutions and other service establishments conducting profitable investment activities.
7. Vietnamese business households and individuals.
2.2 Offshore direct investment conditions:
1. Having offshore direct investment projects (hereinafter called investment projects).
2. Fulfilling all financial obligations towards the State of Vietnam.
3. Observing the provisions of law on management and use of state capital, for cases of using state capital for offshore direct investment.
4. Having been granted investment certificates by the Ministry of Planning and Investment.
2.3 Offshore direct investment capital:
Offshore direct investment capital may take one of the following forms:
1. Foreign currencies.
2. Machinery, equipment; supplies, raw materials, fuels, goods being finished or semi-finished products.
3. Value of industrial property rights, technical know-how, technological processes, technical services or intellectual property rights.
4. Other lawful assets.
2.4 Format of the offshore investment:
Direct and indirect investment;
Until now there has not been any document guiding indirect investment. (Section 2, Article 16, Decree 160/2006/ND-CP dated 28/12/2006 regulates that: “The Head of State Bank of Vietnam will clearly regulate the conditions and proceedings of foreign currency in offshore indirect investment”.
2.5 Competence to approve and issue the Certificate of offshore direct investment:
Competence to approve investment of the Prime Minister:
The Prime Minister shall approve investment for the following projects:
1. Projects of investment in banking, insurance business, financial, credit, journalism, radio or television broadcasting or telecommunications domains, which are funded with VND 150 billion or more of state capital, or VND 300 billion or more of capital of other economic sectors.
2. Investment projects defined in Clause 1 of this Article, which are funded with VND 300 billion or more of state capital, or VND 600 billion or more of capital of other economic sectors.
Competence to grant investment certificates of Ministry of Planning and Investment:
The Ministry of Planning and Investment shall grant investment certificates to the following investment projects:
1. Investment projects approved by the Prime Minister.
2. Investment projects not defined as approved by the Prime Minister.
2.6 Investment certificate-granting process:
The grant of investment certificates shall go through the following processes:
1. The process of registration and grant of investment certificates, applicable to investment projects capitalized at less than VND 15 billion.
2. The process of examination and grant of investment certificates, applicable to investment projects capitalized at VND 15 billion or more.
3. Application form in Decision 1175/2007/QD-BKH dated 10/10/2007.
2.7 Modification of investment certificates:
If wishing to adjust investment projects already granted investment certificates regarding the investment objectives, investment size, investment capital, investors, investment-receiving countries or investment project-execution durations, investors shall fill in the procedures for modification of their investment certificates according to the following processes:
1. The process of registration and modification of investment certificates, applicable to the following cases (Article 16, Decree 78):
a/ The modified contents of the investment certificates are irrelevant to the investment scale and domain;
b/ The modified contents of the investment certificates are irrelevant to the investment domains defined in Clause 1, Article 9 of this Decree and the total investment capital, after being increased, shall not exceed VND 15 billion.
2. The process of examination and modification of investment certificates shall apply to the cases outside the scope of registration and modification of Investment Certificate (Article 17, Decree 78).
2.8 Notification on execution of investment projects:
1. Within 60 days after an investment project is approved under legal provisions of the investment-receiving country, the concerned investor shall send a written notice on the execution of the investment project together with the written approval of such investment project or the legal document of equal validity as prescribed by law of the investment-receiving country to the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Trade, the econo-technical branch-managing ministry, the Ministry of Foreign Affairs, the State Bank of Vietnam and the provincial-level People’s Committee of the locality where the investor is headquartered.
2. A written notice on execution of an investment project shall have the following contents:
a/ The name and address of the head office of the overseas economic organization; the name and address of its branch or representative office (if any);
b/ The investment objectives and investment domain(s);
c/ The investment capital of the overseas economic organization; the investor’s capital portion;
d/ The information on the investor’s representative and the representative of the overseas economic organization, including their full names, permanent residence addresses (in Vietnam and in the foreign country), positions, people’s identity card or passport numbers.
3. In case of changes in the contents specified in Clause 2 of this Article, within 30 days after making such changes, the investor shall send a written notice thereon to the Ministry of Planning and Investment.
2.9 Transfer of investment capital abroad: (Article 23, 24 of Decree 78)
1. Investors may transfer investment capital abroad in order to carry out investment activities after fully satisfying the following conditions:
a/ They have been granted investment certificates;
b/ Their investment projects have been approved by competent state agencies of the investment-receiving countries according to laws of such countries.
2. The transfer of foreign currencies abroad before the grant of investment certificates for research into, and preparation of, investment projects shall comply with the provisions of law on foreign exchange management and relevant provisions of law.
3. The transfer of investment capital abroad must comply with the provisions of law on foreign exchange management, export, technology transfer and other relevant provisions of law.
4. All transactions on the transfer of foreign currencies from Vietnam abroad or vice versa, which are related to investment projects, shall be conducted via a foreign currency account opened at a credit institution licensed to conduct foreign exchange activities in Vietnam and be registered with the State Bank of Vietnam.
2.10 Remittance of profits back to Vietnam:
1. Within six months after obtaining tax finalization reports or documents of equal validity under laws of the investment-receiving countries, investors must remit all profits and other incomes generated from their investment projects back to Vietnam.
2. If wishing to prolong the term defined in Clause 1 of this Article, investors must send written requests to the State Bank of Vietnam for consideration and decision, clearly stating the reasons therefor. The prolongation may be effected no more than twice for not more than six months each time.
3. Investors shall fulfill all financial obligations towards the State of Vietnam in accordance with the provisions of law.
4. Where investment projects fall in the domains eligible for investment preferences, the levels of Vietnam’s enterprise income tax imposed on the profits transferred back to Vietnam shall be the same as those applicable to domestic investment projects in the same investment domains.
5. Where the investment- receiving countries are countries or territories which have signed double taxation avoidance agreements with Vietnam, the investors’ tax obligations towards the State of Vietnam shall comply with the provisions of such agreements.
6. Where the investment- receiving countries are countries or territories which have not yet signed double taxation avoidance agreements with Vietnam, the enterprise income tax amounts already paid in such countries shall be deducted upon the calculation of enterprise income tax in Vietnam.
7. The exemption of export tax for property brought to foreign countries for execution of investment projects shall comply with the provisions of law on import and export duties.
2.11 Invalidation of investment certificates:
Giấy chứng nhận đầu tư chấm dứt hiệu lực trong các trường hợp sau:
An investment certificate shall be invalidated in the following cases:
1. Upon the expiration of the term stated in the certificate or of the investment term according to law of the investment-receiving country.
2. The investment project has not yet been executed past the time limit specified in Article 21 of this Decree.
3. The overseas economic organization is dissolved or bankrupt according to law of the investment-receiving country.
4. The investor is bankrupt or dissolved, which leads to the dissolution of the overseas economic organization or the assignment of the whole offshore investment capital to foreign organizations or individuals.
5. Past 12 months after obtaining tax settlement reports or documents of equal validity under law of the investment-receiving country, the investor still fails to make a report on the operation of the investment project according to the provisions of Article 22 of this Decree.
6. The investor violates the provisions of Vietnamese law or the law of the investment-receiving country, which leads to the invalidation of the investment certificate.
7. The investor requests in writing the termination of the investment project, which is approved by the Ministry of Planning and Investment.