Amendment
and supplement to the law on foreign investment in Vietnam
In order to expand the economic
co-operation with foreign countries and to serve the cause of
industrialization and modernization on the basis of ensuring
investors' rights and legitimate interests as well as to
strengthen the efficiency of the State management in relation
to foreign direct investment activities in Vietnam.
Pursuant to the 1992 Constitution of the
Socialist Republic of Vietnam;
This law makes amendment and supplement to
a number of provisions in the Law on Foreign Investment in
Vietnam, which was passed by the National Assembly of the
Socialist Republic of Vietnam on 12 November 1996.
Article 1
Amendment and supplement to some provisions
of the Law on Foreign Investment in Vietnam as the following:
Point 2 of Article 3.2 is amended as
follows:
"2. Regions:
Regions with difficult socio-economic
conditions;
Regions with extremely difficult
socio-economic conditions."
Point 1 of Article 14 is amended as
follows:
"1. The most important issues relating
to the organization and operation of the joint venture,
namely: appointment and dismissal of the General Director or
the First Deputy General Director; amendment to and complement
of the Charter of the enterprise, shall be decided by members
of the Board of Management attending the meeting on the basis
of unanimous decision.
Parties to the joint-venture may agree to
name other issues in the Charter to be decided on the basis of
unanimous decision"
Article 19a is supplemented as follows:
"Article 19a
Enterprises with foreign capital, parties
to the business cooperation contracts during their operation
shall be entitled to convert the form of investment, to divide
or separate, consolidate or merger the enterprise.
The Government shall provide for
conditions, procedures of such conversion of investment form,
division, separation, consolidation or merger of
enterprises."
Article 21 is amended and supplemented as
follows:
"Article 21
During the course of investment in Vietnam,
capital and other lawful assets of foreign investors shall not
be requisitioned or expropriated by administrative measures,
and enterprises with foreign capital shall not be
nationalized.
The State of the Socialist Republic of
Vietnam shall protect industrial property rights and shall
guarantee the legal interest of foreign investors in respect
of technology transfers into Vietnam."
Article 21a shall be supplemented as
follows:
"1. In case interests of enterprises
with foreign capital and the parties to business co-operation
contracts are adversely affected because of changes in
Vietnamese regulations, they shall be continuously entitled to
priorities as regulated in their investment licenses and this
Law or shall be dealt with satisfactorily by the State of
Vietnam through following measures:
Change the objective in operation of the
projects;
Be entitled to tax exemption or deduction
within the legal framework;
The damages of the enterprise with foreign
capital and the parties to business co-operation contracts
will be treated as their loss and be carried forward to the
subsequent years;
Be considered to compensate adequately in
some necessary cases.
2. The new provisions with more favorable
conditions which are issued after the investment license
granted to foreign investors shall be applied to the
enterprise and the parties to business co-operation
contracts."
Article 33 shall be amended and
supplemented as follows:
"Enterprises with foreign capital and
the parties to business co-operation contracts shall be
allowed to buy foreign currency at commercial banks in order
to satisfy current transactions, and other permitted
transactions in compliance with the regulations on foreign
currency management"
The Government of Vietnam guarantees the
balance of foreign currency in respect to the principally
important projects under the Government's programs from time
to time.
The Government of Vietnam assures its
assistance in maintaining foreign currency balance in respect
to the projects on building infrastructure and other important
projects."
Article 34 shall be amended as follows
" Parties to a joint venture are
entitled to assign the value of their capital contributed to
that enterprise provided that priority is given to the parties
in the joint venture enterprise. Where the assignment is made
to a party outside the joint venture enterprise, the
conditions of the assignment must not be more favorable than
those offered to parties in the joint venture. The assignment
of capital must be agreed among the parties of the joint
venture.
The above provisions shall also apply to
the assignment of the rights and obligations of the parties to
business co-operation contracts.
Foreign investors in the enterprise with
100% foreign capital are entitled to assign their capital.
In case, profits arise from the assignment,
the assignor shall be liable to a profit tax rate of 25% on
that profit."
8. Article 35 -Paragraph 2 shall be
supplemented and amended as follows:
"In special cases with the approval of
the State Bank of Vietnam, enterprises with foreign capital
are entitled to open accounts in foreign countries."
9. Article 40 shall be supplemented and
amended as follows
" During the course of operation,
enterprises with foreign capital and foreign parties to
business co-operation contracts may be carried forward their
loss in whatever tax year to the following year and set off
against the profits of subsequent years for a maximum of five
years."
10. Article 41 shall be supplemented and
amended as follows:
" After payment of the tax on profits
and other financial duties, an enterprise with foreign capital
shall withdraw from the remaining profits to establish reserve
fund, welfare fund, extension production fund and other funds
decided by the enterprise."
11. Article 43 shall be amended as follows:
" When transferring profits abroad,
foreign investors shall be taxed at the rate of 3%, 5%, 7% of
the profits transferred, matching with their capital
contribution rates to the legal capital of the enterprises
with foreign capital and to the business cooperation
contracts."
12. Article 44 shall be amended as follows:
"The Vietnamese residing overseas when
investing in Vietnam pursuing provisions of this law shall be
entitled to profits tax reduction of 20% in comparison with
projects of the same category unless they are subject to the
profits tax rate of 10%; and shall be entitled to a
withholding tax rate of 3% on profits transferred
abroad."
13. Article 46 shall be amended as follows:
"Article 46
1. Enterprises with foreign capital, the
parties to business co-operation contracts must pay rent for
the use of land, water or sea surfaces; in case natural
resources are exploited, royalties must be paid pursuant to
relevant provisions.
The Government shall provide rent exemption
and reduction for the use of land, water and sea surface in
respect of Building ? Operation - Transfer, Building- Transfer
- Operation, Building- Transfer projects; projects investing
in regions with difficult socio-economic conditions, and
regions with extremely difficult socio-economic
conditions"
When the Vietnamese party contributes to
the capital by the value of its land-use right, it shall take
responsibility to pay compensations, site clearance and
fulfill the procedures to be entitled to use the land.
If the Vietnamese Government leases the
land, the Provincial People's Committee where the project is
sited shall determine the rent and organize the implementation
of compensation, site clearance, and fulfill the procedures of
land leasing.
Enterprises with foreign capital shall be
entitled to pledge the assets attached to the land and its
land-use right to make guarantees for loans at credit
institutions, which are allowed to carry out business
operation in Vietnam.
The Government of Vietnam shall provide
conditions and procedures of pledging and releasing the
land-use right of enterprises with foreign capital."
14. Article 47 is supplemented and amended
as follows:
"Article 47
1. Products exported or imported by an
enterprise with foreign capital or a party to a business
co-operation contract shall be taxed complying with the Law on
Export and Import Duties.
2. Enterprises with foreign capital and
parties participating in business co-operation contracts shall
be exempted from import duties in respect to merchandises
imported for the purpose of forming fixed assets, such as:
Equipment, machinery;
Specialized transporting means in the
technological assembly, imported means used to carry workers;
Components, elements, lose parts,
attachment, pattern, spare parts attached to equipment,
machinery and specialized means of transport;
Raw and other materials imported for
manufacturing equipment and machinery used in technological
assembly, or for manufacturing components, elements, parts,
attachment, pattern, spare parts attached to equipment,
machinery;
?) Construction materials which have not
been produced domestically.
The exemption from import duties regarding
to imported goods mentioned above shall also apply to
expansion the scale of projects and replacement or renewal of
technology.
3. Materials, components, parts imported
for manufacture projects investing in the investment specially
encouraged fields or regions with extremely difficult
socio-economic conditions, shall be exempted from import
duties for a period of five years from the commencement of
production.
The Government shall provide exemption
from, or reduction of export and import duties in respect to
goods, for which investment is specially encouraged."
15. Article 52 is supplemented and amended
as follows:
" Article 52
Enterprises with foreign capital, business
co-operation contracts terminate their operation in either
case as follows:
The expiry of the duration stipulated in
the investment license;
Following the conditions of termination
stipulated in the contract, the charter of the enterprise or
an agreement made by the parties;
Under a decision of the State body in
charge of foreign investment management due to a serious
violation of either the law or any provision of the investment
license;
Being declared bankrupt."
16. Article 53 is supplemented and amended
as follows:
" Article 53
1. Upon the termination of operation as
stipulated in Clause 1, 2, 3 of Article 52 of this law,
enterprises with foreign owned capital and parties to the
business co-operation contracts must proceed liquidating the
assets of the enterprise, settling the outstanding liabilities
of the parties to the contract.
2. During the liquidation process of an
enterprise's assets, if the enterprise is found in bankrupt
condition, the liquidation shall be dealt with in accordance
with the bankruptcy law.
3. If an enterprise with foreign capital is
declared bankrupt, it shall be dealt with in accordance with
the law on enterprise's bankruptcy.
4. If the Vietnamese party takes part in a
joint-venture enterprise or a joint-stock enterprise by its
land-use right, when the enterprise is disbanded or declared
bankrupt, the remaining value of the land-use right shall be
the enterprise's asset to be liquidated.
17. Article 55 Paragraph 2 is supplemented
and amended as follows:
"The Government shall make provisions
on the issuance of investment licenses, registration of
investment, decide on the delegation of investment license
issuing authority to qualified people's committees of
provinces of cities under central authority, based on the
master plans and plans for socio-economic development, the
investment sector, the nature of the investment, and the scale
of the investment project; and make provisions on the issuance
of investment licenses with respect to investment projects in
industrial zones and export processing zones.
18. Article 59 is supplemented and amended
as follows:
"Parties, either of the parties or
foreign investor shall submit the dossier of application for
investment license to the Investment License Issuing Body
according with the regulations of the Government "
19. Article 60 is supplemented and amended
as follows:
The Investment License Issuing Body shall
consider the application and notify the investor of its
decision no latter than forty-five (45) working days or thirty
(30) working days in respect to the projects which is required
to obtain an investment permit, and the projects which is
required to register for investment license respectively as of
the date of receipt of the sufficient application file. The
approved decision shall be notified in the form of an
investment license.
An investment license has power as the
certificate of business registration.
20. Article 63 is supplemented as follows:
Any enterprise, individual with outstanding
records in business, production or taking a great part in the
cause of construction and development of the country, shall be
awarded according to the laws.
Any foreign investor, enterprise with
foreign capital, party to business co-operation contracts,
entity, individual, State officer, State body which breaches
provisions of the Law on Foreign Investment shall be dealt
according to the laws depending on the seriousness of the
breach.
21. Article 64 is supplemented and amended
as follows:
"1. Inspection of the enterprise's
operation must be conducted in strict compliance with that
functions, competence and according to the relevant law.
2. The financial inspection of an
enterprise must not be done more than once a year.
An unexpected inspection is carried out
only when there is a proof of violation of laws by an
enterprise.
When carrying out an inspection, there must
be a written decision of the authorized person?s. After
completing the inspection, the minutes and conclusion of the
inspection are required. The Chief of the inspection group
shall be responsible for the contents of both the inspection's
minutes and conclusion.
The person making decisions to conduct
unlawful inspection or taking advantage of inspections for
private purposes causing troubles and difficulties for the
enterprise's operation, depending on the level of violation,
shall be punished or examined for penal liability; if causing
damage he or she will have to pay compensation according to
the laws.
Any foreign investor, enterprise with
foreign capital, party to business co-operation contracts,
organization, individual, has right to appeal, or to take
legal action against decisions or conducts of State officers
or bodies that are unlawful or cause difficulties and
inconvenience. The appeal, or legal action and the settlement
of appeal or legal action must be conducted according to the
laws.
22. Article 66 is supplemented and amended
as follows:
" 1. Pursuant to the principles set
out in this law, The Government of Vietnam may enter into
agreements with foreign investors, or set out insurance and
guarantee measures for investment."
2. The foreign investment activities in
Vietnam shall comply with the provisions of this Law and other
relevant Vietnamese laws. In case Vietnamese laws have no
regulation on the matter, the parties may make agreements in
the contract to apply foreign laws if the consequence of the
application does not contrast with the principles of
Vietnamese laws.
23. The phrases of "profits tax"
stated in the Law on Foreign Investment in Vietnam shall be
amended as "corporate income tax".
Article 2.
This law comes into force from July 1st
2000.
Article 3.
The Government shall amend and supplement
documents instructing in detail the implementation of the Law
on Foreign Investment in Vietnam to fit with this Law.
This law was passed by the X National
Assembly of the Socialist Republic of Vietnam at its 7 Session
on May 16th, 2000.
Chairman of National Assembly
NONG DUC MANH
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