Asia Legal

In the course of advising enterprises in Vietnam for their business and conducting legal due diligence on target companies in M&A transactions, we found some legal issues below that many enterprises in Vietnam are frequently involved in. These legal issues construe administrative violations by the Company which are subject to certain fines and sanctions under the relevant regulations. Not making capital contribution in full Under Law on Enterprise 2020, the owner/shareholders/members of a company (hereinafter collectively referred to as “shareholders”) are required to make a capital contribution in full as registered within 90 days from the date of issuance of the enterprise registration certificate. If the shareholders do not contribute capital on time, then the company shall register the actually contributed capital with the licensing authority within 30 days after the deadline of capital contribution. If the Company fails to register the change of capital, the Company shall be s...

Acquiring shares in a Vietnam-owned company is one of the most-chosen forms of investment in Vietnam. In general, tax implications of the share acquisition are different from the one of newly set up a foreign-invested enterprise in Vietnam. Typically, a foreign investor (the “ Investor ”) may acquire shares in a joint-stock company in  Vietnam  (the “ Target Company ”) by either (i) purchasing shares from the existing shareholders (the “ Seller ”) of the Target Company or (ii) subscribing new shares that are privately issued and allotted by the Target Company to the Investor or (iii) the combination of the said methods. Subject to the type of the share acquisition transaction, the taxes applied may be diverse. Share transfer If the share acquisition transaction is conducted in the manner of transferring shares from the Seller to the Investor, the Investor is not required to pay any tax to Vietnamese authorities. Transferring shares in a joint-stock company is considered as a t...

When investing in conditional business lines in Vietnam, the foreign investors need to consider whether the industry in which they intend to invest in Vietnam is a conditional business line or not. Under the law of Vietnam, there are two types of conditions applied, including: (i) Market access conditions for the foreign investors; and (ii) Conditions for doing business.  1. Market access conditions for the foreign investors   The market access conditions for the foreign investors are pre-check conditions which will be appraised by the investment registration authority of Vietnam before granting Investment Registration Certificate to the foreign investors.  According to Article 9 of the applicable Law on Investment, the foreign investors are entitled to the market access conditions applicable to the domestic investors, excep...

Labor – Human resources always play an important role in a business. When doing investment in Vietnam, regulations on labor in general and labor contract in particular requires foreign-invested enterprises’ strict compliance. 1. Form and content of a labor contract Under Article 13 of the Labor Code 2019, a labor contract is an agreement between an employee and an employer on paid job, salary, working conditions, rights and obligations of each party in the employment relations. If the two parties conclude an agreement by another name but showing the following 3 elements, it is still considered a labor contract: paid job; salary; and management and supervision of a party. a. Form of labor contracts A labor contract must be made in writing which is in paper or via electronic means in accordance with regulations on electronic transactions, except for a labor contract with less than 1-month terms which may be concluded in verbal. b. Content of labor contracts A labor contract must contain ...

On 17 September 2021, the Hanoi Tax Department explained in writing the concerns Giao Hang Tiet Kiem Company regarding personal income tax (PIT) related to phone calls and mid-shift meal allowances. In order to meeting the conditions to exempt the reimbursement of phone calls and mid-shift meals from PIT and to be deductible expense, companies shall follow range of different provisions. For phone calls, according to Clause 2.dd, Article 2 of Circular No. 111/2013/TT-BTC, the payment for phone calls are types of income from wages and remunerations that the employers paid and are excluded from PIT in some circumstances. “dd) Other benefits in cash or not in cash apart from wages paid to the taxpayer by the employer in any shape or form: dd.4) Flat expenditures on stationery, business trips, phone calls, costumes, etc. that are in excess of the limits prescribed by the State. Flat expenditures are not included in taxable income in the cases below: dd.4.2) For the employees working in ...

The operation duration of the investment project is recorded on the Investment Registration Certificate. Depending on the location of the investment project, the field of investment, the investment capital, the project will be determined by the investment licensing authority for its operation duration, but not exceeding the following period: Investment projects inside an economic zone shall not exceed 70 years. investment projects outside an economic zone shall not exceed 50 years. The duration of a project in a disadvantaged area or extremely disadvantaged area or a project with large investment capital but with slow rate of capital recovery may be longer but shall not exceed 70 years. If a project uses land allocated or leased by the State, but the transfer of land is delayed, the delay shall not be included in the project duration or execution schedule. The duration of the project will be considered and decided by the investment registration authority, on the basis of a comprehensiv...

The cost of establishing and operating a business in the early stages is always one of the top concerns when Japanese investors invest in Vietnam. With the advantage of being a country with low cost, Vietnam is becoming an attractive destination for Japanese investors in all fields. The following information will provide Investors with an overview of the basic costs of establishing and operating a business in Vietnam. 1.      Forming a foreign-invested enterprise   No. Procedures Associated Cost 1 Applying for Investment Registration Certificate (“IRC”) at the Department of Planning and Investment $2,500 or more (Depending on business lines that Investors intend to do in Vietnam) 2 Applying for setting up a foreign-invested enterprise at the Department of Planning and Investment (After the IRC is granted) $500 - $800 3 Making a corporate seal ...