JANUARY

2014

LEGAL GUIDE TO DOING

BUSINESS IN VIETNAM

Member of

SHORT
INTRODUCTION
Vietnam with its fast-growing and dynamic economy provides lucrative opportunities for foreign investors willing to
understand the market. Indochina Legal has prepared this legal guide to assist those interested in investing in Vietnam or
otherwise dealing with generic legal questions in the course of doing business in Vietnam.
This legal guide was initially submitted as Indochina Legals contribution to Legalinks multi-country survey on legal and
business developments in each Members jurisdictions. We intend to provide relevant information on various key areas from
the countrys legal system to its applicable legal regimes for establishment and operation of businesses, employment, tax,
competition, intellectual property, commercial arrangements, e-commerce and consumer protection.

Eric Le Drau
Managing Partner

DISCLAIMER
The material contained in this legal guide is intended for information purposes only. This guide is current as at December
2013 and covers most but not every Vietnamese regulation scheduled to enter into force on January 2014.
Accordingly, the contents herein should not be treated nor relied upon as legal advice. For further information or clarification
in relation to any matter or legal instrument in this document, kindly contact any of our Vietnam offices or drop us an email
at il.hcmc@indochinalegal.com.

TABLE
OF CONTENTS
A / LEGAL SYSTEM........................................................................................................06

11. Do foreign employees require work permits and/or residency permits if they work in Vietnam?
If so, how long does it take to obtain them?

1. What is the legal system (i.e. common law system, civil law system or both) in Vietnam?

06

2. What are the major law courts in Vietnam?

06

4. What is/are the official language(s) in Vietnam?

08
10

B / FOREIGN INVESTMENT.............................................................................................12

30

corporate transactions (such as redundancies and disposals) in Vietnam?

13. Are there any employment protection laws (such as minimum wage law and/or maximum

3. What are the sources of laws (such as constitution, statute law and common law) in
Vietnam?

12. Are employees entitled to management representation and/or to be consulted in relation to

28

30

working hours law) in Vietnam?

14. Is there any pension system in Vietnam? Is it on a mandatory or voluntary basis?

31

15. How is the termination of individual employment contracts regulated in Vietnam? Under

32

what circumstances is the dismissal of an employee unlawful?

16. Are redundancies and mass layoffs regulated in Vietnam?

33

5. Are there any restrictions faced by a foreign individual or company intending to invest in
Vietnam?

12

6. Are there any exchange control or currency regulations in Vietnam?

13

7. What grants or incentives are available to a foreign individual or company to encourage

investment in Vietnam?

17. In relation to employees, what is the basis of taxation (i.e. whether territorial source principle,
16

C / BUSINESS VEHICLES................................................................................................18
8. What is the most common form of business vehicle used by foreign investors in Vietnam?

E / TAX...........................................................................................................................36

18

36

tax residency principle or other principle is adopted) in Vietnam?

18. Under what circumstances are employees subject to taxation in Vietnam?

36

19. What income tax must be paid by:

36

i.

Employees?

ii.

Employers, in relation to their employees?

i.

Registration formalities;

ii.

Minimum (and maximum) share capital;

iii.

Whether shares can be issued for non-cash consideration, such as assets or

21. Under what circumstances are corporations subject to taxation in Vietnam?

39

services (and any formalities);

22. What are the main taxes that potentially apply to a corporation and what are their tax rates?

39

iv.

Any restrictions on foreign shareholders;

23. Please explain how each of the following is taxed in Vietnam:

43

v.

Management structure and any restrictions on foreign managers;

i.

Dividends paid to foreign corporate shareholders?

vi.

Directors liability;

ii.

Dividends received from foreign companies?

vii.

Parent company liability; and

iii.

Interest paid to foreign corporate shareholders?

iv.

Intellectual property (IP) royalties paid to foreign corporate shareholders?

20. In relation to corporations, what is the basis of taxation (i.e. whether territorial source

38

principle, tax residency principle or other principle is adopted) in Vietnam?

viii. Reporting requirements (including filing of accounts).

D / EMPLOYMENT..........................................................................................................26

24. Are there any thin capitalization rules (i.e. restrictions on loans from foreign affiliates) in
Vietnam?

44

25. Are there any controlled foreign company rules (i.e. the profits of a foreign subsidiary must
9. What are the main laws regulating employment relationships in Vietnam?

26

10. Is a written contract of employment required in Vietnam, and if so, must it contain any

44

26. Are there any transfer pricing rules (i.e. restrictions on the pricing of transaction between

particular language? Are any agreements and/or implied terms likely to govern the
employment relationship?

be imputed to a local parent company) in Vietnam?

a local entity and a foreign entity) in Vietnam?

27

27. How are imports and exports taxed in Vietnam?

44
45

TABLE
OF CONTENTS
28. Is there a wide network of double tax treaties and free trade agreements in Vietnam?

46

F / COMPETITION...........................................................................................................46
29. Is there any competition law in Vietnam?

48

30. Are restrictive agreements and practices regulated by competition law in Vietnam?

49

31. Is unilateral (or single-firm) conduct regulated by competition law in Vietnam?

49

32. Are mergers and acquisitions subject to merger control in Vietnam?

50

K / PRODUCT LIABILITY..................................................................................................62
37. Are there any laws regulating product liability and product safety in Vietnam?

62

Glossary..........................................................................................................................64

G / INTELLECTUAL PROPERTY.......................................................................................52
33. Please outline the main intellectual property rights that are capable of protection in Vietnam.
In each case, please state:

52

i. What is the nature of the right?

ii. How is it protected?
iii. How is it enforced?
iv. How long is it protected?

H / MARKETING AGREEMENTS......................................................................................56
34. Are marketing agreements regulated in Vietnam? If so, please give brief details in respect
of the following arrangements:

56

i. Agency;
ii. Distribution; and
iii. Franchising.

I / E-COMMERCE............................................................................................................58
35. Are there any laws regulating e-commerce (such as electronic signatures and distance
selling) in VIetnam?

58

J / DATA PROTECTION...................................................................................................60
36. Are there any data protection laws in Vietnam?

60

LEGAL
SYSTEM
1. What is the legal system (i.e. common law system, civil law system or both) in Vietnam?

Court

Vietnam has a civil law system, akin to the French legal system.

Nature

Jurisdiction

2. In certain instances, empo-

First instance trials of:

wered

to

hold

first-instance

trials of cases according to the

Being a one-party State under the control of the Communist Party of Vietnam, socialist orientations are often

provisions of the Code of Civil

incorporated into Vietnams legal system, as for instance, the ownership of land and natural resources by the

Procedure

Vietnamese people (through the State) and the States protectionist stance towards State owned enterprises
(SOEs), Vietnamese owned enterprises and Vietnamese employees.

(i)

cases where a concerned party to

the dispute is living abroad or the disputed

property is located abroad;
(ii) requests

for

recognition

and

enforcement in Vietnam of foreign court

judgments;

2. What are the major law courts in Vietnam?

(iii) disputes

arising

from

business

or trade activities in cargo or passenger

Under the Amended 2013 Constitution and the Law on Organization of the Peoples Courts, the court hierarchy

transportation by air or sea; purchase and sale

of Vietnam (excluding military tribunals, other tribunals provided by law and special tribunals set up by the

of shares, bonds and other valuable papers;

National Assembly under special circumstances) generally comprises 3 tiers, at the top of which is the Supreme

investment, financing, banking; insurance;

Peoples Court, followed by the Provincial Peoples Courts, and then the District Peoples Courts. The nature and

and exploration and exploitation of resources;

jurisdiction of each Peoples Court are shown below.

(iv) requests

Court

Nature

Jurisdiction

Supreme Peoples Court

Highest judicial body of Vietnam

Supervisory and/or review trials of cases

for

recognition

and

enforcement in Vietnam of foreign arbitral

awards on business or commercial matters,
and requests related to the resolution
of disputes by Vietnamese commercial

with decisions which have already taken legal

arbitrators in accordance with the Commercial

effect but have been protested against; or

Arbitration Law; and

Review, in limited cases, of first-instance

(v)

collective labor disputes, which have

decisions of the immediate lower courts,

been resolved by labor arbitration boards of

which have not yet taken legal effect but have

provinces and centrally-run cities

been appealed or protested against

Provincial
Peoples Court

1. Mainly an appellate court

Appellate trials of cases where the

District Peoples Court

Court of first instance

Civil, commercial and labor cases within

first-instance ruling of lower courts have

its competence except when the Provincial

not yet taken legal effect but have been

Peoples Courts deem it necessary to exert

appealed; and

jurisdiction over such matter

Review of cases where the rulings of lower

courts have already taken legal effect but
have been protested against

LEGAL
SYSTEM
3. What are the sources of laws (such as constitution, statute law and common law) in
Vietnam?

Legal Document

Subject

PM decisions

Issued by the Prime Minister (PM) to focus on State management relating to

Government operation, the public administrative system and working

Being a country of civil law tradition, Vietnams source of law is written legislation (or more commonly referred

regulations of the Governments members and chairmen of peoples

to as legal documents). Under the Amended 2013 Constitution and the Law on Promulgation of Legal Documents,

committees of provinces

Vietnams primary legal documents comprise the Constitution and the laws and resolutions of the National
Assembly, all of which set out general rules and principles. Meanwhile secondary regulations, which are issued by

Ministerial circulars

Issued by Ministers and Heads of ministry-like agencies to provide detailed

executive and judicial bodies empowered to promulgate legal documents, provide details for the implementation

guidelines on the implementation of higher-ranking legal documents,

of the general rules and principles in the primary legal documents.

specify regulations on technical standards and procedures, and set technoeconomic standards of sectors they are in charge of

An overview of the hierarchy of Vietnams legal documents is set forth below (in descending order of legal
weight).

Resolutions and circulars

Resolutions of the Justices Councils of the Supreme Peoples Court lead

courts in applying legal documents in a consistent manner; Circulars of the

Legal Document

Subject

Constitution

Sets out the fundamental rights of Vietnamese citizens; the fundamental law

Supreme Peoples Court aim to exercise management of local peoples courts

and military courts; Circulars of the President of the Supreme Peoples
Procuracy provide methods to ensure implementation of the tasks and
authorities of local peoples procuracies and military procuracies

of the State
NA laws and resolutions

Laws of the National Assembly (NA), the legislative arm of the State, address

GSA decisions

provide guidelines for detailed auditing procedures and the implementation of

fundamental issues and the rights and obligations of Vietnamese citizens

such procedures

while NA resolutions reflect the NAs decisions on socio-economic

development tasks and the planning, allocation and adjustment of State

Joint Resolutions

budget
NASC ordinances and resolutions

Presidential orders and decisions

respective participations in State management as stipulated by laws

Joint Circulars

the Supreme Peoples Procuracy provide guidelines for the consistent

Constitution, NA laws and NASC ordinances

application of legal documents relating to judicial operation; Joint Circulars of Ministers or Heads of Ministry-level agencies provide guidelines in the

Issued by the State President to exercise tasks and competencies defined

Issued by the Government to provide detailed guidelines on the

implementation of higher-ranking legal documents; specify tasks, authority
structure and organizational structure of ministries, ministry-like agencies
and government-affiliated agencies

Joint Circulars of the President of the Supreme Peoples Court and Director of

certain period of implementation; NASC resolutions aim to interpret the

implementation of the higher-ranking legal documents related to their

in the Constitution and the laws and resolutions of the National Assembly
Decrees

Issued by the NASC or between the Government and central/ socio-political

organizations to create guidelines on how to address issues related to their

Ordinances of the NA Standing Committee (NASC) contain regulations on the

tasks assigned by the NA and that are proposed to be developed as laws after a

Issued by the General State Auditor (GSA) to prescribe auditing standards and

respective function
Local resolutions, decisions and

Resolutions of the Peoples Councils & decisions & directions of the Peoples

directions

Committees provide further guidelines in the implementation of higherranking legal documents at the local level of provinces, districts and
communes

.
9

LEGAL
SYSTEM
In some instances, certain State bodies having competence to decide on particular matters (e.g. tax offices
or business registration offices) issue their official opinion to clarify some points or to provide guidelines on the
scope of application or manner of implementation of relevant regulations. Although not recognized as official
sources of law, these official letters or opinions are deemed binding upon issuance to the requesting or addressed
parties.

4. What is/are the official language(s) in Vietnam?

Vietnamese (ting Vit) is the national and official language of Vietnam.

10

11

FOREIGN
INVESTMENT
5. Are there any restrictions faced by a foreign individual or company intending to
invest in Vietnam?

6. Are there any exchange control or currency regulations in Vietnam?

Yes. Vietnams prevailing exchange control regulations (the FX Regulations) require that all transactions,

As a general matter, foreign investment in Vietnam may be subject to any or a combination of the following
restrictions:

payments, listings, advertisements, quotations, setting prices and recording prices in contracts and agreements
and other similar forms of both residents and non-residents within the territory of Vietnam be effected in
Vietnamese Dong (VND) subject to certain exceptions permitted by regulations of the State Bank of

market access restrictions such as maximum percentage of foreign ownership, requirements on

Vietnam (SBV), namely:

corporate form such as undertaking of certain business lines through a joint venture or business
cooperation contract (BCC) with Vietnamese partner(s);

transactions with institutions permitted to provide foreign exchange services;

mandatory screening and evaluation procedures during incorporation and procurement of an

internal capital transfer between a resident organization and a dependent accounting entity;

investment certificate (IC) for any first investment project in Vietnam, which is granted for a limited
operation term and for the registration of the initial project only (as opposed to simpler business

contribution of capital by a resident for implementation of a foreign investment project in Vietnam;

registration procedures in the case of Vietnamese investors establishing wholly Vietnamese owned
companies for the procurement of an enterprise registration certificate (ERC) containing both the

receipt of payment by a resident pursuant to an import or export contract or contract entrusting import

business and tax registration of the Vietnamese applicant for any proposed line of business, for any

or export;

initial and subsequent projects undertaken by the enterprise and usually for an indefinite term of
operation (see item 8.i));

receipt of payment by resident contractors from investors or head contractors in order to make payment
and disbursement transactions to overseas subcontractors or suppliers;

Vietnam residency requirement for certain corporate executives;

receipt of payment by resident institutions providing business insurance services from insurance
foreign employment restrictions (see item 8.v and 11); and

purchasers for all types of goods and services which must be reinsured offshore;

de facto restraining measures such as the State authorities sympathy towards SOEs and Vietnamese

receipt of payment by residents being institutions conducting business in duty free goods or providing

owned companies and general reluctance in recognizing or enforcing international arbitral awards.

services in separated areas in international bordergates or providing customs bond warehouse services
for the supply of goods and services;

Is an approval or permit required if a foreign individual or company wants to enter a certain industry?
receipt of payment by residents being customs and police offices of international bordergates and
Yes. Under the 2006 Investment Law, a foreign investor investing in Vietnam for the first time must have an
investment project which consists of a series of proposals for the expenditure of a determined medium and long-

customs bond warehouses from non-residents for all types of taxes and fees for entry/exit visas and
fees for the provision of services;

term capital (equity and debt) in order to carry out investment activities from a specific registered site and for
a specified duration and which is subject to either investment registration or evaluation procedures before the

receipt of salary, bonuses and allowances by non-resident organizations and resident foreigners;

competent licensing authority in order to be granted an IC. The incorporation of a Vietnamese company by a foreign

12

investor takes place simultaneously with the licensing of the first project, and the issued IC will concurrently serve

telegraphic transfers by non-residents to other non-residents or in order to make payment to residents

as the ERC of the newly established foreign invested enterprise (FIE) in Vietnam.

for the export of goods and services; and

13

FOREIGN
INVESTMENT
other necessary situations after consideration by and permission from the SBV Governor.
Residents, for purposes of exchange control in Vietnam, include organizations and individuals in the following
categories (non exhaustive):
economic organisations established and carrying on business activities in Vietnam
diplomatic representative offices, consulate representative offices and representative offices of
international organizations of Vietnam in foreign countries (the Diplomatic Offices);
representative offices in foreign countries of credit and economic institutions established and carrying
on business activities in Vietnam and Vietnamese State bodies (the Representative Offices);

direct investment activities (such as receipt of capital monetary contributions and capital for
implementation of direct investment; receipt of medium or long-term foreign loan capital registered
with the local-level SBV; disbursement outside Vietnam of the principal, interest and fees on such SBVregistered foreign medium or long-term; and remittance of dividends abroad) can be made in foreign
currency but only through a direct investment capital foreign currency account opened at 1 authorized
credit institution in Vietnam by foreign investors or parties of FIEs and BCCs in Vietnam; and
indirect investment activities (such as receipt from assignment of capital contribution and shareholding
or from the sale of securities; disbursement being a capital contribution or purchase of securities; and
disbursement for payment of expenses arising in Vietnam) shall be conducted in VND through an indirect
investment VND account opened by non-resident foreign investors at an authorized credit institution in
Vietnam.

Vietnamese citizens residing in Vietnam; Vietnamese citizens residing overseas for a duration of less

Subject to submission of the relevant documentation to the bank concerned and fulfillment of the financial

than 12 months; and Vietnamese citizens working for any Diplomatic Office or Representative Office

obligations to the State, the outflow of foreign currency from Vietnam to overseas is authorized for the purpose of

and the individuals accompanying such citizens;

legitimate payments, including the following:

foreigners permitted to reside in Vietnam for a duration of 12 months or more; and in the case of

payment for imported goods and services;

foreigners in Vietnam for study, medical treatment, tourism, or work for Diplomatic Offices, such duration
shall exclude any period of ineligibility as a resident; and

overseas remittance by foreign investors of (i) invested and reinvested capital, (ii) profits and dividends
earned from investment activities in Vietnam, (iii) revenue from transfer of technology and (iv) principal

representative offices or branches in Vietnam of foreign economic institutions, permanent establishments

and interest of offshore loans;

of foreign parties participating in investment or other commercial activities in Vietnam, and operating
offices of foreign contractors in Vietnam.

capital transfer by a Vietnamese enterprise for an offshore investment project licensed by the Ministry
of Planning and Investment (MPI); and

Any individual or entity not otherwise in any of the above categories shall be considered a non-resident in
Vietnam under the FX Regulations.

overseas remittance of salaries and other legal incomes of foreign employees.

As a general matter, the inflow of foreign currency into Vietnam and the transfer of foreign currency out
of Vietnam are subject to comprehensive FX Regulations. Revenue and disbursement transactions relating to
investment activities in Vietnam fall under one of the 2 following categories:

14

15

FOREIGN
INVESTMENT
7. What grants or incentives are available to a foreign individual or company to encourage
investment in Vietnam?
Both qualified Vietnamese companies and FIEs may be entitled to certain investment incentives depending
on, inter alia, the following considerations:

Meanwhile, State investment guarantees are generally enjoyed by both Vietnamese owned companies and
FIEs, including the following rights:
purchase of foreign currency to meet requirements for current, capital, and other permitted transactions
in accordance with FX Regulations;

location of the project: whether in a preferential geographical area or in an industrial park, export

compensation at market conditions in cases of nationalization or confiscation of assets or capital by

processing zone, economic zone or high-tech zone.

administrative measures;

investment sector: whether in any of the preferential investment sectors (e.g. bio-technology

overseas remittance of profits, payments received from the provision of technology and services

development, environmental protection, manufacture of composite or light construction materials, etc.);

and from intellectual property, foreign loan principal and interest, invested capital and proceeds from
liquidation of investments, and other monies and assets lawfully owned by the investor in accordance

purpose of investment: whether for expansion of scale, raising output capacity or business capability,

with FX Regulations;

renovation of technology or raising product quality, or reducing environmental pollution; and

use of assets as collateral or mortgage of land use rights and assets attached to land with credit
labor employment requirements: whether employing more than 3,000 employees.
Investment incentives range from or may be a combination of the following and are stated in the qualified

institutions authorized to operate in Vietnam; and

access and use of public services.

FIEs IC:
preferential corporate income tax (CIT) rates of (i) 10% or 20% for the entire duration of the project
of enterprises in certain sectors or (ii) from 10% to 20% from 10-15 years for enterprises engaged in
encouraged investment projects or with projects in socio-economically disadvantaged locations;
CIT exemptions or holidays for a maximum of 2 to 4 years from the first year the business has taxable
income;
50% CIT reduction for a maximum of 4 to 9 subsequent years following the CIT exemption or holiday
period;
land rent, land use fee or land use tax exemption or reduction;
accelerated depreciation of fixed assets; and
assistance with costs of site clearance, relocation and auxiliary infrastructure construction for investors
in public private partnership projects.
16

17

BUSINESS
VEHICLES
8. What is the most common form of business vehicle used by foreign investors in
Vietnam?

By law, an IC shall be issued within 15 working days (in case of investment registration) or 45 days (in
case of investment evaluation). In practice, however, the licensing procedure may take longer, with the licensing
authorities often seeking the opinions of certain central or local authorities and requesting further clarification

The most common form of business vehicle used by foreign investors is a limited liability company (LLC) (cng
ty trch nhim hu hn), which can be set up by 1-50 investors or members (i.e. 1 member in the case of single

or supporting documentation. In contrast, an ERC for wholly Vietnamese owned companies is issued within 5
business days.

member LLCs (SLLCs) or 2 or more members in the case of multiple member LCCs (MLLCs)) and which can either
be a 100% FIE or a joint venture between local and foreign investors.

ii. Minimum (and maximum) share capital;

Foreign investors ( like local investors) intending to issue, list or trade shares are required under Vietnamese

The total amount of capital contributed or undertaken to be contributed by members or shareholders in a

law to be in the form of a shareholding company or joint stock company (JSC) (cng ty c phn), with at least 3

certain period as stipulated in the enterprises charter (i.e. the Vietnamese equivalent of articles of association in

shareholders with no limit on their maximum number.

other jurisdictions) is referred to as the charter capital of an enterprise in Vietnam, and may either be:

divided into shares, in the case of JSCs; or

A JSC in Vietnam can either be private or public. As defined under the Amended Securities Law, a public
company is a JSC that has (i) made a public offer of shares, or (ii) shares listed on the stock exchange or a
securities trading center, or (iii) shares owned by at least 100 investors excluding professional securities investors,

based on the total amount of the capital contributions made by the members, in the case of LLCs (i.e.

and a paid-up charter capital of VND 10 billion or approximately USD 474,000 or more.

LLCs not being allowed by law to issue shares).

Please provide details on:

Generally, there are no minimum and maximum capital requirements for an FIE; it must, however, have enough
capital resources to successfully implement its investment project and realize its business goals for the licensing

i. Registration formalities;

authority to issue an IC. The capital structure of the company, including its total investment amount or charter
capital, is then stated in the IC.

A foreign investor having a new investment project in Vietnam must perform either investment registration
procedures for projects under VND 300 billion or approximately USD 14.3 miliion and not in conditional business

In certain sectors, certain capital thresholds (or legal capital) are required to be satisfied in order for the

sectors or investment evaluation procedures for projects over VND 300 billion or in any of the conditional business

company to be able to do business. For instance, the following amounts are required as minimum capital for the

sectors.

following sectors:

Such FIEs business registration will be carried out at the same time as its investment registration or
evaluation formalities before the competent licensing authority for the latters issuance of an IC.

Sector
Real estate business
Real estate development

Minimum Legal Capital

VND 6 billion or approximately USD 287,000
Not less than 15%-20% (depending on the land area usage of the project)
of the total investment capital of the approved project for infrastructure
projects (being urban, residential or industrial zones developments)

18

19

BUSINESS
VEHICLES
Sector

Minimum Legal Capital

Aviation

Depending on (i) whether for international or domestic air transportation

business or general aviation business for commercial purposes and (ii) the
number of aircrafts operated, from VND 100 to 1,300 billion or approximately

Education

iv. Any restrictions on foreign shareholders;

Under prevailing regulations, foreign entities and individuals may either set up an enterprise in Vietnam or
contribute capital and purchase shareholding in a Vietnamese enterprise subject to the following restrictions:

USD 4.75 to 61.73 million

49% foreign ownership cap in publicly listed companies (currently proposed to be increased to 60%) ;

From VND 30 million to 150 million minimum investment cost per student

relevant foreign ownership ratio in the banking, petroleum, civil aviation, publishing, press, education,

depending on the level of course/training provided (e.g. nursery, secondary

securities, and insurance sectors;

education, short-term training, vocational, professional education, and higher

education)
Banking

VND 3,000 billion or approximately USD 143 million

Insurance

VND 300 billion or approximately USD 14.3 million for a non-life insurance

relevant foreign ownership ratio in SOEs undergoing equitization or otherwise converting into another
form; and
relevant foreign ownership ratio for sectors set out in Vietnams commitments to the World Trade
Organization (WTO).

company; VND 4 billion or approximately USD 190,000 for an insurance

Depending on their corporate form, enterprises (both Foreign and Vietnamese owned) may be subject to

brokerage company

certain lock-up periods or other restrictions to the transfer of equity as follows:

iii. Whether shares can be issued for non-cash consideration, such as assets or services (and any formalities);
Under the Amended 2013 Enterprise Law, members of LLCs and shareholders of JSCs can make a capital

Form

Other restrictions

SLLC

A company owner may withdraw capital only by way of assignment of a part or all of the charter

contribution or pay for shares respectively in any of the following forms (in addition to cash in VND) as valued in

capital to other organizations and individuals; and the company must then register for conversion into

VND by either the members or shareholders or by professional valuation organizations depending on the asset/s

a MLLC if the company becomes owned by 2 or more organizations and/or individuals as a result of

concerned:

such assignment.

cash in a freely convertible foreign currency;

MLLC

Part of the contributed capital may be returned to members in proportion to their respective shares of
contributed capital if: (i) business operation has been carried out continuously for more than 2 years
from the date of business registration; and (ii) the enterprise is able to pay in full all its debts and other

gold;

property obligations after returning part of the contributed capital to members.

land use rights;
intellectual property rights;

JSC

Within 3 years from the date of issuance of the IC, the shares of founding shareholders cannot be sold
except to other founding shareholders unless the sale is approved by the remaining shareholders.

technology or technical know-how; and

other assets as recorded in the charter of the company as forming the capital of the company.
20

21

BUSINESS
VEHICLES
v. Management structure and any restrictions on foreign managers;
The management structure of an enterprise in Vietnam generally comprises the (i) authorized representatives
(AR) of the owner (for SLLCs), members (for MLLCs) or shareholders (for JSCs), who all comprise the members
council or general meeting of shareholders, the highest decision-making body of a LLC and JSC respectively; (ii)
general director (GD) or director, who serves as the chief executive officer of the enterprise; and (iii) inspectors
or controllers, who oversee the running and management of the enterprise. In the case of JSCs, the board of

Form
JSC

Management structure
General meeting of shareholders
Board of management, comprising 2-11 members, unless otherwise stated in the charter
GD or director
3-5 inspectors or controllers if the JSC has more than 11 individual shareholders or has corporate
shareholders owning more than 50% of the total shares of the enterprise.

management serves as the JSCs management body. The chairman of the enterprise or the members council or

Chairman of the board of management or GD (as stated in the charter) serves as Legal Rep; and

the board of management or the GD (as the case may be) is stated in the charter to be the legal representative

unless otherwise stated in the charter, an individual may concurrently be an AR, the chairman or a

of the enterprise (the Legal Rep), who is the person authorized to represent, sign for, and bind the enterprise. The

member of the board of management, the GD, and Legal Rep, except that the GD of a JSC may not

table below sets forth the management structure of an enterprise in Vietnam according to its corporate form:

currently be a GD of another enterprise.

Form

Management structure

SLLC

If the owner appoints only 1 AR:

chairman being the AR
general director or director
1 to 3 inspectors or controllers

Vietnams current policy on the recruitment and employment of foreigners generally allows the hiring or
If the owner appoints 2 or more ARs:
members council and chairman of the

transfer into Vietnam of foreign directors, executive directors or managers subject to the following requirements
and restrictions (in addition to the work permit requirement as discussed in item 11):

members council
general director or director

Employers, excluding contractors in Vietnam, must file an annual plan, for submission to and approval

1 to 3 inspectors or controllers

by the chairman of the peoples committee in the locality of the head office (the PC Chairman), explaining
the need to employ foreigners for each working position. Employers are also required to report to the PC

Chairman of the enterprise or GD (as stated in the

Chairman of the members council or GD (as

charter) serves as Legal Rep.

stated in the charter) serves as Legal Rep.

Chairman any change in their need to employ foreigners.

Only the managers listed in item 11 are exempted from the work permit requirement in Vietnam.

An individual may concurrently be an AR, the chairman of the enterprise or the members council, GD,
and Legal Rep, unless stated otherwise in the charter.

The Legal Rep of an enterprise must reside in Vietnam, and if absent from Vietnam for more than 30
days then he must provide a written authorization to another person who will perform the rights and

MLLC

Members council
General director or director
3 to 5 inspectors or controllers for MLLCs having more than 11 members (optional for MLLCs
with 2-11 members, depending on its corporate administration requirements)

22

obligations of the Legal Rep.

vi. Directors liability;
The Amended 2013 Enterprise Law provides the general fiduciary obligations of the managers of an enterprise,

Chairman of the members council or GD (as stated in the charter) serves as Legal Rep. An individual

who as defined under the same law include the chairman of the enterprise or of the members council, members of

may concurrently be an AR, the chairman of the enterprise or of the members council, GD, and Legal

the board of management, GD and other managerial positions as stipulated in the charter. Also, board members

Rep, unless otherwise stated in the charter.

of listed and unlisted public companies have further specific obligations provided by other regulations.

23

BUSINESS
VEHICLES
In case of a managers breach of his duties, he may be held personally liable under the law and the companys

financial and accounting matters such as submission of audited annual financial statements within 90

charter for any resulting loss. Depending on the nature and gravity of the breach, an offender may be subject to

days from the closing of the financial year, registration under the Vietnamese Accounting System (VAS)

administrative, civil and even criminal liability.

with the Ministry of Finance (MOF), MOF approval to use an accounting system other than VAS or a
foreign currency as currency accounting unit; and

The Amended 2013 Enterprise Law also provides instances where legal proceedings can be instituted by
(i) a LLC member, in its own or in the companys name, against the chairman of a members council and/or GD,

labor and related employment matters such as registration of labor use and labor books, report on the

and (ii) a shareholder or group of shareholders holding at least 1% of the total number of ordinary shares for

changes in the labor contracts of employees, FIEs report on foreign employees, registration of written

a consecutive period of 6 months, in its/their own or in the companys name, against a member of a board of

internal labor regulations, and submission of social insurance participation dossier and quarterly

management and the GD.

reconciliation of social insurance.

vii. Parent company liability; and

As a general rule, a parent company is only accountable for the debts, liabilities and property obligations of its
subsidiary to the extent of its capital contribution to the subsidiary. The Amended 2013 Enterprise Law, however,
provides for the lifting of the corporate veil and for liability to be directly imputed to the parent company when the
parent company performs the following acts in the name of its subsidiary:
breach of law;
conduct of business or other transactions not in the interests of the subsidiary and causing damage to
other persons; and
premature payment of debts in cases where the company is likely to be in financial danger.
viii. Reporting requirements (including filing of accounts).
Reporting requirements of enterprises in Vietnam generally relate to any of the following matters and are to
be completed according to the specific time frame provided by law:
general post-licensing matters such as publication of announcement on establishment, registration of
commencement of operation, registration with the Police Department of the official seal of the enterprise,
setting up of the register of members (for MLLCs) and register of shareholders (for JSCs), and tax code
registration;
organizational and business registration matters such as registration of additions and changes to the
enterprises lines of business, head office, name, charter capital or capital contribution ratio, founding
shareholders (for JSCs), members (for MLLCs), ARs, and Legal Rep, any of which require the amendment
24

of the IC or ERC;

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EMPLOYMENT
IN VIETNAM
9. What are the main laws regulating employment relationships in Vietnam?
The Labor Code of June 18, 2012 (the 2012 Labor Code) serves as the main law governing employment

10. Is a written contract of employment required in Vietnam, and if so, must it

contain any particular language? Are any agreements and/or implied terms likely to
govern the employment relationship?

relationships in Vietnam, and applies to:

A contract of employment in Vietnam shall be entered into in writing (in 2 copies) except for temporary work of
Vietnamese and foreign employees, trainees and apprentices working in Vietnam;

less than 3 months, and is generally made in accordance with the standard form of the Ministry of Labor, Invalids
and Social Affairs (MOLISA).

employers (whether Vietnamese owned or an FIE) in Vietnam; and

other agencies, organizations and individuals directly related to the labor relationship.
As to the governing law of employment relationships, the 2012 Labor Code provides (see also item 10):
Vietnamese workers sent by their Vietnamese employers to work abroad must comply with Vietnamese

Under Vietnamese labor law, a labor contract is classified based on its term, as follows:
an indefinite term labor contract with no fixed term or time of termination;
a definite term labor contract for a period between 12-36 months; and
a seasonal or specific job labor contract with a duration of less than 12 months.

law and the law of the foreign country concerned, unless an international treaty of which Vietnam is a
member contains some other provision.

Any labor contract for employment relations in Vietnam must be consistent with Vietnamese labor law and
cannot grant to employees fewer benefits than due under Vietnamese labor law. Thus, mandatory rules and

Vietnamese citizens working in FIEs in Vietnam, in foreign agencies and organizations or in

requirements under Vietnamese labor law may apply to foreign nationals working in Vietnam regardless of the

international bodies in Vietnam, or working for individuals being foreign nationals in Vietnam, must

choice of law in the labor contract (see item 9).

comply with and shall be protected by Vietnamese law.

Foreign nationals working in Vietnam must comply with Vietnamese labor law unless an international

In addition to the labor contract, certain aspects of the employment relationship are also covered by the
following agreements:

treaty of which Vietnam is a member contains some other provision, and they shall be protected by

Employers employing more than 10 employees must establish internal labor regulations, which determine,

Vietnamese law. This means that mandatory rules and requirements under Vietnamese labor law may

among other matters, working hours and breaks, labor safety rules, protection of assets and business

apply regardless of the choice of law in the employment contract.

secret and disciplinary labor procedure, and is subject to (i) prior consultation with the Executive
Committee of the Grassroots Trade Union (ECGTU) within the concerned enterprise or its direct superior

As a general matter, the parties to a labor contract may only stipulate that a foreign law shall govern a

level, (ii) registration with the provincial DOLISA and (iii) posting or display within the company premises.

labor contract to the extent that it is not contrary to Vietnamese labor law.
Also, a collective labor agreement can be signed between the ECGTU and the employer. This agreement
sets out working conditions and employee benefits, which must be at least equal to or greater than
those stipulated by law, and must meet these conditions: (i) all matters subject to collective negotiation
have been agreed and recorded in the minutes of the collective negotiation sessions executed by the
ECGTU and the employer and (ii) 50% of the employees have voted in favor of the negotiated matters. The
agreement, when signed, is required to be publicly announced to all employees for information purposes.

26

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EMPLOYMENT
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11. Do foreign employees require work permits and/or residency permits if they work in
Vietnam? If so, how long does it take to obtain them?

a foreigner issued with an operational license in the information and press sector in Vietnam by the

Yes. Under the 2012 Labor Code and Decree No. 102/2013/ND-CP dated September 5, 2013 and effective

a teacher in a foreign agency or organization who is appointed by the competent authority of a foreign

November 1, 2013 (Decree 102), any foreigner working in Vietnam must obtain a work permit, unless such foreigner is

country to come to Vietnam to teach in an international school managed by a foreign diplomatic office

any of the following:

or international organization in Vietnam;

an intra-corporate transferee in any of the following 11 service sectors under Vietnams WTO
commitments: business, communications, construction, distribution, education, environment, finance,
health, tourism, recreational culture, and transport services, in accordance with provisions of an
international treaty of which Vietnam is a member;
a capital contributing member of a MLLC or the owner of a SLLC;
a member of the board of management of a JSC;
the head of a representative office or of a project of an international organization or non-governmental
organization in Vietnam;

Ministry of Foreign Affairs;

a foreign volunteer working in Vietnam without entitlement to a salary in order to implement an

international treaty of which Vietnam is a member;
a foreigner with a masters degree or higher or similar qualification providing consultancy, teaching, or
conducting scientific research at a university or vocational college for a period not exceeding 30 days;
a foreigner confirmed to be coming to Vietnam to implement an international agreement by a central or
provincial State agency or a central socio-political organization; and
a foreigner covered by other cases as decided by the Prime Minister on a proposal from MOLISA.

a foreigner entering Vietnam for a period under 3 months to resolve an incident breakdown or technically

The employer must lodge an application file requesting issuance of a work permit with the DOLISA where

or technologically complex situation arising and affecting, or with the risk of affecting production or

the foreign employee will work on a regular basis or where the employer has its head office, at least 20 days prior

business with which Vietnamese experts or foreign experts currently in Vietnam are unable to deal;

to the date on which it is proposed that the foreigner will commence working in Vietnam. By law, the DOLISA shall,
unless there are valid grounds for refusal, issue a work permit within 10 working days from submission of a valid

a foreign lawyer issued with a foreign lawyer practicing certificate in Vietnam;

a foreigner exempted from procuring a work permit in accordance with the provisions of an international
treaty of which Vietnam is a member;
a foreigner studying in Vietnam but the employer must provide a 7 days advance notice to the Department
of Labor, Invalids and Social Affairs (DOLISA);

application file. In practice, however, the process may take longer.

Work permits currently have a shorter maximum duration of 2 years (compared to the previous maximum
duration of 36 months), but may be renewed for further term(s) subject to certain conditions. Foreigners working
in Vietnam without a work permit may be penalized (e.g. by way of administrative fines) or, if unable to meet work
permit requirements, deported back to their home countries.
In the case of foreign employees who are not required to obtain a work permit, Decree 102 now requires
employers to submit, at least 7 days before the date on which a foreign employee will commence work in Vietnam,

a foreigner coming to Vietnam to provide expert and technical consultancy services or to undertake

a request to the local DOLISA to confirm that such foreign employee is not required to procure a work permit to

other tasks in the research, formulation, evaluation, monitoring and assessment, management and

work in Vietnam.

implementation of a program or a project using official development aid (ODA) in accordance with the
provisions of the relevant ODA agreement;

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EMPLOYMENT
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12. Are employees entitled to management representation and/or to be consulted
in relation to corporate transactions (such as redundancies and disposals) in Vietnam?

Article 104.1 of the 2012 Labor Code meanwhile requires normal working hours not to exceed 8 hours in a
day and 48 hours in a week except for workers who perform extremely heavy, toxic or dangerous work whose work
hours shall not exceed 6 hours in a day. Where work is agreed to be stipulated on a weekly basis, Article 104.2

Yes. In general, an employer must hold discussions at the workplace once every 3 months or on one-off

of the 2012 Labor Code provides that working hours must not exceed 10 hours in a day and 48 hours in a week.

occasions at the request of one of the parties. In particular, the 2012 Labor Code requires an employer to
notify in advance and seek the opinion of its employees or the organization representing the labor collective of its
employees in the following cases:

Overtime working hours shall not exceed 50% of the normal working hours in one day except for the following
cases: (i) manufacturing or processing of export textiles, leather, footwear, agricultural, forestry and aquatic

retrenchment of employees in cases of restructuring, change of technology, or changes for economic

and (iii) other cases where urgent work must be resolved. However, in such cases the maximum overtime working

reasons;

hours may not exceed 300 hours per year.

formulation of wage scales, wage tables and labor rates; and promulgation of rules on payment of bo -

14. Is there any pension system in Vietnam? Is it on a mandatory or voluntary

basis?

nuses;

Yes. Employers and employees in Vietnam are by law required to participate in social, health, and unemployment
or job loss insurance at the following rates:
drafting or amending internal labor rules;

Social
Insurance

Health
Insurance

Unemployment
Insurance

Trade Union
Fee

Employee

8%

1.5%

1%

N/A

Employer

18%

3%

1%

2%

dealing with a breach of labor discipline including temporary suspension of an employee;

formulation and implementation of occupational safety and hygiene plans;
decisions on matters relevant to the rights and interests of women or disabled employees; and
issuing other regulations relevant to the rights and obligations of employees.

Social and unemployment insurance contributions do not apply to foreign expatriates but only to Vietnamese
employees; however, as from 1 October 2009, a foreign expatriate who signs an employment contract for 3 months

13. Are there any employment protection laws (such as minimum wage law and/or
maximum working hours law) in Vietnam?

or more with an entity in Vietnam shall be subject to the statutory health insurance payments at the same rates

Yes. The wage rate of private employees must not be lower than the minimum wage rates stipulated by the

The compulsory social insurance contributions are based on the employees salary and wages as stated in the

applicable to Vietnamese employees.

labor contract, subject to a cap of 20 times the minimum salary or wage as declared by the Government. These
areas and industries and determined according to minimum living conditions of employees and family households,
socio-economic conditions and wage rates on the labor market. MOLISA has set the current minimum wage levels

income tax purposes (see enumerated deductions in item 19.i).

for the private sector effective January 1, 2014 from VND 1,900,000 to 2,700,000 (equivalent to US$ 90 to 128),
depending on the region where the employer is located and/or operates from.

With respect to pension, employees who have paid social insurance contributions for 20 years or more and
being of retirement age (in general, 60 years old for men and 55 years for women) shall be entitled to a monthly

30

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EMPLOYMENT
IN VIETNAM
salary on which social insurance premiums are based, corresponding to 15 years of having paid social insurance

An employer that unilaterally terminates a labor contract must provide advance notice to the employee

premiums, plus an additional 2% for men or 3% for women for each further year of having paid social insurance

according to the prescribed period under the law (from 3 to 45 days depending on the term of the labor contract

premiums; with the maximum rate equaling 75% and the lowest monthly retirement pension being equal to the

and the circumstances under which the labor contract is terminated).

general minimum salary or wage.

In case of an illegal unilateral termination by an employer (i.e. termination other than according to the
Employees who have paid social insurance premiums for more than 30 years in the case of men and 25 years in

abovementioned grounds), the employer must:

the case of women shall also, upon retirement, be entitled to a lump sum allowance in addition to their retirement
pension. This lump sum social insurance benefit shall be calculated on the number of years of the period of

receive the employee back to work in accordance with the signed labor contract;

having paid social insurance premiums, for each year of which period, employees shall be entitled to 1.5 times the
average monthly salary or remuneration on which social insurance premiums are based.

pay wages, social insurance and health insurance for the period during which the employee did
not work, plus at least 2 months wages (the prescribed amount);

15. How is the termination of individual employment contracts regulated in Vietnam?

Under what circumstances is the dismissal of an employee unlawful?

in addition to the prescribed amount, pay an allowance equal to 1/2 of 1 months wage for each year of
employment (if the employee has regularly worked for 12 months or more) or at least 2 months wages
(if so agreed by the parties in order to terminate the labor contract) in case the employer does not wish

Termination of employment is strictly regulated under Vietnamese labor law. An employer can only unilaterally

to continue to work (the allowance);

terminate an individual labor contract under the following specific circumstances provided by the 2012 Labor
Code:

pay the prescribed amount and amend or supplement the labor contract of the employee concerned in
case there is no longer the working position or job for which the labor contract was signed and the

the employees repeated failure to perform work in accordance with his labor contract;

employee wishes to continue to work; and

the employees inability to work after having been ill or injured and treated for 12 consecutive months (for
indefinite term labor contracts), 6 consecutive months (for definite term labor contracts) or more than

in addition to the prescribed amount and the allowance, pay the employee an amount equivalent to his

half the duration of the contract (for seasonal or specific job labor contracts of less than 12 months);

wage for the period during which advance notice was not provided in accordance with the prescribed
period.

the employers need to narrow production and reduce the number of jobs as a result of a natural disaster
or force majeure;
the employees failure to work at the workplace on the 15th day from expiry of the term of suspension
of performance of his labor contract; and
the employers retrenchment of employees as a result of restructuring, change of technology, for

16.

Are redundancies and mass layoffs regulated in Vietnam?

Yes. Employers can only make redundancies and layoffs as a result of restructuring, change of technology,
for economic reasons, or due to merger, consolidation or separation of the enterprise.
In case of retrenchment due to restructuring, change of technology, or economic reasons:

economic reasons, or due to merger, consolidation or separation of the enterprise (see item 16).
The employer must formulate and implement a labor usage plan and if new jobs are created, then the
employer must prioritize retraining for employees in order to continue to employ them.

32

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EMPLOYMENT
IN VIETNAM
If the employer is unable to provide new jobs but must retrench employees, then the employer may only
retrench employees after (i) discussion with the organization representing the labor collective at the
grassroots level, (ii) 30 working days advance notice of its planned retrenchment to the DOLISA, and (iii)
payment of allowance for job loss to employees equivalent to 1 months wages for each working year
but at least 2 months salary.
In case of merger, consolidation, division or separation of an enterprise:
The succeeding employer shall be responsible to continue to employ the current number of employees
and to amend their labor contracts.
When the succeeding employer is unable to employ all current employees, then such employer
must prepare and implement a labor usage plan.
On transfer of ownership or right to use assets of an enterprise, the previous employer must prepare a
labor usage plan.
In case of retrenchment of employees, the employer must pay allowance for job loss equivalent 1
months wages for each working year but at least 2 months salary.

34

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TAX
IN VIETNAM
17. In relation to employees, what is the basis of taxation (i.e. whether territorial source
principle, tax residency principle or other principle is adopted) in Vietnam?
Employees who are considered as tax residents of Vietnam are taxed on their worldwide income (subject
to the provisions of any double tax treaty (DTA) entered into by Vietnam with the relevant country) while non-tax
resident employees are only taxed on their Vietnam-source income.

18. Under what circumstances are employees subject to taxation in Vietnam?

An individual is considered to be a Vietnamese tax resident and thus taxable on his worldwide income if he:

income from capital investment, capital and real property transfers, royalties and franchising, winnings
prizes, and inheritances and gifts (the non-employment income).
For both employment income and business income, progressive rates (see table of rates below) ranging from
5% to 35% apply to tax residents (i.e. both Vietnamese and expatriate resident employees). In the case of non-tax
residents, their Vietnam-sourced employment income is subject to a flat rate of 20%. While their business icome
is treated as non-employment income that is subject to the 1% to 5% rate. Non-employment income meanwhile
is taxed (depending on whether the individual is a resident or non-resident of Vietnam for tax purposes) at rates
ranging from 0.1% to 25%.
Residents employment income and business income:

Monthly taxable income (million VND)

Tax rate

Up to 60

Up to 5

5%

maintains a residence in Vietnam (e.g. has been granted a permanent or temporary residence card); or

Over 60 up to 120

Over 5 up to 10

10%

has leased a residential housing in Vietnam for a total term of 183 days or more.

Over 120 up to 216

Over 10 up to 18

15%

Over 216 up to 384

Over 18 up to 32

20%

Over 384 up to 624

Over 32 up to 52

25%

considered as a non-tax resident in Vietnam for such tax assessment year.

Over 624 up to 960

Over 52 up to 80

30%

19. What income tax must be paid by:

Over 960

Over 80

35%

spends 183 days or more in the aggregate in Vietnam as calculated within 1 calendar year or within 12
consecutive months starting from the date of his arrival in Vietnam;

A non-tax resident is an individual who does not meet the abovementioned criteria for tax residency in
Vietnam. However, if an individual has a permanent living place available for more than 183 days but has actually
been present in Vietnam for less than 183 days, and can prove to be a tax resident of another country, he shall be

i. Employees?
Personal income tax (PIT) is paid on an individuals taxable income, comprising:
income from activities of production and business in goods and services and independent professional
practice (the business income);
income from salaries, wages, and most employment benefits, whether in cash or in kind (the employment
income); and

Annual taxable income (million VND)

Vietnams PIT Law allows, among other tax deductions:

contributions to mandatory social, health and unemployment insurance schemes;
up to VND 1 million or approximately USD 50 for monthly contributions to voluntary pension schemes
set up in accordance with the guidance of the MOF;
contributions to certain approved charities;
personal tax allowance of VND 9 million or approximately USD 450 per month effective July 1, 2013;

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TAX
IN VIETNAM
dependent tax allowance of VND 3.6 million or approximately USD 180 per month per dependent
effective July 1, 2013, subject to the registration by the taxpayer of, and procurement of a tax code for,

A permanent establishment of a foreign enterprise in Vietnam means a place for production and/or the entitys
business activities, which can be in the form of:

such qualified dependent(s) with the relevant tax authority; and

branches, operational offices, plants, workshops, mines, gas fields, other locations in Vietnam where
natural resources are mined;

for foreigners working in Vietnam: a one-off relocation allowance for moving to Vietnam as determined
based on the terms of the labor contract, cost of 1 return air ticket paid by the employer for a foreign

construction sites;

employee to return home for holiday once a year, and school fees in Vietnam paid by the employer for
the children of a foreign employee from primary school up to high school level. Accommodation of a

establishments providing services, including consultancy services;

foreign employee that is paid by the employer is taxable based on the actual rental but not exceeding
15% of total other taxable income.

agents of foreign enterprises; and

In respect of tax residents who have overseas income, PIT paid in a foreign country is creditable.

representatives in Vietnam that either have the authority to sign contracts in the name of the foreign
enterprise or regularly deliver goods or provide services in Vietnam.

ii. Employers, in relation to their employees?

As a general matter, employers must withhold the relevant percentage of income tax from income paid to its

21. Under what circumstances are incorporations subject to taxation in Vietnam?

employees and remit the tax withheld from such employment income to the State Treasury no later than the 20th
of the following month.

An enterprise established under the law of Vietnam must pay tax on its worldwide income. Foreign-source
income derived by residents is subject to tax in the same way as Vietnamese-source income, and is creditable in

Personal income tax returns are due by 30 March in the year following the assessment year. Employers

Vietnam if already paid in the relevant foreign country.

finalize PIT on behalf of its employees, provided that the employees have income only from the same employer
and authorize such employer to finalize tax on their behalf.

A foreign enterprise with a permanent establishment in Vietnam must pay tax on all income arising in Vietnam
(including income not relating to the operation of the resident establishment but arising in Vietnam) and on foreign

In addition, employers must make the social security contributions for its employees (see discussion in item

income that relates to the permanent establishment.

14).
A foreign enterprise without a permanent establishment in Vietnam must pay tax only on income arising in

20. In relation to corporations, what is the basis of taxation (i.e. whether territorial
source principle, tax residency principle or other principle is adopted) in Vietnam?

Vietnam.

In relation to business vehicles, taxation is based on the principle of tax residence in Vietnam. Residence is
not defined under Vietnamese tax regulations but a corporation is generally considered to be a resident if it is
incorporated in Vietnam, or if it is incorporated under foreign law but has a permanent establishment in Vietnam
and/or if it conducts production and business activities that generate taxable income in Vietnam.
A permanent establishment of a foreign enterprise in Vietnam means a place for production and/or the entitys
business activities, which can be in the form of:
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TAX
IN VIETNAM
22. What are the main taxes that potentially apply to a corporation and what are their
tax rates?
A tax resident corporation will be subject to the following taxes:

Tax

Nature

Tax

Imposed on the companys profits, which

Standard rate: 22% effective as from January 1,

income

include profits of affiliates and branches

2014 then 20% by January 1, 2016

tax (CIT)

(dependent units); taxable revenue includes

Rate

Special sales

A form of excise tax applicable to the

Ranges from 10% to 70% depending on the type

tax (SST)

production or import of certain goods such

of goods or services

as cigarettes, cigars, spirits, beer, certain

Rate

Corporate

Nature

automobiles, assorted types of petrol, air

conditioners; and the provision of certain
services such as dance halls, massage
parlors, casinos, golf clubs and lotteries

income from the sale of products, provision of

Rate for enterprises with total annual turnover

services, leasing or sale of assets, transfer of

not exceeding VND 20 billion or approximately

Capital

Imposed on gains from transfers of interests

Transfers of interests in a FIE or Vietnamese

property or shares, business or joint venture

USD 1 million: 20% by January 1, 2014

assignment

and securities

enterprise: 22% CIT with the target enterprise

operations with other economic entities and

financial operation

Oil & gas/natural resources: 32% to 50%,

profits

being required to withhold the tax due and

tax (CAPT)

account for this to the tax authorities within 10

depending on the project

days from the approval of sale

Preferential tax rates: (i) 10% or 20% for the

Transfers of securities (bonds, shares of both

entire duration of the project of enterprises in

listed and unlisted JSCs pursuant to Circular

certain sectors or (ii) 10% for 15 years or 20% for

No. 111/2013/TT-BTC dated August 15, 2013):

10 years for taxpayers engaged in encouraged

CIT on a deemed basis at 0.1% of the total

investment projects or with projects in socio-

disposal proceeds or 20% on the net gain

economically disadvantaged locations

Foreign

A system of withholding tax (CIT and VAT)

Total combined CIT and VAT rate from 0.1% to

contractor

applicable

15%

to

foreign

entities

carrying

Value added tax

Applies to goods and services used for

0%: exported goods/services, goods processed

withholding tax

on business in Vietnam or engaging in a

(VAT)

production, trading and consumption in

for export

(FCWT)

transaction with a Vietnamese contracting

Vietnam (including goods and services

party but not having any legal entity or

purchased from abroad), and on the duty paid

5%: applies generally to areas of the economy

value of imported goods

concerned with the provision of essential goods

and services
10%: the standard rate to activities not
specified as not subject to VAT, VAT-exempt, or
subject to 0% or 5% VAT

40

licensed presence in Vietnam

Stamp duty or

Applies on the required registration of

registration fee

ownership of certain assets, including land,

Rates vary between 0.5% and 20%

buildings, transportation vehicles and guns;

there is no registration fee on transfer of
shares
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TAX
IN VIETNAM
Tax
Property taxes

Nature

Rate

Tax

Nature

Rate

Land use fee to those allocated land by the

Land use fees rates vary depending on the

Import and

Applicable to goods imported to and exported

Duty rates vary depending on the category of

State for long term stable use to develop

location of the land.

export duties

from Vietnam.

goods and any applicable international treaty

or agreement (see item 27).

infrastructure for sales or lease

Land rental to those leasing land from the

Land rental rates vary depending upon the

State, which is settled either through one off

location, value of the land, infrastructure and

payment or annually

sector in which the business is operating.

23. Please explain how each of the following is taxed in Vietnam:

i. Dividends paid to foreign corporate shareholders?

Non-agricultural land use tax on residential

Non-agricultural land use tax is charged on a

land and non-agricultural land used for

square meter basis with progressive tax rates

business purposes

ranging from 0.03% to 0.15%

Natural

Imposed on the exploitation and use of

Rates vary from 1% to 35% depending on the

resources tax

natural resources including metallic or non-

specific classification of natural resources and/or

(NRT) or

metal lic minerals, crude oil, natural gas, coal

production

production

gas, natural forest products, natural marine

royalty tax

products, natural water, and other natural

that the paying entity has fulfilled all its tax obligations before payment.
ii. Dividends received from foreign companies?
Gross dividends (before tax) received by a company in Vietnam from a foreign company are treated as taxable
income of the company in Vietnam. Any foreign tax amount that has been paid overseas (i.e. on the worldwide
revenue of the foreign company before distribution of the dividends) will be deductible against the CIT of the
company in Vietnam.

resources
Environmental

EPT is an indirect tax applicable to the

Rates vary as follows depending on the type of

protection

production and importation of certain goods,

mineral or resource:

tax (EPT) and

which may cause damage to the environment,

environmental

such as gasoline, oil and grease, coal and

Goods

protection fee

certain chemicals.

iii. Interest paid to foreign corporate shareholders?

If the recipient foreign corporate shareholder is not a tax resident or does not have a permanent establishment

Unit

VND

Petro,diesel, grease

litre/kg

300 - 1,000

Coal

ton

EPF is aimed at businesses engaging in

HCFCs

kg

4,000

mining natural resources including crude oil,

Plastic bags

kg

40,000

natural gas, coal gas, and both metallic and

Resticted use

kg

non-metallic minerals.

chemical

(EPF)

Dividends paid by a company in Vietnam to its foreign corporate shareholders are not subject to tax, provided

or a licensed presence in Vietnam, a withholding tax on CIT of 5% shall apply unless the rate is reduced under a
tax treaty. There is no withholding tax on VAT on such paid interest.

10,000 - 20,000

500 - 1,000

iv. Intellectual property (IP) royalties paid to foreign corporate shareholders?

If the recipient foreign corporate shareholder is not a tax resident or does not have a permanent establishment
or a licensed presence in Vietnam, a 10% royalty withholding tax shall apply unless the rate is reduced under a tax
treaty.

Business

Based on the registered capital of the

Rates vary from VND 1 million to VND 3 million

license tax

enterprise in its IC or ERC and is payable upon

per year based on the amount of registered

(BLT)

registration of the business for tax purpose

capital of the enterprise

and subsequently on an annual basis

42

43

TAX
IN VIETNAM
24. Are there any thin capitalization rules (i.e. restrictions on loans from foreign affiliates) in Vietnam?
Currently, there are no specific tax-driven thin capitalization rules in Vietnam. However, certain restrictions to
that effect are provided on foreign loans and CIT (e.g. permitted borrowing capacity and excessive interest rates)

27. How are imports and exports taxed in Vietnam?

Except for goods stipulated by the Government as non-taxable, goods imported to or exported from Vietnam
are subject to import or export duties, including:
goods which are imported or exported across the bordergates of Vietnam;

and apply to some sectors (e.g. in the power industry, the leverage ratio for power plants must be at least 70:30
debt-to-equity for the investment project to be issued with an IC).

goods which pass between the domestic market and a non-tariff zone (e.g. export processing zones
and enterprises, bonded warehouses or warehouse zones, special economic or commercial-industrial or

25. Are there any controlled foreign company rules (i.e. the profits of a foreign subsidiary
must be imputed to a local parent company) in Vietnam?

other economic zones) and vice versa; and

other goods purchased, sold or exchanged which are deemed to be imported or exported goods.

There are currently no controlled foreign company rules in Vietnam.

Import duty rates are classified into the following 3 categories:

26. Are there any transfer pricing rules (i.e. restrictions on the pricing of transaction
between a local entity and a foreign entity) in Vietnam?

Category
Yes. Vietnams transfer pricing regulations outline various situations where transactions will be considered
as being between related parties, and the mechanism for determining the market arms length transaction value

Ordinary rate

(e.g. comparable uncontrolled price, cost plus, resale price, comparable profits and profit split).

Description

Rate

Applicable to imported goods that are not

Based on the Most Favored Nation (MFN)

subject to preferential or special preferential

(or Normal Trade Relations) rate plus a 50%

rates or to imported goods not accompanied

surcharge.

by an appropriate Certificate of Origin (C/O).

Under the wide ranging definition of related parties, the control threshold is lower than in many other countries
(20%) (i.e. one party holds directly or indirectly at least 20% of the investment capital in the other party, or the

Preferential

Applicable to imported goods from countries

Based on rates in accordance with Vietnams

two parties hold at least 20% of the investment capital of a third party). The definition also extends to certain

rate

that have MFN status with Vietnam or from

WTO commitments.

significant supplier, customer and funding relationships between otherwise unrelated parties.

other countries of the WTO.

Special

Applicable

from

Based on rates in accordance with the relevant

preferential rate

countries that have a special preferential

treaty or trade agreement entered into by

party transactions must also prepare and maintain contemporaneous transfer pricing documentation. Where

trade agreement with Vietnam (e.g. ASEAN

Vietnam.

companies fail to do so, the tax authorities have the right to impose deemed pricing, profits or tax.

members, Japan, China, India, Australia and

Compliance requirements include an annual declaration of related party transactions and transfer pricing
methodologies used, which is required to be filed together with the annual CIT return. Companies with related

to

imported

goods

New Zealand).

In principle, Vietnam follows the WTO Valuation Agreement with certain variations. The taxable value of
imported goods is typically based on the transaction value (i.e. the price paid or payable for the imported goods,
and where appropriate, adjusted for certain taxable or non-taxable elements). Where the transaction value is not
applied, alternative methodologies for the calculation of the customs value will be used.

44

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TAX
IN VIETNAM
Import duty exemptions are provided for projects which are listed as encouraged sectors and goods imported
in certain circumstances, including:
machinery and equipment, specialized means of transportation and materials (which cannot be produced
in Vietnam) comprising the fixed assets of certain projects or imported to use for oil and gas activities;

raw materials, spare parts, accessories, other supplies, samples, machinery and equipment imported for
the processing of goods for export and finished products for use in the processed goods; and
movable assets.
Export duties meanwhile are charged only on a few items, basically natural resources such as sand, chalk,
marble, granite, ore, crude oil and forest products, among others. Rates range from 0% to 40% based on the free
on board (FOB) price (i.e. the selling price of goods at the port of departure as stated in the contract), excluding
freight and insurance costs.

28. Is there a wide network of double tax treaties (DTA) or Free Trade Agreements
(FTA) in Vietnam?
Yes. As of the end of 2013, there are 58 double tax treaties signed by Vietnam with various countries and
territories, including most of its significant trading partners (except for the US) that are in force.
To date, Vietnam is party to 8 bilateral and multilateral FTAs that are in force, namely: Asean FTA, Asean
- Australia-New Zeland FTA, Asean - India Comprehensive Economic Cooperation Agreement, Asean - Japan
Comprehensive Agreement Economic Partnership, Asean - Korea Comprehensive Economic Cooperation
Agreement, Asean - China Comprehensive Economic Cooperation Agreement, Vietnam -Chile FTA and Vietnam Japan Economic Partnership Agreement.
Vietnam is presently in the process of negotiating 7 bilateral and multilateral FTAs, namely: Trans-Pacific
Partnership (TPP), Asean - EU FTA, Vietnam - Korea FTA, Regional Comprehensive Economic Partnership, Vietnam
- EU FTA, Vietnam - EU Free Trade Associations Trade Agreement and Vietnam - Customs Union of Russia, Belarus
and Kazakhstan FTA.

46

47

COMPETITION
IN VIETNAM
29. Is there any competition law in Vietnam?
Yes. Vietnams Competition Law establishes 2 broad categories of prohibited conduct, namely, practices
in restraint of competition and unfair business practices; and creates 2 competition authorities namely, the

illegal multi-level selling of goods, and

other unfair competitive practices determined in accordance with certain criteria stipulated under the
competition laws.

Vietnam Competition Administration Department (VCAD) and the Vietnam Competition Council to administer the
Competition Law.
Vietnams Competition Law defines practices in restrain of competition as practices of enterprises which reduce,
distort or hinder competition in the market, including:

30. Are restrictive agreements and practices regulated by competition law in Vietnam?
Yes. The Competition Law of Vietnam prohibits the following agreements or collusion irrespective of the
market share of the relevant parties:

agreements in restraint of competition,

to prevent or impede other enterprises to participate in the market or develop business;

abuse of dominant market position and monopoly position, and

to exclude from the market other enterprises which are not parties to the agreement; and

economic concentration.

to win a tender for supply of goods and services.

Unfair business practices meanwhile comprise the following practices which are contrary to general standards
of business ethics and cause or may cause damage to the interests of the State or to the legitimate rights and
interests of other enterprises or of consumers:

Meanwhile parties having a combined market share of 30% or more of the relevant market cannot make
agreements to, among other things:
directly or indirectly fix the price of goods and services;

misleading instruction,

divide consumption markets or sources of supply of goods and services;

infringement of business secrets,

restrict the amount and quantity of goods and services produced, purchased or sold;

coercion in business,

restrain technical or technological developments or investment; and

defamation of another enterprise,

impose on other enterprises conditions for signing contracts for the purchase and sale of goods or
services or to force other enterprises to accept unrelated conditions and obligations (third line forcing).

causing disruption to the business activities of another enterprise,

advertisement aimed at unfair competition,
promotion aimed at unfair competition,
discrimination by an association,

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49

COMPETITION
IN VIETNAM
31. Is unilateral (or single-firm) conduct regulated by competition law in Vietnam?

Where the enterprises participating in an economic concentration have a combined market share from 30% to
50%, the concentration must be notified to VCAD, unless the economic concentration results in a small to medium

Yes. It is unlawful for an enterprise of group of enterprises in a position of market dominance or monopoly
to abuse its position in specified ways, such as:

enterprise. The parties cannot complete the concentration until they have received notification from VCAD that it
does not consider the concentration to be prohibited.

selling goods or services below cost in order to exclude competitors;

fixing an unreasonable selling or purchasing price or a minimum re-selling price that causes damage or
unfavorable conditions for consumers;
restricting production or distribution or limiting the market or impeding technical or technological
development so as to cause loss to consumers;
applying different commercial conditions to same transactions to create unequal competition;
third line forcing; and
preventing market participation by new competitors.
The test for a dominant market position is based on market share (of 30% or more in the relevant market for
an individual enterprise, 50% or more in the relevant market for 2 enterprises together, 65% or more in the relevant
market for 3 enterprises and 75% or more in the relevant market for 4 enterprises) and, in the case of individual
enterprises, the ability to restrain competition.

32.

Are mergers and acquisitions subject to merger control in Vietnam?

Yes. Vietnams Competition Law also regulates economic concentrations, including mergers, consolidations,
acquisitions, joint ventures or other forms of concentration stipulated by law.
An economic concentration where the parties have a combined market share above 50% in the relevant market
is prohibited unless an exemption is granted or the post-concentration enterprise is a small to medium enterprise
(i.e. a company with less than 300 employees if in the manufacturing sector or less than 100 employees in the
service sector). Other exemptions apply where one or more of the parties is at risk of being dissolved or becoming
insolvent (the failing firm defence) or where the economic concentration enhances export or socio-economic
development or technological progress.

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51

INTELLECTUAL
PROPERTY
33. Please outline the main intellectual property rights that are capable of protection in
Vietnam. In each case, please state:

ii. How is it protected?

Generally, registration is required for protection of intellectual property except in the case of copyrights, whose

i. What is the nature of the right?

registration only creates prima facie evidence of protection. As a general principle also, intellectual property rights
are protected upon registration on a first to file basis except for trade secrets, well known trademarks, geographic

Patent: An invention must be (i) novel, (ii) of an inventive nature, and (iii) industrially applicable in order

indications and trade names, which are entitled to legal protection upon fulfillment of their own conditions for

to be patentable.

formation and usage.

Trademark: A trademark is registrable if it is both (i) a visible sign in the form of letters, words, drawings

Applications for registration of a patent, trademark, industrial design and trade name are filed with the National

or images including holograms (or a combination of these), represented in one or more colors, and (ii)

Office of Intellectual Property of Vietnam (NOIP). Applications for registration of a copyright meanwhile are filed

capable of distinguishing the goods and services of its owner from those of other owners.

with the Department of Copyright in Literature and Arts or the Department of Information and Culture where the
author or owner of the works resides.

Industrial design: An industrial design is registrable and thus protected if it is (i) novel, (ii) of an inventive
nature, and (iii) industrially applicable.
Copyright: The right arises when a work, including software programs, is created and fixed in a certain
material form, irrespective of its content, quality, form, mode and language, and whether or not such
work has been published or registered.
Confidential information: A trade secret shall be eligible for protection when it (i) is neither common
knowledge nor easily obtainable; (ii) can be applied in business and, when used, will enable the holders
of such information to have more favorable advance than other people who do not have or use such
information in production, business, and (iii) is confidentially kept by the holders with necessary
measures so that such information will neither be disclosed nor easily accessible.
Trade name: A trade name shall be protected when it is capable of distinguishing the bearing business
entity from other business entities operating in the same business sector and locality. In particular,
a trade name shall be deemed to be distinctive when it (i) consists of a proper name, except where
the proper name was widely known by use, (ii) is not identical with or confusingly similar to a trade
name which was used earlier by another person in the same business sector and locality, and (iii) is not
identical with or confusingly similar to another persons mark or a geographical indication which was
protected before the date of use of such trade name.

iii. How is it enforced?

As a general matter, a right holder of a registered intellectual property may choose to pursue any of the
following legal recourses to deal with an intellectual property infringement:
civil procedures before the competent local peoples courts for adjudication of (i) cases with respect
to claims of abuse of intellectual property rights, (ii) disputes concerning royalty or remuneration, (iii)
claims on registration right and the right of authorship and (iv) disputes relating to contracts concerning
assignment of ownership right or licensing contract for the right to use objects of intellectual property
rights, and the application of, among other measures, (aa) compulsory termination of the infringing acts,
(bb) compulsory public apology and rectification, (cc) compulsory performance of civil obligations, (dd)
compulsory payment of damages for loss and (ee) compulsory destruction, distribution or use for noncommercial purposes of goods;
administrative measures by the market control agencies, customs agencies and specialized inspection
authorities for intellectual property violations (i) causing losses to consumers or the society; (ii)
involving the production, importation, transportation, or trade of counterfeit goods; or (iii) concerning the
production, importation, transportation, of trade of goods bearing a mark or a geographical indication
that is identical with, or confusingly similar to a protected mark or geographical indication, which include
remedies such as (aa) administrative warnings and monetary fines from to 1 to 5 times the value of the
discovered infringing goods; (bb) suspension of business activities for a definite term; and (cc) in the
case of counterfeit goods and materials and implements used for manufacturing or trading such goods,

52

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INTELLECTUAL
PROPERTY
the confiscation, destruction, distribution, and use for non-commercial purposes, or compulsory delivery

Confidential information: A trade secret is protected for so long as it continues to satisfy all the criteria

of transiting goods out of the territory of Vietnam or re-exportation, after infringing elements had been

to be a trade secret (see item 33(i) on nature of the right).

removed;
Trade name: A trade name is protected for the entire duration of use (i.e. for so long as the owner of the
criminal prosecution for intellectual property violations (i) involving a large amount or number of goods

trade name is still conducting business under the name).

or (ii) constituting criminal acts; and

Of note, Vietnam is a member of the World Intellectual Property Organization (WIPO) and a party to almost
border measures by customs agencies such as temporary detainment of imported or exported goods

all international treaties relating to intellectual property rights, including the Paris Convention for Protection of

upon the request of the right holder as accompanied by (i) evidence to substantiate lawful ownership

Intellectual Property; the Madrid Agreement and the Madrid Protocol concerning the International Registration

right or use right to the object, (ii) evidence testifying to the infringement and (iii) deposit of an amount

of Trademarks, the Patent Cooperation Treaty on the international registration of patents, the Berne Convention

equal to 20% of the value of the goods or at least VND 20 million in case such value could not be

for Protection of Literary and Artistic Works and the Agreement on Trade-Related Aspects of Intellectual Property

determined, or a guarantee ensuring compensation in case of a wrongful request.

Rights.

iv. How long is it protected?

A registered intellectual property is protected from the date of issue and lasts for the following periods:
Patent: 20 years from the date of application
Trademark: 10 years from the date of application, renewable for successive 10 year periods without limit
Registered design: 5 years from the date of application, renewable for an additional 2 periods of 5 years
up to a maximum of 15 years
Copyright: Indefinite protection for the moral rights of authors such as the right to (i) give titles to their
works, (ii) attach their real names or pseudonyms to their works, and (iii) have their real names or
pseudonyms acknowledged when their works are published or used; however, the right of an author to
publish or permit another person to publish his works is only protected for 75 years from the date of the
first publication
Copyright protection on cinematographic works, photographic works, applied art works and anonymous works
will be up to 75 years as from its first publication, or 100 years from the date of its creation if the work
has not been published within 25 years after creation.
For other works, rights of author are protected for the duration of the life of the author plus 50 years. Coauthored works are protected for 50 years from the death of the last surviving co-author.

54

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MARKETING
AGREEMENTS
34. Are marketing agreements regulated in Vietnam? If so, please give brief details in
respect of the following arrangements:

it has registered franchising activities with the MOIT (for franchising from overseas to Vietnam or from
Vietnam to overseas) or the Department of Industry and Trade (for domestic franchising) except for
domestic franchising activities or franchising from Vietnam to overseas; and

i. Agency;
the goods and services subject of the franchise are not prohibited for trading.
Commercial agency agreements must be made in writing or in other forms of equal legal validity. An agent has
the right to contract with various principals, unless the law specifically provides that an agent can only contract
with 1 principal in relation to a certain product or service, and to require the principal to provide guidelines and
information for and to satisfy other conditions relating to the performance of the agency contract. It is the
agents obligation to sell or purchase goods and to provide services to customers at the price of goods and level
of charges for provision of services fixed by the principal, and to comply strictly with the agreements with respect
to the delivery or receipt of goods or money with the principal.

A license to use an intellectual property or a TTA need not be registered in order to be effective. However, to
avoid any third party claims, the parties may consider proceeding to register such license to use an intellectual
property with the NOIP or TTA with the Ministry of Science and Technology.
A business entity shall be entitled to receive a franchise only when it has been licensed to carry out franchising
activities.

ii. Distribution; and

Distribution agreements are governed by the Commercial Law and Civil Code and comprise the activities of
wholesaling (i.e. selling goods directly to other entities but not to the final consumer), retailing (i.e. selling goods
directly to the final consumer), agency for purchase and sale of goods and franchising. Although Vietnams WTO
commitments permit 100% FIEs to engage in distribution, this sector remains restrictive to date as the same is
often made subject to the discretionary judgment of the State authorities (e.g. establishment of retail outlets
based on compliance with the State management of retailing and the master plan of the province or city where the
retail sales outlet is proposed to be set up, and approval of the setting up of outlets other than the first one based
on satisfaction of a vague economic needs test).
iii. Franchising.
Commercial franchise contracts, including related licensing agreements on intellectual property rights (such
as trademarks) or technology transfer agreements (TTA), must be made in writing or in other forms of equivalent
legal validity. A franchise contract organizing operations in Vietnam must also be written in Vietnamese.
A company is entitled to conduct franchising only when:
its business system to be franchised has been in operation for at least 1 year;

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E-COMMERCE
IN VIETNAM
35. Are there any laws regulating e-commerce (such as electronic signatures and distance selling) in Vietnam?
Yes. Under the e-Transactions Law, where the law requires a document to be in writing, a data message
(i.e. information in the form of electronic data interchange, electronic documents, e-mails, telegrams, telegraphs,
facsimiles and other similar form) shall be deemed to meet such requirement and to have the same validity as the
original document if:
the integrity of the contents of the data message is maintained since its first creation in the form of a
complete data message; and
the information contained therein is accessible and usable for reference when necessary.
Where the law requires a document to be signed, such requirement with respect to a data message shall be
deemed to be satisfied if:
the method of creating the e-signature may identify the signatory and indicate his approval of the
contents of the data message; and
such method is sufficiently reliable and appropriate to the purpose for which the data message was

The e-transactions Law does not apply, however, to the issuance of certificates of land use right or ownership
of housing and other real estate, documents on inheritance, certificates of marriage, decisions on divorce,
certificates of birth, certificates of death, bills of exchanges and other valuable papers.

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DATA
PROTECTION
36. Are there any data protection laws in Vietnam?

Use of the personal information collected in e-commerce transactions must be in compliance with the
purpose for collecting the information as stated in the policy on protection of personal information of that trader,

Yes. Data protection is governed in general by the Criminal Code, Law on Information Technology, Law on

organization or individual.

e-transactions and Law on Consumer Protection.

The Criminal Code penalizes the following acts in relation to data integrity and secrecy:
Article 46.2 of the Law on e-transactions, in particular, prohibits agencies, organizations and individuals
from using, providing or disclosing information on private and personal affairs or information of other agencies,

infringement upon other persons privacy or safety of letters, telephone and/or telegraph (Article 125);

organizations and/or individuals which is accessible by them or under their control in e-transactions without the
latters consent, unless otherwise provided for by law.
In addition, Article 21 of the Law on Information Technology provides that organizations and individuals

breach of regulations on operation, exploitation and use of computer networks (Article 225); and
illegal use of information in computer networks (Article 225).

collecting, processing and using personal information of another person shall:

Offenders for any of the above crimes shall, depending on the nature and severity of the crime, be subject to
notify such person of the form, scope, place and purpose of the collection, processing and use of his

warning, administrative fine, non-custodial reform or imprisonment.

personal information;
use the collected personal information for proper purposes and to store such information only for a
certain period as stipulated by law or as agreed upon by the 2 parties;
take necessary managerial or technical measures to ensure that the personal information shall not be
lost, stolen, disclosed, modified or destroyed; and
immediately take necessary measures upon receipt of a request for re-examination correction or
cancellation and not to supply or use relevant personal information until such information is corrected.
An individual may request any organization or individual storing his personal information in the network
environment to check, correct or cancel such information.
Furthermore, Decree No. 52/2013/ND-CP dated 16 May 2013 on e-commerce, effective as of 1 July 2013,
requires e-commerce traders, organizations or individuals collecting personal information from consumers to
formulate and publish a policy on protection of personal information. Prior consent from the consumer must
also be obtained before such e-commerce traders, organizations or individuals can gather and use a consumers
personal information except in certain cases permitted by law, such as the gathering of personal information that
has already been publicized on e-commerce websites or the gathering of personal information to sign or perform
contracts or to calculate the price of the product or service.

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PRODUCT
LIABILITY
37. Are there any laws regulating product liability and product safety in Vietnam?
Yes. The Law on Consumer Protection grants to consumers the right to:
claim compensation for loss and damage when goods or service fail to comply with technical criteria or
standards of quality which the trader has announced, listed, advertised or undertaken; and
lodge complaint or denunciation, to institute legal proceedings or request a social organization to
institute proceedings to protect the consumers rights
In case of discovery of defective goods, the manufacturer and/ or the importer must promptly take all
necessary measures to stop the supply of the goods on the market and make a public announcement that the
goods are defective and about the recall of such goods in at least 5 consecutive editions of a daily newspaper or
on 5 consecutive days on radio and/ or television in the locality where such goods are circulated.

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63

GLOSSARY
Glossary of main Acronyms and Abbreviations
AR
ASEAN

Authorized representative
Association of Southeast Asian Nations

MOLISA
NA

Ministry of Labor, Invalids and Social Affairs

National Assembly

BCC

Business cooperation contract

NASC

National Assembly Standing Committee

BLT

Business license tax

NOIP

National Office of Intellectual Property of Vietnam

CAPT
CIT
DOLISA

Capital assignment profits tax

NRT

National resources tax

Corporate income tax

PIT

Personal income tax

Department of Labor, Invalids and Social Affairs

PM

Prime Minister

SBV

State Bank of Vietnam

DTA

Double tax treaty

EPF

Environmental protection fee

SLLC

Single member limited liability company

EPT

Environtmental protection tax

SOEs

State owned enterprises

ERC

Enterprise registration certificate

SST

Special Sales Tax

European Union

TTA

Technology transfer agreement

Foreign Contractor Withholding tax

VAS

Vietnamese Accounting System

FIE

Foreign invested enterprise

VAT

Value added tax

FTA

Free Trade agreement

FX

Foreign exchange control regulations

EU
FCWT

GD
IC
JSC
Legal Rep
MFN
MLLC
MOF

64

General director
Investment certificate

VCAD
VND
WIPO
WTO

Vietnam Competition Administration Department

Vietnamese dong
World Intellectual Property Organization
World Trade Organization

Joint stock company

Legal representative of the enterprise
Most favored nation
Multiple member limited liability company
Ministry of Finance

65

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