CONTENTS

• Standard Accounting System
• Possession Definitions
- Patents, Utility Solutions and Industrial Design
- Trademarks
- Copyright
Land
Labour costs
I>> Standard Accounting System:
FDI companies have to obey the Vietnam accounting regime system. For these companies, if they have legitimate reasons to apply the other accounting systems, they must ask the Financial Ministry for allowance in paper. These companies have to register with the Financial Ministry the accounting system which they will use is permitted before applying.

1 Vietnam accounting regime system:
Companies have to run all accounting contents including: voucher regime, account system, account book regime, financial reporting system, document archiving regime.
2 FDI companies have to apply an suitable accounting system with their business activities or fields.
3 Vietnam Dong is used in account writing. FDI can use foreign currency in order to write in account books and reports but the currency have to be registered in advance and be permitted by the Financial Ministry.
4 Measurement unit used in account writing is the Vietnam’s official measurement units.
5 Fiscal year of FDI companies must be appropriate to tax-calculating year. the fiscal year can be a solar calendar year or 12 months which start at the beginning quarter and is registered in concerned accounting system. The first fiscal year is counted at the time issuing the Investment Certificate to the end of the accepted fiscal year.
6 In order to operate account activities, FDI companies can hold a account division or hire an independent accounting organisation.

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II>> Possession Definitions:

1. Patents, Utility Solutions and Industrial Design:

Protection in VietNam can be provided to patents and utility solutions for a period of 15 years. Certificate of utility solutions may be granted for 6 years. Certificate of industrial design is granted for 5 years and may be renewed after every five years, but the total effective period of a certificate should not exceed 15 years. Inventions related to national defense or health may be granted only with certificates, not patents.

Licence contracts should be approved by the Ministry of Science, Technology and Environment and be registered with the industrial Property Department before becoming effective. The maximum period of a licence contract is 7 years commencing from the date of approval by the Ministry of Science, Technology and Environment.


2. Trademarks

According to the Civil Code, trademarks represent symbols used to differentiate goods and services of the same type belonging to different manufacturers and trading companies. A trademark may be a letter, a figure or a combination of these which is presented with one or many colors.
The first step to ensure protection of trademarks is registration. Trademark protection is granted for 10 years from the date of the filling of the application and may be renewed for a further 10 year period.
A registration application should include 15 trademark samples and a list describing the products and services having such trademark samples and a list describing the products and services having such trademarks in English, French, German or Russian ( with a Vietnamese translation). Government authorities will investigate the trademark and issue a certificate in the case of approval

After filling the application, a mark should always be used in Vietnam. If a mark is not used within five years in Vietnam, and the owner cannot provide good reasons as to why it has not been used, the registration may be cancelled when there is an application from a third party. Trademarks may be placed on products, in documentation related to the product or services, or in advertisements.


3. Copyright:

The Civil Code provides protection for copyright of original works including writing, verbal work, art performance, films, video tapes, radio programs, photograghs, music compositions, paintings, and sculptures architecture, computer software, scientific researches, textbooks, geographical maps, translations, adapted works and collections. A distinction between economic and moral rights in perpetuity. Economic rights are protected for the life of the author plus 50 years. In specific cases of copyrights may be protected for only 50 years counting from the first publication date. The Office of Copyright Protection under the Ministry of Culture is responsible for the operation of the law.


III>>  Land:

I1. In Vietnam, the land is owned by the entire national and managed on the people’s behalf by the State. The Constitution gives citizens the right to built dwelling houses according to law, protects the right of lessees and lessers, give citizens  the right to  transfer their lands use rights but not the land itself, and entrusts the land or organizations and individuals for stable and long term use. For foreign investment projects, the maximum time for leasing land is 50 years ( 70 years in some special cases). 

            There are 2 ways for a FIE to acquire land for its project

o       By a direct lease from the State for the duration of the investment project, with rent being paid annual or on a lump sum basis; or

o       By the Vietnamese partner to a joint venture or to a BCC leasing land from the State and subsequently contributing the value of the land use right to the joint venture or business cooperation. 

2. Land rentals

 FIEs using land, water and sea surfaces leased to them by the State for implementing their projects must pay land rentals 

a-Urban areas

Urban areas include any land located within cities, towns and townships which is used for building dwelling houses and offices of establishments, organizations and manufacturing and business establishments, and for constructing infrastructure for the purpose of public interest, national defense and security, and other purposes, and  those areas have been divided into 5 groups with different rental rates for each group. 

The applicable rates of land rent in urban areas are:

Group No

Minimum Rental level (USD/m2/year )

Maximum Rental level (USD/m2/year )

1

1.00

12

2

0.80

9.6

3

0.60

7.2

4

0.35

4.2

5

0.18

2.16

b-Non urban areas

The applicable rates of land rent in non-urban areas are:

Group No

Minimum Rental level (USD/m2/year )

Maximum Rental level (USD/m2/year )

Commune having a boundary adjacent to a Group 1 inner city

0.18

1.08

Commune having a boundary adjacent to a Group 2 inner city

0.10

0.60

Delta region

0.06

0.36

Central region

0.03

0.18

Mountainous region

0.01

0.06

3-Water and Sea surfaces

Rentals for rivers, lakes and bays are between USD 75 and USD 525 /ha/year-the use of water surfaces in urban areas for construction purposes is subject to the rate applicable to urban areas 

Rentals for sea surfaces are between USD 150 and USD 600/km2/year-when the area in question varies from time to time, a rate of USD 1500 to USD 7500/km2/year applies

4.Exemption and reduction

Land rentals are exempted while capital construction of a project is being carried out

The amount of rent payable is reduced by 5% if the rent is paid in advance for at least 5 years, if paid for more than 5 years in advance, the rent is reduced by 1% for each additional year but by not more than 25% of the total rent payable. Where land rent is paid in a lump sum for a period of more than 30 years, a 30% reduction of the payable land rent will be applied

5.Payment:

A FIE must submit to the relevant authorized organization a declaration for payment of land rentals and relevant  documents within 1 month from the date of calculation of land rent which is the date land is hand over to it for use. The rent is payable on an annual basis or on a lump sum basis and can be paid in USD or VND

 Where a foreign organization or individual cooperate with a Vietnamese organization which is licensed to rent land from the State in constructing residential houses, it is only required to pay the land rentals until the residential house are sold

6. Transferring the right to use land

A transfer of the right to use the land will attract tax where the right to use the land is transferred to a third party by a foreigner prior to the expiry of the term. This would happen in the situation where a FIE is dissolved prior to the expiry of the term of the investment license and the right to use the land is transferred as part of the liquidation process. The transferor is liable to pay tax at the rate of 10% for farm/forestry land and 20% for other types of land. The value of the land on which the tax rates are calculated will be stipulated by the relevant people’s committee.

 7.Leasing property and purchasing residential property

A foreigner may lease premises in Vietnam  for dwelling and business purposes provided that the legal status of the premises is ensured.

 Foreign residents in Vietnam can buy house for the duration of  their  stay in the country for their personal use. They are able to buy one house on land leased from the Government, however, the house will be confiscated as the authorities do not wish to encourage property speculation. Houses may only be purchased from State-owned real estate agencies, and foreign owners are required to pay land rent. 

Potential purchasers should be aware that, when a foreign owner cease to reside in Vietnam and does not sell or bequeath the house, the title deeds will become null and void 90 days after the owner leaves VN. Such a provision presumes that a seller would be able to sell the house within 3 months. 

8.Mortgaging of value of land use rights and of assets attached to land

FIEs shall be permitted to mortgage the value of the land use right and assets accompanied with the leased land during the leased period at Vietnamese credit institutions, foreign bank branches, and joint venture banks between Vietnam and foreign banks in accordance with the Law on Credit Institution, to borrow capital for their business and production operations in accordance with the current regulations in the following  cases:
      a. A FIE which has paid its land rent in advance for many years, and the  remaining duration of the term for which the land rent has been paid is at least 5 years.
      b. A JVC to which the Vietnamese parties make capital contribution in the form of the land use right, the remaining duration of which is at least 5 years.

The value of mortgaged land use rights shall consist of compensation expenses, site clearance, and the prepaid land rent minus the expired land rent payments.

 

   

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