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CHAPTER
IV
RIGHTS
AND OBLIGATIONS OF
FOREIGN INVESTORS AND ENTERPRISES
WITH FOREIGN CAPITAL INVESTMENT
>> Article 25
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Enterprises
With Foreign Capital Investment [and] parties to Business
Co-operation Contracts may employ workers pursuant to their
business requirements and must give priority to the employment
of Vietnamese citizens; [they] may only employ foreigners
to perform tasks requiring technical and management qualifications
which Vietnam has not yet attained, but [they] must train
Vietnamese personnel for replacement.
The rights,
interests and duties of employees working in Enterprises
With Foreign Capital Investment shall be ensured by means
of labor contract, collective labor agreement and the provisions
of labor law.
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>> Article 26
| Persons using labor, Vietnamese
workers and foreign workers must comply with the provisions
of labor law and relevant laws, [and they] must respect each
others' honor, dignity and tradition. |
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>> Article
27
| Enterprises With Foreign Capital
Investment must respect the right of Vietnamese workers to
participate in political [and] socio-political organizations
in accordance with the provisions of Vietnamese law. |
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>> Article
28
| An Enterprise With Foreign Investment
Capital [and] the Foreign Party to a Business Co-operation
Contract shall insure [their] assets and civil liabilities
with a Vietnamese insurance company or another insurance company
permitted to operate in Vietnam. |
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>> Article
29
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The transfer
of foreign technology to Vietnam in foreign investment projects
may be carried out in the form of contribution of the value
of the technology as capital or the purchase of the technology
on the basis of a contract, in compliance with the law on
technology transfer.
The Government
of Vietnam encourages the rapid transfer of technology,
especially advanced technology.
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>> Article 30
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An Enterprise
With Foreign Capital Investment [and] the parties to a Business
Co-operation Contract, after completing the basic construction
for the enterprise's formation, must conduct final acceptance
of, and [prepare] final accounts for the facility with a
certification from an inspection organization.
Enterprises
With Foreign Capital Investment [and] the parties to Business
Co-operation Contracts shall conduct tendering in accordance
with the provisions of the law on tendering.
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>> Article 31
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Enterprises
With Foreign Capital Investment [and] parties to Business
Co-operation Contracts shall have the right to conduct business
autonomously in accordance with the objectives stipulated
in the Investment License. They may import equipment, machinery,
materials and means of transport, export directly or entrust
the export of and sell their own products in order to implement
the investment project in accordance with the provisions
of law.
Enterprises
With Foreign Capital Investment [and] parties to Business
Co-operation Contracts must give priority to the purchase
of equipment, machinery, materials and means of transport
in Vietnam where the technical and commercial conditions
are commensurate.
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>> Article 32
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An Enterprise
With Foreign Capital Investment may establish a branch24
outside of the province [or] city directly under the Central
Authority25 where the Enterprise
has set up its head office in order to conduct business
activities within the scope and objectives stipulated in
[its] Investment License and [such establishment] must be
approved by the People's Committee of the province [or]
city directly under the Central Authority where the branch
is established.
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>> Article 33
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Enterprises
With Foreign Capital Investment and parties to Business
Co-operation Contracts may purchase foreign exchange at
[a] commercial bank in order to meet [their] current transactions
and other permitted transactions in accordance with the
provisions of the laws concerning foreign exchange control.
The Government
of Vietnam guarantees to balance foreign exchange for especially
important projects that are invested pursuant to a program
of the Government from time to time.
The Government
of Vietnam guarantees to assist in the balancing of foreign
exchange for projects that build infrastructure facilities
and a number of other important projects.
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>> Article 34
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The parties
to a Joint Venture Enterprise have the right to assign the
value of their portions of capital in the Joint Venture
Enterprise, but [they] must give priority of assignment
to the parties to the Joint Venture Enterprise. In the event
that an assignment is made to an enterprise outside of the
Joint Venture, the assignment conditions shall not be more
favorable than those offered to the parties to the Joint
Venture Enterprise. An assignment of capital must be agreed
upon by the parties to the Joint Venture Enterprise.
These provisions
shall also apply to the assignment of the rights and obligations
of the parties to a Business Co-operation Contract.
The Investor
of an Enterprise With One Hundred Per Cent (100%) Foreign-Owned
Capital has the right to assign [his/her/its] capital.
In the event
that an assignment of capital generates a profit, the assignor
shall pay enterprise income tax at the rate of twenty-five
per cent (25%).
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>> Article 35
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An Enterprise
With Foreign Capital Investment shall open accounts in Vietnamese
currency and foreign currency with [a] Vietnamese bank or
joint venture bank or branch of [a] foreign bank established
in Vietnam.
In special
circumstances as approved by the State Bank of Vietnam,
Enterprises With Foreign Capital Investment may be permitted
to open [an] offshore account.
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>>
Article 36
| The conversion between Vietnamese
currency and foreign currencies shall be effected at the official
exchange rates announced by the State Bank of Vietnam at the
time of conversion. |
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>> Article 37
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Enterprises
With Foreign Capital Investment [and] Foreign Parties to
Business Co-operation Contracts shall adopt the Vietnamese
accounting system. In circumstances where it is necessary
to adopt another commonly used accounting system, approval
from the Ministry of Finance must be obtained.
The system
for depreciation of fixed assets of Enterprises With Foreign
Capital Investment and Foreign Parties to Business Co-operation
Contracts shall be implemented in accordance with the regulations
of the Government.
The annual
financial statements of Enterprises With Foreign Capital
Investment and Foreign Parties to Business Co-operation
Contracts shall be audited by an independent Vietnamese
auditing company or other independent auditing company permitted
to operate in Vietnam in accordance with the provisions
of the law on auditing. The annual financial statements
must be submitted to the financial authority and the State
authority in charge of management of foreign investment.
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>> Article 38
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Enterprises
With Foreign Capital Investment and Foreign Parties to Business
Co-operation Contracts shall pay enterprise income tax at
a rate of twenty-five per cent (25%) of the profits made;
in circumstances where investment is encouraged, the enterprise
income tax rate shall be twenty per cent (20%) of the profits
made; in circumstances where a number of criteria for investment
encouragement [are met], the enterprise income tax rate
shall be fifteen per cent (15%) of the profits made; in
circumstances where investment is especially encouraged,
the enterprise income tax rate shall be ten per cent (10%)
of the profits made.
With respect
to the fields of oil and gas and a number of other precious
and rare natural resources, the rate of enterprise income
tax shall be in accordance with the provisions of the Oil
and Gas Law and relevant laws.
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>> Article 39
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Depending on
the investment fields and geographical areas stipulated
in Article 3 of this Law, Enterprises With Foreign Capital
Investment and Foreign Parties to Business Co-operation
Contracts may be exempted from enterprise income tax for
a maximum period of two (2) years from the time when the
business begins to make a profit, and may be granted a fifty
per cent (50%) reduction of enterprise income tax for a
maximum period of two (2) subsequent years.
In cases where
Enterprises With Foreign Capital Investment and Foreign
Parties to Business Co-operation Contracts implement a project
that [satisfies] a number of the criteria for investment
encouragement, [they] are exempted from enterprise income
tax for a maximum period of four (4) years from the time
when the business begins to make a profit, and are granted
a fifty per cent (50%) reduction of enterprise income tax
for a maximum period of four (4) subsequent years.
With respect
to cases where investment is especially encouraged, the
maximum period of exemption from enterprise income tax shall
be eight (8) years.
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>>
Article 40
| Enterprises With Foreign Capital
Investment and the parties to Business Co-operation Contracts
that suffer losses after [their] tax finalization with the
tax authority are entitled to carry forward the losses to
the following year, [and] such losses can be deducted from
the taxable income. The period during which losses may be
carried forward shall not exceed 5 years. |
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>> Article 41
| After the payment of enterprise
income tax and fulfillment of other financial obligations,
an appropriation from the remaining income for the purpose
of establishing a reserve fund, welfare fund, production expansion
fund and other funds is decided by the Enterprise. |
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>> Article 42
| In the case of reinvestment
in projects for which investment is encouraged, a refund of
part or all of the enterprise income tax already paid on the
amount of the profits reinvested will be granted. The Government
shall stipulate the proportion of tax refund based on the
field, geographical area, form and term of reinvestment. |
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>> Article 43
| When remitting profits abroad,
a Foreign Investor must pay an amount of tax at the rate of
three per cent (3%), five per cent (5%) or seven per cent
(7%) of the amount of profit remitted abroad, depending on
the amount of the Foreign Investor's capital contribution
to the Legal Capital of the Enterprise With Foreign Capital
Investment or the [amount of] capital for implementing the
Business Co-operation Contract. |
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>> Article 44
| Vietnamese persons resettling
abroad who invest back into the country in accordance with
the provisions of this Law shall be entitled to a twenty per
cent (20%) reduction of enterprise income tax as compared
to projects of the same category, except in the circumstances
where the enterprise income tax rate of ten per cent (10%)
is applied; and [they] are entitled to a profit remittance
tax rate of three per cent (3%) on the amount of profit remitted
abroad. |
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>> Article 45
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Based on the
regulations of the Government, the State authority in charge
of management of foreign investment shall determine the
applicable enterprise income tax rates, enterprise income
tax exemption and reduction periods and tax rates for the
remittance of profits abroad in accordance with the provisions
of Articles 38, 39, 43 and 44 of this Law. The [applicable]
tax rate and the period of exemption and reduction of tax
shall be stated in the Investment License.
If there is
a change to investment conditions during the course of implementing
a project, the tax exemption and reduction for Enterprises
With Foreign Capital Investment and Foreign Parties to Business
Co-operation Contracts shall be determined by the Ministry
of Finance.
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>> Article 46
| 1. |
Enterprises With Foreign Capital Investment [and]
Foreign Parties to Business Co-operation Contracts,
who use land surface, water surface [and/or] sea surface
must pay rent; in the case of exploiting natural resources,
natural resource tax must be paid in accordance with
the provisions of law.
The Government shall stipulate the exemption or reduction
of land, water surface [and] sea surface rents for
Build-Operate-Transfer projects, Build-Transfer-Operate
projects [and] Build-Transfer projects, [and] projects
that invest in geographical areas with difficult socio-economic
conditions and geographical areas with especially
difficult socio-economic conditions.
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| 2. |
In the event that the Vietnamese Party contributes
capital in [the form of] the value of land use rights,
the Vietnamese Party is responsible for [land] surface
clearance [and] compensation and the completion of
the procedures for obtaining the land use rights.
In the event that the land is leased out by the State
of Vietnam, the People’s Committee of the province
[or] city directly under the Central Authority of
the locality where the [concerned] investment project
is located shall organize the implementation of [land]
surface clearance [and] compensation and the completion
of the procedures for leasing out the land.
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| 3. |
An
Enterprise With Foreign Capital Investment may mortgage
the assets affixed to land and the value of the
land use rights in order to secure capital loans
borrowed from credit institutions permitted to operate
in Vietnam.
The Government shall stipulate the conditions and
formalities for Enterprises With Foreign Capital
Investment to mortgage land use rights.
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>> Article 47
| 1. |
Export duty [and] import duty for goods exported and
imported by an Enterprise With Foreign Capital Investment
and the parties to a Business Co-operation Contract
shall be applied in accordance with the Law on Export
and Import Duties. |
| 2. |
Enterprises
With Foreign Capital Investment [and] the parties
to Business Co-operation Contracts are exempted
from import duty with respect to items imported
to form the fixed assets, including:
| a. |
Equipment
[and] machinery; |
| b. |
Means
of carriage for specific use which are parts
of the line[s] of technology and means of transportation
to be used for the carriage26
of workers; |
| c. |
Components,
parts, detached devices, spare parts, installations,
moulds [and] accessories which accompany the
equipment, machinery [and] means of carriage
for specific use provided for in point b of
this clause; |
| d. |
Raw
materials [and] materials to be used for the
manufacturing of the equipment [and/or] machinery
which are parts of the line[s] of technology
or for the manufacturing of components, parts,
detached devices, spare parts, installations,
moulds [and] accessories which accompany the
equipment [and/or] machinery; [and] |
| e. |
Construction
materials that can not yet be manufactured domestically.
The exemption of import duty for the imported
goods provided for in this clause shall also
apply in the case of expanding the scale of
the project [or] replacing [or] renovating technology. |
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| 3. |
Raw materials, materials [and] components imported
for production [purposes] of projects [that invest]
in a field for which investment is especially encouraged
or in a geographical area with especially difficult
socio-economic conditions are exempted from import
duty for a period of 5 years as from the commencement
of production. |
| 4. |
The Government shall stipulate the exemption [and/or]
reduction of export and import duties with respect
to other goods for which investment needs to be especially
encouraged. |
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>> Article 48
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Export Processing
Enterprises are exempted from export duty on goods that
are exported from the Export Processing Zone to foreign
countries, and from import duty on goods that are imported
from foreign countries into the Export Processing Zone.
Export Processing
Enterprises [and] Enterprises With Foreign Capital Investment
in Industrial Zones are entitled to enjoy tax preferences
in circumstances where investment is encouraged or especially
encouraged in accordance with the provisions of Articles
38, 39, 43 and 44 of this Law. The Government shall stipulate
the specific preferential tax rate for each type of Export
Processing Enterprise [and] Enterprise With Foreign Capital
Investment in an Industrial Zone.
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>> Article 49
| In addition to the types of
taxes stipulated in this Law, Enterprises With Foreign Capital
Investment and Foreign Parties to Business Co-operation Contracts
must pay other types of taxes in accordance with the provisions
of the law. |
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>> Article 50
| Foreigners and Vietnamese persons
who work in Enterprises With Foreign Capital Investment or
work for parties to Business Co-operation Contracts must pay
personal income tax in accordance with the provisions of the
law. |
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>> Article
51
| Enterprises With Foreign Capital
Investment and the Foreign Parties to Business Co-operation
Contracts have the responsibility to comply with the provisions
of the law on environmental protection. |
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>> Article 52
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An Enterprise
With Foreign Capital Investment [and] a Business Co-operation
Contract shall terminate [their] operations in the following
circumstances:
| 1. |
The term
of operation stated in the Investment License expires; |
| 2. |
Pursuant
to the conditions for termination of operation as stipulated
in the contract [and/or] enterprise charter, or as agreed
upon by the parties; |
| 3. |
Pursuant
to the decision of the State authority in charge of
management of foreign investment due to a serious violation
of law or a stipulation of the Investment License; [or] |
| 4. |
Due to being
declared bankrupt. |
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>> Article 53
| 1. |
Upon termination
of operation under the circumstances stipulated in Clauses
1, 2 and 3 of Article 52 of this Law, the [concerned]
Enterprise With Foreign Capital Investment [and] the
parties to the [concerned] Business Co-operation Contract
must proceed with the liquidation of the enterprise’s
assets [and] discharge the contract. |
| 2. |
If an enterprise,
during the course of liquidation of its assets, is discovered
to be on the verge of bankruptcy, the enterprise’s bankruptcy
shall be handled in accordance with the formalities
prescribed by the laws concerning enterprise bankruptcy. |
| 3. |
The bankruptcy
of an Enterprise With Foreign Capital Investment shall
be carried out in accordance with the provisions of
the laws concerning enterprise bankruptcy. |
| 4. |
In the event
that the Vietnamese Party participating in a Joint Venture
Enterprise who contributes capital in [the form of]
the value of land use rights is dissolved or bankrupt,
the remaining value of the land use rights contributed
as capital shall be included in the Enterprise’s assets
that are subject to liquidation. |
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NOTES:
24.
Branch: As
defined under Article 100 of the 1995 Civil Code of Vietnam,
a branch (or "chi
nhaùnh" in Vietnamese)
is a subordinate unit of a juridical person, and which
has the duty to perform all or part of the functions of
the juridical person, including representative functions,
under the juridical person’s authorization. A branch does
not have the status of a juridical person, and all civil
rights and obligations arising from transactions performed
by the branch shall be assumed by the juridical person
establishing it. See also Article 15 of the 1999 Enterprise
Law for a somewhat similar definition.
25.
Administrative units: In
Vietnam, a province is accountable directly to the Government
(usually expressed as the Central Authority") and
is comprised of provincial cities, towns, rural districts,
municipalities, precincts, villages, hamlets and neighborhoods.
A city directly under the Central Authority such as Ho
Chi Minh City and Hanoi is also accountable directly to
the Government and is divided into urban districts, rural
districts, wards and neighborhoods. Vietnam also has special
zones which are accountable directly to the Government.
26.
Carriage of workers: For
picking up and bringing workers to/from a work site.
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