Licensing for Foreign Contractor

Under the provisions of the Vietnam law for operations of foreign contractors in Vietnam in the fields: investment and construction consulting, supply of materials and technology equipment together with technical services related to the construction works, construction of work, foreign contractors must apply for a contractor license.

Conditions for obtaining permits for foreign contractor in Vietnam:

Case for bidding packages that are subject to compulsory application in accordance with the bidding law of Vietnam: Win the bid or select the bid.

– Had won the bid or can select the bid.

– Had a forwarding bid contract.

Case for bidding packages that are not subject to compulsory application in accordance with the bidding law of Vietnam:

– Had won the bid or can select the bid.

– Had a forwarding bid contract.

Meeting all the conditions and capability that are consistent with contracted works prescribed by the law of Vietnam.

In all cases that foreign contractors are assigned the bid (due to win the bid through bidding or select the bid), foreign contractors have to codeshare with Vietnam contractors or have to use Vietnam sub-contractors (except the cases that are allowed by the Prime Minister or prescribed by the law of Vietnam).

Foreign contractors have to commit to fully implement the provisions of the law of Vietnam relating to contracting activities in Vietnam.

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Legal Procedures Post Licensing in Vietnam

After establishing a company in Vietnam, the compay has to perform a number of legal procedures for compliance purposes.

First, they have to declare the license tax. The tax declaration should be submitted to tax authorities. If the taxpayer has a branch in the same province, the tax declarations of the branch should be submitted to the taxpayer’s tax authority. On the other hand, if the taxpayer has a branch in another province, the tax declarations of the branch should be submitted to the tax authority of the branch. In case when the taxpayer does not have a permanent business location, the tax declaration should be submitted to the sub-department of taxation where the business is located or where the taxpayer resides. License tax is submitted annually and if the taxpayer has declared and paid license tax, he is not required to submit license tax declaration in the next year if the amount of license tax payable is not changed. In case the taxpayer amount of license tax payable in the next year is changed, a tax declaration shall be submitted by December 31st of that year.

Second, the enterprise has to conduct the VAT (value added tax) declaration. The taxpayer that has just begun his business shall declare VAT quarterly. In the next calendar year after 12 months of business, VAT declarations shall be declared whether monthly or quarterly depending on the revenue from the sale of goods and/or services in the preceding calendar year (12 months). VAT shall be declared monthly or quarterly throughout the calendar year and the 3-year period. For example, the first stable period begins on October 1st, 2014 and ends on December 31st 2016.

Third is the CIT declaration (corporate income tax). The CIT declaration should be submitted to the supervisory tax authorities. According to business results, the taxpayer shall make the quarterly tax payment within 30 days of the quarter succeeding the quarter in which tax is incurred; they shall not submit the provisional CIT declaration quarterly.

The fourth is the invoice printing. Before placing the first order for invoices, the company must send a written request for permission to use ordered invoices to the supervisory tax authority. Before the business uses invoices for its sale of goods and services, except for invoices purchased from or provided by the tax authority, the business has to send a notice of invoice publication together with a sample invoice to the tax authority.

Every quarter, sellers of goods and services shall submit the invoice using a report to the tax authority, even when there are no invoices that have been used during the period. The report of the first quarter shall be submitted by April 30th, second quarter by July 30th, third quarter by October 30th, and fourth quarter by January 30th of the next year. If no invoices are used during the period, the quantity of used invoices in the report shall be zero (0).

The fifth is the bank account. The opening of a bank account to conduct transactions with customers is necessary because according to the ministry of Finance, the invoice value of 20 million VND or above should be transferred through the bank. Within 10 days from the day that enterprise opens a bank account, the company has to notify the bank account number to the competent tax agency.

The sixth also the last one is labour and social insurance. If the contract between enterprise and employee has a duration of over 3 months, it is subjected to compulsory social insurance.

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Energy & Resources

Vietnam is known as a rich country with natural resources. The energy industry of Vietnam has developed for a number of years but the lack of modern technology and capital that makes Vietnam has still stalled in this potential field. By the strength of resources, cheap labor, and transport, Vietnam is attracting many foreign investors to invest in the energy industry. Our energy and resources lawyers in Vietnam always monitor the legal environment and keep our client posted to changes that could impact their business.

In particular, Vietnam has considerable supplies of oil, natural gas and refineries. Proven oil reserves in Vietnam amount to 3.3 billion barrels as the second-most in Southeast Asia, after Indonesia. Revenues from oil and gas contribute about 30% of Vietnam’s GDP. Vietnam Oil and Gas Group (PetroVietnam), a state-owned company is eligible to conduct petroleum activities, sign cooperation contracts and govern petroleum industry in Vietnam.

For exploration and production, sea zones in Vietnam are divided into different geographic “blocks” based on the advice of PetroVietnam. The size and scope of these blocks can vary from year to year, depending on the scale of the activities undertaken by the company currently assigned to it. According to Law on Petroleum 1993, amending in 2000 and 2008, to participate in this field, the investors have to join the bidding for researching and exploiting petroleum. In special cases, the Vietnam Government may appoint the contractor to select investors wishing to engage in petroleum. Then the investor must enter into a dividing product or joint venture or other contract which contents all terms as required by Article 15 (amended), managed by the Vietnam Government. This contract’s term shall not exceed 25 years in which period of research and exploration not exceed 5 years. The duration may be extended 5 years for the contract and 2 year for period of research and exploration. In case projects are encouraged to invest in petroleum and exploring natural gas, the term can be 30 years and 7 years for a period of research and exploration.

Taxation for petroleum activities is based on the type of natural resources exploited, economic, technical conditions of the mines, the amount produced. According to law on Petroleum and other provisions on taxation, the natural resources tax rate is from 4% to 25% for crude oil, 0% to 10% for natural gas. To ensure the reserve aiming to domestic demand, Vietnam has regulated export rate for natural resources, especially tax rate at 20% for crude oil and coal. This regulation was implemented to encourage companies in Vietnam to refine crude oil in the country as the new refineries come online.

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Renewal of License for the Establishment of Branches Office in Vietnam

The extension of the license for the establishment of a foreign trader’s branch in Vietnam shall be following the regulation of the commercial law and the relevant guiding decrees and circulars under Vietnam laws.

Preparation of dossiers for extension of license for the establishment of branches includes:

-Application for extension of license for the establishment of branches, made according to the form set by the Ministry of Industry and Trade, signed by a competent representative of the foreign trader;

-A copy of the business registration certificate or equivalent paper of the foreign trader that is translated into Vietnamese and certified by a Vietnamese diplomatic mission or consulate abroad consular legalization in accordance with the law of Vietnam;

-Copies of audited financial statements or documents certifying the fulfillment of tax or financial obligations in the latest fiscal year or papers of equivalent value issued by competent agencies or organizations (where the foreign trader established) to prove the existence and operation of the foreign trader in the latest financial year, it must be translated into Vietnamese and authenticated in accordance with the provisions of Vietnamese law;

-A copy of the license for the establishment of the branch.

The order and procedures for extension of the license for the establishment of the branch at a competent agency shall be as follows:

-A dossier for extension of the license for the establishment of the branch must be submitted within 30 days at the latest before the license expires;

-Foreign traders submit applications directly or via post or online (if applicable) to the Ministry of Industry and Trade;

-Within 03 working days from the date of receipt of the dossier, the Ministry of Industry and Trade shall check and request the supplement if the dossier is incomplete and invalid. Requests for supplementary records are made at most once during the process of processing applications;

-Within 05 working days from the date of receipt of the complete and valid dossier, the Ministry of Industry and Trade shall renew the branch establishment permit. In case of non-renewal, the reasons therefor must be clearly stated in writing;

-In case the extension of the license for the establishment of the branch is not governed in specialized legal documents, the Ministry of Industry and Trade shall send a written request for comment to the specialized management ministry within 03 working days from the date of receipt of a complete and valid file. Within 5 working days from the date of receiving the Ministry of Industry and Trade’s written request, the specialized managing ministries shall clearly state whether they agree or disagree with the license extension. Within 5 working days after receiving the opinions of the specialized management ministry, the Ministry of Industry and Trade shall extend or not extend the branch establishment permit to the foreign trader. In case of non-renewal, the reasons therefor must be clearly stated in writing;

-Within 15 days from the date of extension of the license for the establishment of the branch, the Ministry of Industry and Trade shall publish on the website of the Ministry.

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