LEGAL UPDATE – NOVEMBER 2021 – Tax exemption and reduction to assist enterprises affected by Covid-19

Issue November 2021

Nguyen Bich Van

Nguyen T. Minh Thu
Assisting Lawyer

Supportive measures to assist enterprises and people who are affected by COVID-19, the Government enacted Decree No. 92/2021/ND-CP dated 27 October 2021 to elaborate of Resolution No. 406/NQ-UBTVQH15 of National Standing Committee. Decree No.92 has detailed guidance on the contents which impact on operation of enterprises, including (i) Corporate income tax (CIT) reduction, (ii) VAT reduction, (iii) Exemption of delayed payment.

CIT reduction

Enterprises established in accordance with Vietnam’s law, Organizations that are established in accordance with the Law on Cooperatives whose revenue in the tax period of 2021 does not exceed 200 billion VND and is smaller than the revenue earned in the tax period of 2019 are subject to enjoy CIT reduction. For enterprises who are newly established, consolidated, merged or acquired for the tax period of 2020 and 2021, the reduction shall be applicable provided that the condition on revenue in the tax period of 2021 does not exceed 200 billion VND.

The reduction rate is 30% of payable amount of CIT in 2021. CIT deductible amount is counted for enterprise’s entire revenue, including incomes from capital assignment or transfer the right of capital contribution; incomes from real estate transfer (exclusive social housing); incomes from transfer of investment projects, transfer the right to invest in projects, and other incomes which are excluded when applying tax incentives under the Law on Corporate Income Tax. CIT deduction is not applicable to deducted revenue, revenues from financial activities and other incomes. The reduced CIT under Decree 92 does not include the CIT which is eligible for incentives according to prevailing regulations.

The Decree 92 also provide guidance to determine revenue for enterprises with less than 12 months of operation and declaration of tax reduction.

VAT reduction

Enterprises, organizations shall be reduced 30% of VAT’s rate or 30% of the rate for calculating VAT depending on applicable tax calculation method. The period of VAT reduction is from 01 November 2021 to 31 December 2021.

Deduction of VAT is applicable to goods, services which are heavily impacted by Covid-19, including: (i) transportation services (railway, waterway, air, and other road transport); accommodation services; food and beverage services; travel and tourism agencies, travel and tourism related or supportive services; (ii) Publishing products and services; cinematography services, TV show production, music recording and publishing; artworks, composing, art, recreation services; services of library, archives, museum, cultural activities; sport and entertainment services. The goods and services mentioned in item (ii) do not include software and online sales of goods and services.

Out of noting on how to make VAT invoice, handling issued invoices which have not been noted on tax reduction, enterprises and organizations need to declare the goods and services to be reduced VAT in the “Appendix on reduction of VAT under Resolution No. 406/NQ-UBTVQH15″ in Appendix II issued attached to this Decree together with the VAT Declaration Note.

Exemption of late payment

Enterprises, organizations which incur losses in the tax period of 2020 shall be exempted late payment amount incurred in 2020 and 2021 for on outstanding tax payable amount, land use levies and land rental. If the outstanding tax payable, land use levies, land rent are increased by enterprise itself or in accordance with decisions of the State Authorities, enterprises are not subject to pay late payment amount incurred in 2020 and 2021 for such increased amount if the taxpayer incurs a loss in 2020. The exemption, however, is not applied in the cases that late payment amount has been paid before the effective date of this Decree.

To be exempted from late payment, enterprises must submit request for exemption of late payment to responsible tax authority for determination of losses in 2020 and consideration of exemption of late payment. Time limit for consideration is 15 working days from the receipt of the taxpayer’s application form for exemption from late payment.

It should be noted that in case the tax authority wrongly determines the right to be exempted from late payment, the tax authority may revoke the decision on exemption from late payment interest and the enterprises must pay in accordance with the laws.

The Decree 92 takes effect from 19 October 2021.

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LEGAL UPDATE – AUGUST 2021 – Decree No. 47/2021/ND-CP detailing a number of regulations of the Law on Enterprises 2020

Issue August 2021

Huynh Hoang Sang

Nguyen Thi Thu Ha
Assisting Lawyer

On April 1st, 2021, the Government promulgated Decree No. 47/2021/ND-CP detailing a number of regulations of the Law on Enterprises 2020 which replaced Decree No. 81/2015/ND-CP, Decree No. 93/2015/ND-CP, Decree No. 96/2015/ND-CP and Decision No. 35/2013/QD-TTg (“Decree 47”). Decree 47 shall guide a number of provisions pertaining to enterprises and concretize a number of issues which were not recorded specifically in the Law on Enterprises 2015 and take effect as of 04 January 2021.

Social Enterprises

Decree 47 supplements and regulates more clearly that social enterprises responsibility must maintain social and environmental objectives, retain earnings for reinvestment and other stipulations recorded on the Commitment on implementing social and environmental objectives during the operation term. Except in a case of early termination of its social and environmental objectives prior to the committed term, any social enterprise which fails to fulfil such Commitment or to retain profit for re-investment must refund all incentives, aid and support it received to achieve its registered social or environmental objectives.

Social enterprises is permitted to divide or separate, or consolidate or merge with another social enterprise or another enterprise in accordance with the relevant provisions of  the Law on Enterprises.

For termination of social and environmental objectives before the end of the committed term and dissolves, then the balance of its assets or the residual financial resources with respect to the assets and financial resources received by the social enterprise must be returned to the donor or transferred to another social enterprise or organization with similar social objectives or must be transferred to the State in accordance with the provisions of the Civil Code.

Information Disclosure of State-Owned Enterprises

Regarding the disclosure of information of state-owned enterprises, Decree 47 regulates on information disclosure in the form of, including: (i) the enterprise’s website, (ii) the portal or website of the owner’s representative agency, and (iii) the enterprise portal.

Previously, it was only obliged for State-owned enterprises whose 100% charter capital is held by the State to disclose periodic information. However, Decree 47 has supplemented new subjects under which State-owned enterprises whose 50% of charter capital or voting shares are held by the State have to disclose periodic information as follows:

  • Basic information about the enterprise and its company
  • Report on implementation of the annual production and business plan in the standard form attached with this Decree 47 before June 30th of the year preceding the succeeding year.
  • 6-month report on actual management and organizational structure of the enterprise in the standard form attached with this Decree 47 before July 31st every year.
  • Annual report on actual management and organizational structure of the enterprise in the standard form attached with this Decree 47 before June 30th of the execution year.
  • Six (6) monthly report and summarized report on the financial statements audited by an independent auditor before 31 July each year.
  • Annual report and summarized report on the financial statements audited by an independent auditor, including the financial statements of the parent company and consolidated financial statements (if any) in accordance with the law on enterprise accounting within 150 days from the end of the fiscal year.

Cross-ownership between Companies in A Group of Companies

Subsidiary companies are not permitted to invest in purchase of shares in or contribute capital to the parent company. Subsidiary companies of the same parent company are not permitted to jointly contribute capital or purchase shares at the same time in order to have mutual cross ownership.

Subsidiary companies having the same parent company which is a State-owned enterprise whose 65% of charter capital or voting shares or more is held by the State, are not permitted to jointly contribute capital to establish a new enterprise, jointly purchase capital contribution portion or shares of an established enterprise, and jointly receive transference capital contribution portion or shares from members or shareholders of established enterprise. The business registration authority shall refuse to register the change of members or shareholders of the company if during the course of processing dossiers, they find out that there are violations related to such regulations.

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Issue June 2021

Ha Thi Hai

Phan Van Huy
Assisting Lawyer

On March 26, 2021, the Government issued the Decree No. 31/2021/ND-CP (“Decree 31”) detailing and guiding the enforcement of a number of provisions of the Law on Investment on investment conditions; business lines and conditions for market access by foreign investors; guarantees for business investment; investment incentives and supports; overseas investment activities; investment promotion; state management of investment in Vietnam and overseas investment. Below are notable contents:

1. List of business lines restricted from foreign investors’ market access

Complying with Vietnam’s commitments to market opening under new generation free trade agreements, one of the most important changes of the Investment Law 2020 is the regulation that foreign investors may apply market access conditions applicable to domestic investors, except for investment in business lines restricted from foreign investors’ market access. Accordingly, Decree 31 has promulgated the List of business lines restricted from foreign investors’ market access. This list provides for 84 business lines, including 25 business lines not allowed to foreign investors’ market access, and 59 business lines conditional to foreign investors’ market access. According to the principle of negative listing, Decree 31 once again affirms that, except for those business lines restricted from foreign investors’ market access, foreign investors shall be able to access the market same as domestic ones.

Decree 31 provides for the concept of “business lines without market access commitment of Vietnam which are business lines that, under investment-related international treaties, Vietnam made no any commitment or reserved the right to impose measures against market access obligations, national treatment or other obligations on non-discriminatory treatment between domestic investors and foreign investors”. For business lines without market access commitment of Vietnam, market access conditions will be applied in accordance with Vietnamese laws, if any. Where Vietnamese laws provides for no regulation on market access restriction to such business lines, foreign investors shall be able to access the market same as domestic ones. That means Decree 31 should be interpreted that there shall be no process for obtaining opinions from governing ministries when the investment registration agency considers granting foreign investment licenses into business lines without market access commitment of Vietnam.

Market access conditions for foreign investors in the business lines specified in the List of business lines restricted from foreign investors’ market access will be publicly posted on the National Investment Portal.

The above change is a very important new point of the Investment Law 2020 when changing from the principle of positive listing to the principle of negative listing to consider applying market access conditions to foreign investors which express the efforts of Vietnamese Government to attract foreign investment, especially in the context of the 4.0 economy where more and more new forms of business are coming. However, in practice, specialized management agencies as well as local licensing agencies will take a long time to review, research, unify and implement this new regulation.

2. Detailing many cases of adjustment of investment projects

One of the important new points of Decree 31 in particular and the Law on Investment 2020 in general is the provisions for detailed legal corridors for new forms of investment project mergers and acquisitions, especially investment projects using land. Before the issuance of the Law on Investment 2020 and Decree 31, forms of merger and acquisition of projects such as separation of projects, use of land use rights and properties attached land for contribution of capital or contribution to business cooperation faced difficulties in many provinces due to the lack of specific regulations. Now, in addition to the forms of project adjustment inherited from the Investment Law 2014 and Decree 118/2015/ND-CP such as:

  • Adjustment of investment projects in case investors partially or wholly transfer investment projects
  • Adjustment of investment projects in case of division, separation, merger or conversion of economic organizations
  • Adjustment of investment projects according to court or arbitration judgments or decisions

Decree 31 adds new forms of project adjustment including:

  • Adjustment of investment projects in case investors receive the transfer of investment projects which are collateral assets
  • Adjustment of investment projects in case of division, separation or merger of investment projects
  • Adjustment of investment projects in case of use of land use rights andproperties attached to land belonging to investment projects as capital contribution to enterprises
  • Adjustment of investment projects in case of use of land use rightsand properties attached to land belonging to investment projects for business cooperation

New forms of project adjustment in Decree 31 are expected to make the mergers and acquisitions market more exciting, especially land-use projects, in the context that the economy is being heavily affected by the Covid-19 epidemic.

3. Conditions for investment in the form of capital contribution, share purchase or purchase of contributed capital

In order to tighten the management of investment activities of foreign investors in the form of capital contribution, share purchase, purchase of contributed capital, the Investment Law 2020 added two additional mandatory conditions for investment in the form of capital contribution, share purchase, purchase of contributed capital which are: Ensuring national defense and security in accordance with the Law on Investment; and Satisfying the provisions of law on land on conditions for receiving land use rights, conditions for land use in islands, border communes, wards and towns, coastal communes, wards and towns. Accordingly, Decree 31 supplements the mechanism of consultation with the Ministry of National Defense and the Ministry of Public Security on satisfaction of the above conditions for foreign investors investing in the form of capital contribution, share purchase, purchase of capital contributions to economic organizations with land use right certificates in islands, border communes, wards and towns, coastal communes, wards and towns; other areas affecting national defense and security, except for economic organizations implementing investment projects in industrial parks, export processing zones, high-tech parks and economic zones established under the Government’s regulations.

In order to clarify conditions on areas affecting national defense and security, Decree 31 introduced the concept of “Other areas affecting national defense and security” including many areas under the law on protection of defense works and military zones; in accordance with the law on guards; the law on protection of important works related to national security; the Government’s regulations on combining national defense with socio-economic and socio-economic with national defense; the Prime Minister’s decision on approving the master plan on defense layout combined with socio-economic development; The area prohibiting foreign organizations and individuals to own houses to ensure national defense and security in accordance with the law on housing.

In fact, for both foreign investors and Vietnamese enterprises, determining whether a specific location subject to Other areas affecting national defense and security” is a complicated task due to the fact that there are many relevant legal documents, even internal documents of State agencies which are not public.

4. Security deposit for implementation of investment projects

The Investment Law 2020 introduced a new regulation that benefits investors by allowing investors to secure the implementation of the project by submitting a credit institution’s guaranty instead of compulsory deposit in cash.

The Decree 31 clarifies that the investors shall have to make a deposit or submit the guarantee certificate of a credit institution after the investor’s approval or approval of the auction winning result, and before making compensation for ground clearance (in case the investor does not advance the compensation for resettlement support) or before the decision on land allocation or lease or approval on the change of land use purposes. In case the project is secured by a guarantee certificate of a credit institution, such credit institution shall have to pay the deposit amount which is payable by the investor in case the project’s schedule for putting into exploitation and operation is delayed or in case the project is terminated by the investment registration agency (except for case of termination of the project to protect national relics, antiquities or treasures).

5. Supplementation of conditions and procedures for shutdown of investment projects

The Investment Law 2020 provides for new regulation allowing investors to cease operation of investment projects (without terminating investment projects). Especially, in case of shutdown of the project due to force majeure, investors are entitled to land rental exemption or land use fee reduction during the shutdown period.

Decree 31 provides for conditions and procedures for shutdown of investment projects in cases of self-determination of shutdown of investment projects; decision for cease operation of investment projects of state investment management agencies; investment projects causing harm or risk to national defense and security. The total downtime of the investment project shall not exceed 12 months.

6. Attraction of investment in innovative start-up small and medium-sized enterprises and innovative start-up investment funds

Decree 31 supplements the regulations on facilitating foreign investors to establish innovative start-up small and medium-sized enterprises or contribute capital, buy shares or capital contributions to these enterprises. Accordingly, foreign investors shall only need to conduct procedures as prescribed for domestic investors in accordance with the Law on Enterprises without obtaining Investment Registration Certificate or approval for capital contribution, share purchase, contributed capital purchase if such enterprises meet certain conditions of innovative start-up investment projects. 

7. Decree 31 amends, replaces and abols many other Decrees

Decree 31 takes effect on March 26, 2021, amending and supplementing many of relevant Decrees to conform with new changes in Decree 31 such as:

  • Decree No. 46/2014/ND-CP on land and water surface rents;
  • Decree No. 52/2020/ND-CP on golf course investment and business;
  • Decree No. 25/2020/ND-CP on elaboration of some Articles of the Law on Bidding on investor selection;
  • Decree No. 96/2016/ND-CP providing for security and order conditions for a number of conditional business lines;
  • Decree No. 82/2018/ND-CP on management of industrial parks and economic zones;
  • Decree No. 11/2013/ND-CP on management of investment in urban development;
  • Decree No. 99/2003/ND-CP on promulgation of hi-tech zone regulations;
  • Decree No. 94/2020/ND-CP regulating preferential mechanisms and policies for Vietnam National Innovation Center.

At the same time replace and repeal many of the following decrees and regulations:

  • Decree of Government No. 118/2015/ND-CPdated November 12, 2015, guidelines for some Articles of the Law on Investment;
  • Decree No. 37/2020/ND-CPdated March 30, 2020 on amendments to list of industries benefitting from investment incentives attached to Decree No. 118/2015/ND-CP on elaborating to Law on Investment;
  • Decree No. 83/2015/ND-CPdated September 25th 2015, regulations on outward investment;
  • Decree No. 104/2007/ND-CPof June 14, 2007, on provision of debt collection services.;
  • Decree No. 69/2016/ND-CPdated July 01, 2016, requirements for running debt trading service;
  • Decree No. 79/2016/ND-CPdated July 01, 2016, conditions for training business in specialist knowledge, professional competence in management and operation of apartment buildings, knowledge of real estate brokerage practicing, real estate transaction management;
  • Article 2 of Decree No. 100/2018/ND-CPdated July 16, 2018 amending and annulling some regulations on necessary business conditions in fields under the management of the Ministry of Construction.

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Issue April 2021

Nguyen Thi Ngan
Legal Assistant

The new Decree No. 18/2021/ND-CP (Decree 18) amending Decree 134/2016/ND-CP on import and export tax will come into effect on 25th April. The prominent point of the Decree is specific regulations on conditions, registration procedure, supervision and management of export processing enterprises (“EPEs”). Procedures for registration to applying EPEs will be simplified and streamlined between investment licensing authorities (DPI or DIZA) and customs agency. Approval of EPEs registration is only based on the commitment for conditions satisfaction of the applicant. The applicant shall have 1 year span from the date of commencement of operation to complete all construction infrastructure to satisfy EPEs conditions.

1. The conditions for customs inspection and supervision for export processing enterprises

According to the Decree 18, the conditions on customs inspection and supervision applicable for EPEs include:

a) Having a hard fence separating from the outside area; having gates/ doors to ensure the delivery of goods in and out of the export processing enterprise through the gate/door.

b) Having a camera system that observes the gate/exit, entry and storage locations anytime, all day (24/24 hours, including day off, holidays); camera data is linked online to the customs office that manages the business and is archived at the export processing enterprise for a minimum of 12 months.

c) Having software to manage imports not subject to tax of the export processing enterprise to report on the import-export-inventory settlement of the use of imports in accordance with the law on customs.

2. Inspection for EPE eligibility

All existing EPEs shall have a span of maximum of 1 year  from the effective date of Decree 18 to complete the conditions for customs inspection and supervision and apply for assessment of satisfaction with the Sub-Department of Customs where those EPEs are administered. Accordingly, the Sub-Department of Custom undertakes at-site evaluation of satisfaction of customs supervision and inspection conditions and issues a written confirmation of eligibility for the export processing enterprise.Evaluation of satisfaction with customs inspection and supervision conditions in accordance with Decree 18 shall be applicable to both EPEs registered under the new regulations and EPEs that have been issued with Investment Registration Certificates prior to the effective date of Decree 18 and in normal operation, including EPEs that have been certified by the customs office for their conditions for customs inspection and supervision before the effective date of Decree 18.

At the expiry of 01 year deadline, if the export processing enterprise (i) fails to give notice; or (ii) fails to meet the conditions of customs inspection and supervision, the tax policy for the non-tariff area shall not be applied from the date above the 1-year time limit. Consequently, the EPE is obliged to return  to the State all unpaid taxes due to preferential treatment of EPEs.

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LEGAL UPDATE – FEBRUARY 2021 – New points of the Law on Public Private Partnerships (PPP)

Vol 2 Issue February 2021


Nguyen Thi Ngan
Legal Assistant

The Law on Public-Private Partnership Investment (the “PPP Law”) was ratified by the National Assembly on June 18, 2020 and took effect on January 1, 2021. The PPP Law consists of 11 chapters and 101 articles, designed to attract more resources from the private sector, especially foreign investors, while also aiming for sustainable development, “PPP for people” (people-first-PPP) as recommended by the United Nations. The PPP Law clarifies some vague provisions of Decree 63/2018/ND-CP on investment in the form of public-private partnerships (“Decree 63”), integrates regulations of Law on Bidding, Law on Public Investment, etc. This new law is considered to create a stronger legal corridor for the implementation of PPP projects.

1.  Limit permitted sectors

The new PPP law provides 5 sectors to apply PPP form, reduced from 9 under Decree 63. The 5 applicable sectors are: (i) Transportation (ii) Power grids and power plants (except hydro-power plants and fields restricted to the State regulated under the Electricity Law) (iii) Irrigation; clean water supply, sewage and waste treatment (iv) Health care and education; and (v) Information technology infrastructure.

Of which, the minimum investment capital required for PPP projects in health; education and training sector is 100 billion VND (approximately USD4.35 million) and the minimum investment capital required for other projects is 200 billion VND. The minimum capital required for PPP projects in difficult socio-economic areas or extremely difficult socio-economic areas in accordance with the law on investment is not lower than 100 billion VND. There is no minimum investment capital required for PPP projects implemented in the form of O&M contract.

2. New provisions on PPP contracts

 Project contract form classification (Article 45 PPP Law)

A PPP contract is classified in either (i) project contract applying the mechanism of fee collection directly from users or underwriters of public products and services, including: BOT (build- operate-transfer) contract; BTO (build-transfer-operate) contract; BOO (build-own-operate) contract; Operate-maintain (O&M) contract; or (ii) project contract in which payment is made by the State on the basis of the quality of public products and services, including: BTL (build-transfer-lease) contract and BLT (build-lease-transfer) contracts. The parties can sign mixed contract combining models of the above.

Eliminate BT (build-transfer) contract model

 It is practically proved that build-transfer model (BT) has negative consequences and it is not consistent with the principle of public private partnership, the model of BT contract regulated in Decree 63 has been removed. BT projects that have not been obtained in-principal approval of the investment plan shall be ceased as of 15 August 2020 and no new BT project shall be considered going forward.

PPP contracts governing law shall be Vietnamese law

 While Decree 63 allowed to apply foreign laws as governing law for PPP contracts and other related contracts and agreements in accordance with the Civil Code (Article 46 Decree 63), the PPP Law stipulates that PPP project contract, its annexure and other relevant documents signed between a Vietnamese state authority and a PPP project investor or enterprise shall be governed by Vietnamese law. With respect to matters that are not regulated under Vietnamese law, the parties may reach specific agreements in a PPP contract on condition that such agreements are not in contrary to basic principles of Vietnamese law.

3. PPP project appraisal council

 The PPP Law specifies the principles of establishment and the operation mechanism of the PPP project appraisal council. Depending on the level of agency approving investment decision, the feasibility study report, the pre-feasibility study report shall be appraised by the State appraisal council; the interdisciplinary appraisal council or the grassroots appraisal council (Article 6 PPP Law)

4. State investment in PPP projects

According to Article 69.2 of the PPP Law, the proportion of state capital in a PPP project shall not exceed 50% of the project’s total investment. The law also details the use of state capital in PPP projects. In the absence of a decree guiding the use of state capital in PPP projects, regulations limited the uses of state capital, only for the following purposes:

  1. support for the construction of works and infrastructure systems for a PPP project;
  2. payment for land clearance, compensation and resettlement, and support of the construction of temporary works;
  3. payment to the project company for providing public products and services (eg, by way of a tariff payment under a PPP concession contract);
  4. payment for revenue support in the event of revenue reduction;
  5. expenses of the different State authorities in signing the project contracts, preparing, pre-feasibility study report and feasibility study report, and their other obligations in implementing a PPP project (i.e., those obligations stemming from the “process to implementing a PPP project”); and
  6. expenses of the appraisal committee for evaluating the pre-feasibility study report and feasibility study report.

This could be an obstacle to the implementation of PPP projects in the near future

5. Synchronize regulations on the investor selection process

Bidding requirement on investor selection process was for the first time specifically provided under the PPP law instead of being referred to the Law on Bidding as before. Particularly, the investor selection process is as follows (Article 28.1 PPP Law):

  1. Making shortlist (where applicable);
  2. Preparing for selection of the investor;
  3. Bidding;
  4. Evaluating bidding documents;
  5. Submitting, assessing, approving and publishing investor selection results;
  6. Negotiating, finalizing and concluding PPP contract, and publishing contract information.

6. Bid guarantee

Based on the size and nature of each project, the bid guarantee value is specified in the tender invitation documents for selection of investors at a determined rate ranging from 0.5% to 1.5% of the total investment of the project. The bid security shall not be refunded in the event that the Investor withdraws the bid during the time the bid is valid or the Investor violates the law on bidding leading to cancellation of the bid or the Investor fail to conduct or refuse to negotiate or finalize the contract within 30 days from the date of receipt of the bid-winning notice from the bid solicitor or to negotiate and finalize the contract but refuse to sign the contract, except in case of force majeure or the PPP project enterprise established by the investor fails to ensure the performance of the contract as prescribed (Article 33 PPP Law).

 7. State guarantee mechanism

 Revenue increase/decrease sharing

According to Article 82 of the PPP Law, when the annual revenues reach more than 125% of the revenue in the Financial Plan in a PPP project contract, the investor and the PPP project enterprise shall share 50% with the State the difference between the actual revenue and the 125% of revenue in the financial plan. On the contrary, for projects applying BOT, BTO, BOO contracts, in case the actual annual project revenues fall below 75% of projected revenue in the Financial Plan, subject to certain regulatory conditions, the State shares with the investor, the PPP project enterprise 50% of the difference between the 75% of the revenue in the financial plan and the actual revenue.

The sharing of this increase or decrease in revenue by the State will be applied after adjusting the prices, fees for public products and services, adjusting the duration of the PPP project contract and the increased/decreased revenue shall be audited by the State Audit.

Foreign currency assurance mechanism for PPP projects

According to Article 81 of the PPP Law, only projects that fall under the authority to decide on investment policies of the National Assembly or the Prime Minister shall be eligible to apply the foreign currency assurance mechanism in pursuant to foreign exchange management policy and the ability to balance foreign currencies from time to time.

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Vietnam’s Top 100 Lawyers by Asia Business Law Journal

January 29th, 2021

Bizconsult Law Firm has 3 lawyers, Nguyen Anh Tuan, Nguyen Dang Viet and Le Hong Phong ranked in Vietnam’s Top 100 Lawyers 2020 (The A-List 2020) by Asia Business Law Journal.

The A-List ( is concluded after extensive research conducted by Asia Business Law Journal. Nominations are given by professionals, mainly in-house counsels and corporate legal managers in Vietnamese and global companies and law firms including Abbott, Agile Counsel, Bayer Group, Berjaya Corporation., Climate Fund Managers, Dai-ichi Life, EY, GlaxoSmithKline, Grant Thornton, etc.

Bizconsult’s 3 lawyers in the top 100 rankings have intensive expertise and extensive experience, and are appreciated for their wise and comprehensive advice that help develop clients’ businesses. According to this survey, Lawyer Le Hong Phong is regarded as “a dedicated and responsive M&A lawyer”.

We thank Asia Business Law Journal for conducting this extensive survey.

We express our thanks and gratitude to the positive comments and nominations for our attorneys from clients participating in the survey, their interests and the trust in our legal services.

Breakthroughs in Vietnam’s securities market

November 19, 2020

Since the first promulgation of the law on securities in 2006, Vietnam’s securities market has experienced dramatical growth (roughly twentyfold in market capitalisation). After three rounds of amendments to and supplementation of the law, on November 26, 2019, the National Assembly approved the new law on securities No. 54/2019/QH14 coming into effect on January 1, 2021 (“Law 2019”). Significant changes brought in by the new law promise to create a relevant legal framework and strong impetus to enhance market development. This article reviews some prominent issues.

Securities offering

Currently, conditions on public offerings are specifically provided for stocks, bonds and fund certificates regardless the nature, size and influence of the offering. The Law 2019 improves such provisions by distinguishing conditions applicable for initial public offerings and secondary public offerings of stocks, conditions for offering of non-convertible bonds and convertible bonds and conditions for offerings of fund certificates. Furthermore, new regulations seem to limit public offerings to well-performing, large companies and pay more attention to minority investors’ protection. Of particular note: for eligible IPO issuers, the threshold for paid-up charter increases from 10 billion VND to 30 billion VND; profitable performance history extends from one years to two years; issuers subject to criminal prosecution or having been convicted of any one of the crimes of violation of economic management order are prohibited; and it is required that at least 15 percent of the voting shares to be subscribed to more than 100 minority shareholders.

For private placements, the new law differentiates conditions applicable for the private placement of bonds and those applicable for other securities (stocks, convertible bonds and bonds with warrants). Only professional investors or strategic investors are allowed to apply in private placement. Professional investors are defined more broadly to comprise corporates with paid-in capital of more than 100 billion VND, listed companies, companies registered in the securities trading system, securities practicing certified individuals, individuals possessing a portfolio of at least 2 billion VND or having paid personal income tax in the most recent year of at least 1 billion VND besides other traditional financial institutions. The new law also regulates a private placement lock-up period to be three years for strategical investors and one year for professional investors.

Public companies

Law 2019 alters the criteria for public company classification. Paid-in charter capital of public companies increases to 30 billion VND (the current criteria is 10 billion VND) and at least 10 percent of voting shares are to be held by at least 100 minority shareholders. Companies successfully completing an IPO by registration with the State Securities Committee (“SSC”) are also classified as a public company.

Public companies shall comply with various remarkable regulations. After a successful public offering, they are obliged to register for trading on the unlisted securities trading system for unlisted securities. Share repurchase by a public company shall satisfy a number of conditions including having sufficient funds from specific sources and assigning a securities company to undertake the transaction. Numerous aspects relating to the administration of public companies are also addressed in the new law, namely shareholders’ rights and obligations, shareholder congress convention, the board of management’s structure and its rights and obligations, the nomination of members of board of management, principles for the prevention of conflict of interest, and information transparency.

Securities trading market

Under the new law, the securities market is organised and operated solely by the Vietnam Stock Exchange (“VSE”), a corporate 50 percent and more hold by the State and its subsidiaries. Another important new player in the market is Vietnam Securities Depository and Clearing Corporation (“VSD”), replacing the Securities Depository Center, which will be in charge of registration, depository, clearing and supporting services for securities transactions. Like VSE, VSD is also owned by the State for more than 50 percent of their voting shares and under the supervision of the SSC.

Other significant changes

Depository receipts: this term is defined as securities issued on the basis of securities of an organisation legally established in Vietnam. There is also a term of non-voting depository receipts under the new law on enterprise 2020. This new derivative product is designed with the aim to open up foreign room without loosening restrictions on foreign control over local companies.

Clearing bank: there currently exist three clearing banks in the market, SBV for treasury bonds, BIDV for common securities and Vietinbank for derivatives. The new law sets conditions for new players wishing to enter this niche market. Most notable conditions include having charter capital of more than 10 trillion VND, two years of profitable operation, capital adequacy ratios satisfaction and other requirements on technical infrastructure.

Harmonisation with the law on enterprise: Securities companies and fund management companies after obtaining an operation license from the SSC shall apply for an enterprise registration certificate in accordance with the law on enterprise.

Foreign room applicable for securities companies, fund management companies is opened to 100 percent for foreign institutions operating in banking, securities, insurance industries and originated from countries signing bilateral agreement with SSC. For other foreign organisations and individuals, the room is set to 49 percent.

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LEGAL UPDATE – OCTOBER 2020 – Highlights on mechanism of coordination and streamline for establishment of companies under new Enterprise Law in Vietnam

Vol 1 Issue October 2020


Ha Thi Hai

Phan Van Huy
Assisting Lawyer

Decree No. 122/2020/ND-CP on the coordinating and streamlining of procedures for establishment registration of enterprises, branches and representative offices, initial declaration of labour usage, issuance of codes for units participating in social insurance, registration of invoices usage of enterprises is passed by the Government on October 15, 2020 (the “Decree 122”) with the following notable contents:

1.The mechanism for coordinating and streamlining provided in Decree 122

Decree 122 provides the mechanism for coordinating and streamlining of four procedures applicable to enterprises, branches, and representative offices upon their establishments, including (i) Establishment registration of enterprises, branches and representative offices; (ii) Initial declaration of labour usage; (iii) Issuance of codes for units participating in social insurance, and (iv) Registration of invoices usage with the Business Registration Office, which is the focal agency for dossier-receiving and result-delivering.

Thus, when implementing the mechanism for coordinating and streamlining, enterprises, branches, and representative offices shall no longer have to carry out the procedures of initial declaration of labour usage and registration of self-printed invoices usage, invoices printed on order usage. Also, Decree 122 regulates that enterprise codes, branch and representative office codes shall be used as codes for units participating in social insurance.

Although the mechanisms of Decree 122 are only applied when establishing enterprises, branches, and representative offices, it still helps to streamline some administrative procedures, improve the business environment, facilitate and promote start-up businesses.

2. The coordinated and streamlined dossiers specified in Decree 122

The coordinated and streamlined dossiers specified in Decree 122 comply with the Law on Enterprise and the Decree on enterprise registration, in which (i) The form of Application for enterprise registration specified in Appendix I-1, I-2, I-3, I-4 and I-5 and (ii) The form of Notice of branch/representative office operation registration specified in Appendix II-11 issued together with Decree 122 shall replace the corresponding forms in Appendix I-1 to I-5 and Appendix II-11 issued together with Circular No. 02/2019/TT-BKHDT.

Compared to the replaced forms, the new forms issued together with Decree 122 are basically supplemented with two more items: (i) Invoice usage registration (including options: Self-printed invoices, Invoices printed on order, E-invoices and Invoices purchased from tax authorities) and (ii) Information on social insurance premium payment (select one of payment methods: monthly, every 3 months, every 6 months).

Decree 122 came into effect on 15th October 2020.

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Vietnam: Remarkable changes in the new Law on Enterprises

October 27, 2020

By Trang Nguyen  – Associate | Attorney at Law


On June 17, 2020, the National Assembly officially passed a new Law on Enterprises (“New Law”) to replace the current Law on Enterprises. The New Law (effective from  January 1, 2021) is expected to make a breakthrough in improving the corporate governance, enhance the enterprise’s initiative and create favourable conditions for foreign-invested enterprises to operate in Vietnam.

Reduce business registration procedures

The New Law reducing a number of administrative procedures, including, among others, eliminating the procedure for reporting changes in the information of the enterprise’s manager and the procedure for notification of seal samples with the business registration office to post it publicly on National Business Registration Portal before using.

In addition, regarding the method of enterprise registration, apart from the direct registration method at the business registration authority, Article 26 of the New Law added two other registration methods, which are registration via postal service and registration through the electronic information network, with legal validity equivalent to a hard copy.

Supplemental provisions on the obligations of the legal representatives

The New Law requires the company’s charter to specify the quantity, managerial title and rights and obligations of each legal representative. In case the division of rights and obligations of each legal representative is not clearly specified in the charter, each legal representative of the enterprise will be considered a duly authorised representative of the enterprise before a third party and all the legal representatives are jointly liable for any damage caused to the enterprise in accordance with the laws.

Changing regulation on term of capital contribution with assets

The New Law introduces new regulation on the term for capital contribution with assets of members/ shareholders. In particular, the term for capital contribution of the members/ shareholders remain 90 days from the date of issuance of the Enterprise Registration Certificate, but for members/ shareholders contributing capital with assets, the time for transferring, importing assets contributed as capital, implementing administrative procedures to transfer the ownership of such assets will not be counted to ensure the feasibility of contributing capital with assets of such members/ shareholders.

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Issuance of bonds

Under the New Law, limited liability companies and joint stock companies is allowed to issue bonds. Limited liability companies and joint stock companies that are not public companies shall carry out the procedures for a private offering of bonds according to the provisions of the New Law, while the private offering of bonds by public joint-stock companies, other organizations or the public offering of bonds will follow the law on securities. It is noted that only strategic investors and professional securities investors are entitled to buy, be transferred bonds via private placement.

Expanding rights and scope of shareholders

Rather than holding 10 percent or more of the total amount of ordinary shares for at least 06 consecutive months or a smaller percentage as stipulated in the charter, the New Law prescribed that a shareholder or group of shareholders will only need to own five percent or more of the total amount of ordinary shares or a smaller percentage as stipulated in the company’s charter without a minimum holding period to exercise their right of accessing information regarding the operation of the enterprise, except for documents related to trade secrets, business secrets.

However, the right to nominate members to the board of directors, board of supervisors still reserves for shareholders or groups of shareholders owning 10 percent or more of the total amount of ordinary shares, unless otherwise stipulated in the charter with a smaller ratio.

Non-voting depositary receipt

For the first time, the Non-Voting Depositary Receipt (NVDR) is recorded in the content of the enterprise law. It is considered one of the remarkable points of the New Law.

Essentially, NVDR enjoys same economic benefits and obligations as ordinary shares, with the exception of voting rights. It is expected that a subsidiary of the Ho Chi Minh City Stock Exchange (HOSE) will be established and purchase these ordinary shares from  companies, then issue NVDR’s to sell to investors in need. Detailed regulations shall be specified in the guiding decrees.

NVDR’s are expected to attract more indirect investment from foreign investors into companies with limited foreign ownership, but still ensures the target of state management as the investors owning NVDR’s do not have voting rights, and shall therefore  not interfere in the operations of companies.

The New Law also reforms certain provisions on converting private enterprises into limited liability companies, joint stock companies, partnerships and converting household-businesses into enterprises, etc.

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The Law on Investment 2020

August 10, 2020

The current economic situation in Vietnam has revealed various disadvantages and loopholes in the legal framework, especially under the backbone law on investment. Though, the Law on Investment 2014 (LOI 2014) has been in effect for six years, new regulations are needed to create a more transparent, favourable and sustainable investment environment. On June 17, 2020, the National Assembly of Vietnam adopted the Law on Investment (LOI 2020), which will take effect from January 1, 2021 with the following salient changes:

List of prohibited and conditional business lines

Debt collection services has been added to the list of prohibited business lines as numerous service providers have abused this business activity to extort properties or to manipulate in the black lending market, causing public and security disorder.

For the list of conditional business lines, the LOI 2020 removes 22 business lines that are deemed to have no direct impact on national defence and security, social morality and public health, or which are already controlled by technical regulations and standards. Most popular businesses no longer belonging to the conditional list include franchising, logistics services, commercial arbitration, debt trading services, shipping agency service, medical equipment inspection service and aesthetic plastic surgery services. In contrast, it supplements a number of business activities to the list including insurance auxiliary activities, fishing vessel registry, architectural services, piping water supply service, data centre services, electronic identification and authentication services, provision of payment service without using customers’ payment accounts, among others.

Concretise market access commitment to foreign investors

Market access commitments are now specifically addressed under the LOI 2020. In particular, the government must officially issue a list of business lines not open to foreign investors or which imposed conditions. Accordingly, foreign investors who wish to engage in business lines limited to foreign investors shall meet the conditions of: (i) foreign ownership room, (ii) statutory investment forms, (iii) scope of investment activities; (iv) capacity of foreign investors and business partners participating in investment activities and other regulatory conditions. For all other business activities, foreign investors are equal with domestic investors in all respects. New regulations on detailed list limited to foreign investors under LOI 2020 may improve the transparency and feasibility in applying Vietnam’s market opening commitment under the next-generation FTAs.

Favourable mechanism for innovative start-ups

The definition of innovative start-up investment project is given as a project implementing ideas based on the exploitation of intellectual property, technology, new business models and rapid growth potential. Such projects are entitled to investment incentives. Foreign investors who set up medium- and small-sized innovative start-ups are not required to submit investment project nor obtain an Investment Registration Certificate for the purpose of setting up enterprises.

Deemed foreign investors

Previously, the threshold to consider a foreign-invested economic organisation (EO) as a foreign investor was 51 percent or more of charter capital of target company held by (a) foreign investors; or (b) EO which 51percent or more of its charter capital is owned by foreign investors; or (c) foreign investors and EO stated in (b) jointly. Consequently, such EO must satisfy the investment conditions and comply with investment procedures applicable to foreign investors when participating in incorporation of another EO or acquiring interest in an existing EO or investing in the form of BCC. The LOI 2020 deceases this threshold to 50 percent to comply with controlling ratio under newly adopted revised Law on Enterprise.

Cases where M&A approval is required

The LOI 2020 specifies instances where foreign investors must obtain M&A approval before acquiring an ownership interest in the target company as follows:

  1. an increase of foreign ownership in the target company engaging in business lines included in the lists set limited to foreign investors;
  2. an increase of foreign ownership in the target company from under 50 percent to exceeding 50 percent of the charter capital;
  3. an increase of foreign ownership in the target company which already exceeds 50 percent of the charter capital; or
  4. the target company is using land located at sea-islands, borderlands and coastal areas and other areas having an effect on national security and defence.

The change is expected to overcome ambiguity of the provisions on cases requiring M&A Approval under the LOI 2014.

Mechanism for selecting investors for implementing investment project

To ensure the uniformity and consistency of the legal system, the LOI 2020 clarifies principles, respective conditions applied for each method of selection of investors for implementing land-use project, including: (i) auction for land use rights; (ii) bid for investor selection; (iii) approval of investor.

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