Law on Foreign Investment
- Promulgated
in 1987
- Amended
four times: in 1990, 1992, 1996 and 2000.
- Created
favorable business climate
- Regarded
as one of the most attractive in East Asia
Foreign Direct Investment (FDI) in Vietnam up to 1999
- Total
value: US$ 42.4 billion
- Total
projects: 3,000
- Foreign
Investors: from 65 countries/territories
Areas of investment:
- Oil/gas,
hotel,
apartments
- Manufacturing,
processing aqua, forestry & agricultural products
- Utilization
of
high employment
Targets for 2005
- GDP to
double figure reached in 1995
- Total
investment: US$ 60 billion
- Estimated
FDI:US$ 25 billion
Three Investment Forms
- Joint
Ventures
- 100%
foreign-owned
- Business
cooperation contracts (BCC)
Joint Ventures
- Between
Vietnamese and foreign parties
- Foreign
contribution: 30% of legal capital
- Legal
capital:
30% of total investment
- Profits
and risks
- Board
of Management
Foreign-Owned
- A legal
entity with limited liability, separate from its parent
- Legal
capital:
30% of investment capital
Business Cooperation Contract (BCC)
- Between
foreign
investor and Vietnamese partner
- Not a
legal entity
- Appropriate
for telecommunication projects
Encouraged Investment in the Export field
- Agriculture,
forestry & aqua products
- High
employment - utilizing natural resources
- Infrastructure
& manufacturing facilities
- Mountainous
or
remote
- Investor
in charge of organization, construction, commercial operation
Project transferred to Vietnamese Government BTO
- Investor
transfers the title of the project to Vietnamese Government
- Investor
commercially operates project
- Investor
transfers built project to Vietnamese Government
Government pays investor:
- Land
use rights
- Right
to construction
- Commercial
operation of another project
- Incentives
- Exemption
of land rentals
- Import
duties exemption on machinery, equipment & materials
- Profit
tax & remittance tax concessions.
- Industrial
Zones
Industrial zones
- Export
processing zones
- High
tech zones
Incentives Tax concessions
Available Infrastructure system
Granting investment license: 15 days
Import duties
Tax Rates for Businesses
- 25%:
Heavy Industries
- 35%:
Light Industries
- 45%:
Services
Preferential Profit Taxes:
- 20% rate
- 15% rate
- 10% rate
Criteria for 20% Rate
- Export
50% of products
- 500 or
more employees
- Utilization
of
advanced technology
- Agricultural,
forestry or aqua projects
- Utilization
of
supplies in Vietnam
Criteria for 15% Rate
- Export
80% of products
- Manufacturing
industrial products
- Cultivation
of
perennial industrial crops
- Regions
with difficult conditions
- Transfer
of assets to Vietnam
Criteria for 10% Rate
- Infrastructure
projects in regions with difficult conditions
- In
mountainous
or remote regions
- Forestation
- Specially
encouraged projects
Profit Remittance Tax
- 3%:
Projects with legal capital of US$10 million or more
- 5%:
Projects with legal capital of US$ 5 million to $10 million
- 7%:
Projects with legal capital less than US$ 5 million
Value Added Taxes (VAT)
Goods & services for production, businesses &
consumption
Four VAT Rates:
Personal Income Tax
Four categories subject to taxes
- Vietnamese
citizens residing in Vietnam
- Vietnamese
citizens residing overseas
- Individuals
residing in Vietnam
- Expatriates
working in Vietnam
Licensing Process
Documentation Required
- An
application
- A Joint
Venture or BCC
- Charter
of enterprise
- Legal
and financial status
- A
feasibility study
- Other
documents
Large supply of labor
- Young
workforce
- Highly
literate
Dispute Settlement
- Conciliation
& negotiation encouraged
- If
conciliation fails, parties may bring case to court
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