Doing Business In Viet Nam
Foreigners can take part in biddings for doing projects and other business undertakings in Vietnam. However, it is quite confused for them to do business in Vietnam because of the absence of general regulations on this matter.
There are few specific regulations covering the activities of foreign contractors and sub-contractors in Vietnam. At the moment, Decision No. 87/2004/QD-TTg dated 19 May 2004 of the Prime Minister promulgating the regulation on management of operations of foreign contractors in the construction domain in Vietnam, Circular No.01/2012/TT-BXD dated 8 May 2012 of the Ministry of Construction providing guidelines for issuance of foreign contractor permits and managing foreign contractors in the construction sector in Vietnam, and Circular No.60/2012/TT-BTC dated 12 April 2012 of MOF, introducing the tax regime applicable to contractors in Vietnam, are the most reference legal documents. Subject to the nature of business, the contractor activities shall be subject to the specific sectorial regulations, including technology transfer, construction, etc.
Below are some regulations on foreign construction contractors and sub-contractors.
To become a foreign construction contractor or sub-contractor in Vietnam, an applicant must satisfy the following criteria:
(i) Having won biddings or having been selected for contracting;
(ii) Having signed contract;
(iii) Having full capacity suitable to contracted works according to Vietnamese law provisions; and
(iv) Committing to enter into an association contract with local partner(s), for carrying out the winning project.
For a construction contractor license, application file applicable to organizations must be submitted to the licensing agency in 1 set of originals and 1 set of copies, each of which must contain the following papers:
(i) Application letter made according to set form:
(ii) Certified copies of documents on bidding result or decision on selection of contractor or lawful contract;
(iii) Certified copies of the establishment license (or the business registration certificate of organizations) and the professional practice certificate granted by the country of which the foreign contractor bears the nationality;
(iv) Report on experiences in construction activities related to the contracted job, made according to a set form and the audited financial statements for the latest 3 years (for cases where the contractors undertaking bidding packages not subject to the compulsory application of the provisions of Vietnamese bidding legislation);
(v) The partnership contract with a Vietnamese contractor or the written commitments to employ Vietnamese sub-contractors to perform the contracted work (already included in the bids or bidding dossiers); and
(vi) Lawful authorization letter, for persons other than the contractor's representative at law.
Application letter must be made in Vietnamese. Establishment license or certificate of business registration of a foreign country must be consularly legalized (except otherwise provided for by Vietnamese laws or international treaties which Vietnam has signed or acceded to). Papers and documents in foreign languages must be translated into Vietnamese and the translations must be notarized or authenticated according to Vietnamese laws. Application files for contracting licenses arising in the same year are not necessary to include the documents referred to in (iii) and (iv).
Subject to the nature and scale of the bidding projects, construction contractor license shall be issued by either the Ministry of Construction ("MOC") or city/province-level Departments of Construction, within 15 working days from the receipt of the satisfactory file.
9.4 Permitted Activities
Once being licensed, foreign construction contractors have the following obligations:
(i) To set up their executive offices (to have office lease contracts or executive offices at the localities where the projects exist); and to register the addresses, communications means, transaction accounts and places where they open transaction accounts of their work executive offices and representatives for contract performance at the concerned agencies according to the regulations of the People's Committees of the provinces where the contracted projects exist. At the same time, to notify such information to the MoC, the Ministry of Public Security, the Ministry of Finance ("MoF"), the Ministry of Trade (now Ministry of Industry and Trade - MoIT), State Bank of Vietnam ("SBV"), and the People's Committees of the provinces and centrally-run cities where construction works are located;
(ii) To register the use of seals of their work executive offices at the Police Offices of the provinces and centrally-run cities where construction works are located. Foreign contractors shall only use these seals for affairs in service of contract performance in Vietnam according to the provisions of their contracting licenses. Upon the expiry of contracts, foreign contractors must return their seals to the agencies which have granted them;
(iii) To register and pay taxes according to Vietnamese law provisions; to observe the accounting regime, open accounts and make payments as guided by the MoF and the SBV in service of business activities under contracts;
(iv) To recruit and employ Vietnamese and foreign workers according to the Vietnamese labour legislation. To register only economic managerial and tecnical experts and highly skilled workers whom Vietnam lacks for entry into Vietnam;
(v) To carry out the procedures for exporting or importing supplies, machines and equipment related to the contracts in Vietnam according to Vietnamese law provisions and the MoIT's guidance, including:
- Registration for temporary import for re-export of construction supplies, machines and equipment;
- Registration of the list of import raw materials, fuels, materials, complete and synchronous equipment for works under the contracts;
(vi) To perform partnership contracts already signed with Vietnamese contractors or commitments to use Vietnamese sub-contractors determined when participating in biddings or offering bids according to Vietnamese law provisions;
(vii) To purchase insurance according to Vietnamese law provisions for contractor's works, including: insurance for professional liability of contractors providing investment and construction consultancy; insurance for assets and goods for procurement contractors; insurances of various kinds for construction contractors and other insurance regimes according to Vietnamese law provisions;
(viii) To register for inspecting the quality of supplies and equipment imported and supplied under the contracts;
(ix) To register the safety of construction equipment and transport means related to business activities of foreign contractors according to Vietnamese law provisions;
(x) To observe the regulations on norms, standards, management of quality of construction works, environmental protection as well as other relevant Vietnamese laws provisions;
(xi) To send the periodical reports on the project implementation situation (on 20 June and December every year) to the license issuing agency and the Department of Construction of the locality where the contracted projects exist;
(xii) Upon the completion of works, foreign contractors shall have to compile dossiers on work completion; provide warranty; make the settlement of imported supplies and equipment; handle unused supplies and equipment in work construction contracts according to the regulations on export and import; re-export construction supplies and equipment already registered for temporary import - re-export; and liquidate the contracts. And at the same time, to notify the concerned State management agencies of the expiry of the contracts, terminate operation of their executive offices and return the seals of the executive offices to the agencies which have granted such seals;
(xiii) To supply data to the agencies managing data on contractors according to the provisions of the bidding legislation.
Taxes applicable to foreign contractors and sub-contractors in Vietnam are well described in the Section 16 hereunder.
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