|
A
new foreign Investment Law (FIL), was passed by the National
Assembly on 16 May 2000 and took effect from 1 July 2000.
The significant changes are as follows:-
o
Registration and Licensing
of Business
The new law provides for a category of business that can be
undertaken based on registration alone, in which case the
registration of the issuance of the investment license must
be done within 30 days.
In the case where the businesses need to be evaluated before
licensing, the licensing should be done within 45 days.
o
The Principle of Unanimous
Consent in Joint Ventures
The
new FIL deletes requirement for unanimity except for:
-
Appointment and dismissal of the General Director and the
First Deputy General Director
-
Amendments to the Charter
-
Joint venture parties may agree to make other matters
subject to unanimous approval of the Board
For
other issues, the Board of Management of the joint venture
enterprise may pass resolutions if representatives holding
at least 51% of the Charter capital of the enterprise agree.
o
Reorganization of Business Structures
Foreign businesses will be allowed to change their existing
form of investment, by way of division, separation, merger
or consolidation, the condition for the procedures of which
will be decided by the Government.
o
Dissolution of
Foreign-Invested Enterprises
Under
the new law termination will be allowed in accordance with
the conditions for termination stipulated in the
joint-venture contract, the Charter of the enterprise, or by
agreement between the parties.
Assignment of Interest
Wholly
foreign-owned enterprises which wish to sell an interest in their
company no longer have to give a right of first refusal to
Vietnamese businesses.
·
Compensation
for Land Clearance
Where
the use of land contributed to a joint venture by the Vietnamese
side is its share capital, the Vietnamese party will be responsible
for
-
compensation for land clearance
-
completion of all the procedures to be able to exercise the land use
right
Where
the State leases the land, the State will be responsible for site
clearance and for completion of all the procedures to be able to
lease the land.
o
Mortgage of Land and Property
Attached to Land
Foreign
business will be allowed to grant mortgages over land use rights and
assets attached to the land to banks permitted to operate in Vietnam
(including foreign bank branches).
o
Effect of Dissolution or Bankruptcy
on Land of a Foreign-Invested Enterprise
The
new FIL clarifies that upon dissolution or bankruptcy, the residual
value of the land use right which the Vietnamese party has
contributed to the joint venture capital will belong to the assets
of the enterprise to be liquidated.
o
Foreign Currency
Under
the new FIL a three-tier system applies:-
-
every foreign investor will have the right to purchase foreign
currency from its commercial bank for the purpose of making payments
for current transactions and for other purposes that may be
permitted by law.
-
support for foreign currency balance will be provided to
infrastructure projects and some other essential projects
-
foreign currency balance of important projects will be ensured by
the government from time to time.
o
Opening a Banking Account at a
Foreign Bank
A
foreign enterprise will be permitted to open any account at a
foreign bank.
o
Establishing a Reserve Fund
The
requirement to establish reserve fund equal to 5% of after-tax
profits has been abolished. Reserve and other similar funds
are now discretionary.
o
Carrying Losses Forward
The
new FIL permits foreign parties to Business Cooperation Contracts (BCCs)
to carry forward losses from one tax year to offset profits in any
of the following five years. Foreign branches have not been
included under this law at this moment, however, there is a current
proposal before the Ministry of Finance to allow it.
o
Profits Remittance Tax
The
new remittance tax rate are as follows:-
-
3% tax rate imposed on profits remitted abroad in respect of foreign
investors whose contribution to the prescribed capital of a foreign
invested enterprise or a BCC is at least US$10 million.
-
5% tax rate imposed on profits remitted abroad in respect of foreign
investors whose contribution to the prescribed capital of a foreign
invested enterprise or to a BCC is from US$5 million to US$10
million.
-
7% tax rate imposed on profits remitted abroad in respect of foreign
investors whose contribution to the prescribed capital of a foreign
invested enterprise or to a BCC is less than US$5 million.
o
Import Duty Exemption
Investment
projects and projects implemented in areas of especially difficult
socio-economic conditions will be exempted from import duties on raw
materials, materials and components imported for production
purposes, for a period of five years after the commencement of
production.
o
Project
Guarantee
The
new FIL allows the government to enter into guarantees for any
project within the principles of the Fil.
|
General Section
