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| THE GOVERNMENT | SOCIALIST REPUBLIC OF VIET NAM |
| No. 12-CP | Hanoi, February 18, 1997 |
STIPULATING IN DETAIL THE IMPLEMENTATION OF THE LAW ON FOREIGN INVESTMENT IN VIETNAM
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Law on Foreign Investment in Vietnam of November 12, 1996;
Pursuant to the Law on the Promulgation of Legal Documents of November 12, 1996;
At the proposal of the Minister of Planning and Investment,
DECREES
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The international credit activities, operations of the Vietnam-based affiliates of foreign companies and other commercial and indirect investment forms shall not fall under the scope of regulation of this Decree.
1. Vietnamese enterprises, including:
- State enterprises established under the Law on State Enterprises;
- Cooperatives established under the Law on Cooperatives;
- Enterprises of the socio-political organizations.
- Enterprises established under the Law on Companies;
- Enterprises established under the Law on Private Enterprises;
2. Vietnamese organizations defined in Article 65 of the Law on Foreign Investment in Vietnam, which meet the conditions set by the Government.
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4. Enterprises with foreign invested capital.
5. Overseas Vietnamese.
6. State agencies competent to sign BOT, BTO and BT contracts.
- The Ministry of Planning and Investment;
- The provincial People’s Committees which meet all the conditions according to the assignment decision of the Government;
On the basis of the proposal of the provincial People�s Committee and depending on the conditions of the Management Board of each industrial zone, the Planning and Investment Ministry shall submit to the Prime Minister for decision the authorization by the Ministry of Planning and Investment to the Management Board of the industrial zone to grant investment licenses to the investment projects in the industrial zone.
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2. In cases where the laws of Vietnam have not yet provided for the foreign investment relations in Vietnam, the parties may agree in their contract upon the application of foreign laws, but such agreement must not contrary to the provisions of the laws of Vietnam.
Commercial contract and contracts for delivery of raw materials in return for finished products, or purchase of equipment on deferred payment and other contracts without sharing profits or business results shall not fall under the scope of regulation of this Decree.
The business cooperation contracts in the field of exploration and exploitation of oil and gas and a number of other natural resources in the form of production-sharing contracts shall be subject to the oil and gas legislation, other relevant legislation and the Law on Foreign Investment in Vietnam.
2. Business cooperation contracts shall be signed by the competent representatives of the business cooperation parties.
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1. The nationalities, addresses and the competent representatives of the business cooperation parties.
2. The business purposes and scope.
3. The contributions by the business cooperation parties and the division of the business results, the tempo of performance of the contract
4. The major products, the proportions of products for export and domestic consumption,.
5. The duration of performance of the contract.
6. The rights and obligations of the business cooperation parties
7. Amendment and termination of the contract; the transfer conditions.
8. Settlement of disputes.
A business cooperation contract shall take effect from the date the investment license is granted.
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The functions, tasks and powers of the Coordinating Board shall be agreed upon by the parties.
1. An application for the investment license.
2. A business cooperation contract.
3. The documents certifying the legal status and financial situation of the involved parties.
4. The economic- technical feasibility study.
5. The dossiers defined in Articles 38, 39, 45 and 83 of this Decree.
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2. A new joint venture enterprise is an enterprise established between a joint venture enterprise already licensed to operate in Vietnam and a foreign investor or Vietnamese enterprise or another joint venture enterprise, enterprise with 100 per cent foreign invested capital already licensed to operate in Vietnam.
In special cases, a joint venture enterprise may be established on the basis of an agreement between the Government of the Socialist Republic of Vietnam and the Government of a foreign country.
3. Joint venture enterprises shall be established in the form of limited liability companies and shall have the legal person status as prescribed by Vietnamese law; the liability of each joint venture party to the other party (ies) and to the joint venture enterprise shall be limited to the amount of its contribution to the prescribed capital of the joint venture enterprise.
4. A joint venture enterprise shall be established and operate after it is granted an investment license.
1. An application for the investment license.
2. The joint venture contract.
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4. The documents certifying the legal status and financial situation of the joint venture parties.
5. The economic-technical feasibility study.
6. The dossiers defined in Article 38, 39, 45 and 83 of this Decree.
Article 14.- A joint venture contract must include the following main contents:
1. The nationalities, addresses and competent representatives of the joint venture parties.
2. The business purposes and scope.
3. The investment capital, the prescribed capital, the proportion of contribution to be made by each party to the prescribed capital, the mode and timetable for capital contribution and the tempo for the construction of the enterprise.
4. The major products, the proportion of goods for export and for domestic consumption.
5. The operating duration of the enterprise.
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7. Amendment and termination of the contract, the transfer conditions; the conditions for the termination and dissolution of the enterprise.
8. Settlement of disputes.
Article 15.- The Statute of a joint venture enterprise must include the following main contents:
1. The nationalities, addresses and competent representatives of the joint venture parties, the name and address of the enterprise.
2. The business purposes and scope of the enterprise.
3. The invested capital, the prescribed capital; the proportion of contribution to the prescribed capital, the mode and timetable for contributions to the prescribed capital.
4. The number, composition, tasks, powers and term of office of the Managing Board; tasks and powers of the General Director and Deputy General Directors of the enterprise.
5. The enterprise�s representative before the Courts, Arbitration and the State agencies of Vietnam.
6. The financial principles.
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8. The duration of operation, termination and dissolution of the enterprise.
9. The labor relations in the enterprise, the plan on the training of managerial, technical and business staff and workers.
10. The procedure for amending and supplementing the Statute of the joint venture enterprise.
2. The Vietnamese party(ies) may mobilize its self-procured capital and the capital sources of Vietnamese enterprises and individuals so as to ensure an appropriate proportion in the prescribed capital of the joint venture enterprise.
3. The value of capital contribution by each party shall be agreed upon by the involved parties on the basis of the market prices at the time the capital contribution is made.
4. The foreign party(ies) to the joint venture enterprise may make capital contribution in Vietnamese currency earned from the profits, or from the liquidation or transfer of the invested capital in Vietnam.
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2. The proportion of capital contribution by the foreign party(ies) shall be agreed upon by the parties to the joint venture but must not be lower than 30 per cent of the prescribed capital of the joint venture enterprise.
For new joint ventures, the proportion of the foreign investors� contribution to the prescribed capital must ensure the above-said proportion.
In a number of cases, depending on the business line of the project, its technology, markets, business efficiency and other economic and social benefits, the investment license granting agency may consider and allow the foreign party to a joint venture to make a capital contribution of as low as 20 per cent of the prescribed capital.
3. For important projects, when signing the joint venture contract, the joint venture parties may agree upon the time, mode and rate at which the Vietnamese party(ies) shall increase the proportion of its capital contribution to the prescribed capital of the joint venture enterprise.
In cases where the joint venture parties fail to contribute their capitals according to the committed tempo without any plausible reason, the investment license granting agency shall be entitled to withdraw their investment license .
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The number of members of the Managing Board, the ratio of its members among the joint venture parties, the appointment of members and the Chairman of the Managing Board, the appointment of the General Director and Deputy General Directors shall comply with Article 12 and Article 13 of the Law on Foreign Investment in Vietnam.
The appointment of the aforesaid members must be completed not later than 60 days from the date the investment license is granted.
The Chairman of the Managing Board may concurrently hold the post of General Director of the joint venture enterprise.
2. The term of office of the Managing Board shall be agreed upon by the joint venture parties but must not exceed five years.
3. For a new joint venture enterprise, the existing joint venture enterprise shall have at least two members to the Managing Board, at least one of whom is a Vietnamese citizen who represents the Vietnamese party to the existing joint venture.
2. A meeting of the Managing Board must be attended by at least two thirds of its members who represent the joint venture parties. A member of the Managing Board may authorize in writing a representative to attend meetings and vote on his/her behalf on the matters the representative is mandated to vote. The Chairman of the Managing Board may mandate the Vice Chairman of the Managing Board to convene and chair a meeting of the Managing Board.
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1. The Chairman of the Managing Board shall have the following powers and tasks:
- Convening and chairing the meetings of the Managing Board;
- Playing a key role in supervising and promoting the execution of the resolutions of the Managing Board.
2. The members of the Managing Board shall not be entitled to any salary but allowances related to the operations of the Managing Board, which shall be decided by the Managing Board. These allowances shall be accounted for in the managerial expenditure of the joint venture enterprise.
Article 24.- The General Director and Deputy General Directors of the joint venture enterprise shall manage and direct the day-to-day work of the joint venture enterprise. The General Director shall be the enterprise�s representative before the Courts and the State agencies of Vietnam. The General Director or the first Deputy General Director must be a Vietnamese citizen residing in Vietnam and working for the Vietnamese party. If the joint venture has only one Deputy General Director, he/she shall functions as the first Deputy General Director.
The Managing Board shall determine and assign the powers and tasks between the General Director and the first Deputy General Director. The General Director shall take responsibility before the Managing Board for the operations of the joint venture enterprise. In cases where the General Director and the first Deputy General Director have different opinions on the executive work in the enterprise, the opinion of the General Director must be complied with but the Deputy General Director shall be entitled to reserve his/her opinion and submit it to the Managing Board for consideration and decision at the next meeting.
The management hiring contract is a contract agreed upon and signed by the involved parties to hire the operation, management or exploitation of a project. The signing and performance of the contract must comply with the provisions of the laws of Vietnam.
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2. The managing organization must operate within the scope prescribed in the already approved management contract.
3 The managing organization shall have to fulfill tax and other obligations in accordance with current provisions of law. The joint venture enterprise shall have to pay on behalf of the managing organization all these taxes to the State of Vietnam.
4. Under all circumstances shall the joint venture enterprise shall take responsibility before law for the operations of the managing organization in the performance of the contract. The General Director and Deputy General Directors of the joint venture enterprise shall have to assist and oversee the operations of the managing organization.
An enterprise with 100 per cent foreign invested capital shall be established in the form of a limited liability company and have the legal person status under Vietnamese law.
An enterprise with 100 per cent foreign invested capital shall be established and operate after it is granted an investment license.
1. An application for the investment license.
2. The Statute of the enterprise.
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4. The economic-technical feasibility study.
5. The dossiers defined in Articles 38, 39, 45 and 83 of this Decree.
2. During the process of operation, an enterprise with 100 percent of foreign invested capital must not reduce its prescribed capital. Any increase in the prescribed capital and/or the invested capital shall be decided by the enterprise and must be approved by the investment license granting agency.
3. For important projects, the Ministry of Planning and Investment shall provide guidance for the investors to agree to transfer capital to the Vietnamese enterprises. The conditions, proportion and timetable for the transfer shall be defined in the application for investment.
1. The nationality, address and competent representative of the foreign investor, the name and address of the enterprise.
2. The business purposes and scope of the enterprise.
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4. The enterprise’s representative before the Courts, Arbitration and other State agencies of Vietnam.
5. The financial principles.
6. The operation term of the enterprise, its termination and dissolution.
7. The labor relations in the enterprise, the plan on the training of managerial, technical and business staff and workers.
8. The procedure for amending and supplementing the Statute of the enterprise.
All amendments and supplements to the Statute of an enterprise with 100 per cent foreign invested capital shall be effective only after they are approved by the investment license granting agency.
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In cases where an enterprise with foreign invested capital or the parties to a joint venture propose to extend the operating duration specified in the investment license, an application for extension must be sent to the investment license granting agency for consideration and decision at least six months prior to the expiry of the operating duration. Within 30 days from the date of receipt of the application, the investment license granting agency shall notify its decision. After this time limit, if it does not approve, the investment license granting agency shall notify in writing the investor thereof and clearly state the reason.
- The names and addresses of the joint venture parties, the business cooperation parties or the foreign investor;
- The business purposes and scope;
- The business cooperation capital, the invested capital, or the prescribed capital of the enterprise with foreign invested capital, the proportion of capital contribution to be made by each party;
- The representative of the enterprise or business cooperation parties before the Courts, Arbitration and other State agencies of Vietnam;
- The date of granting the investment license and the operating duration of the enterprise or the duration for performance of the business cooperation contract.
1. The enterprises with foreign invested capital and the business cooperation contracts shall terminate operations in the cases defined in Article 52 of the Law on Foreign Investment in Vietnam. Within 15 days from the termination of their operations, the enterprises with foreign invested capital and the business cooperation parties must announce the termination of their operations on a central or local newspaper and liquidate the enterprise�s assets or the contract.
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3. For a joint venture enterprise, at least six months before its operating duration expires or not later than 30 days after a decision is issued to dissolve the joint venture enterprise ahead of time, the Managing Board of the enterprise shall have to set up the enterprise-liquidation Board, which shall consist of the representatives of the joint venture parties, and define the tasks and powers for the Liquidation Board. Its members may be chosen from the employees of the joint venture enterprise or specialists outside the joint venture enterprise.
4. The liquidation of a business cooperation contract or of the assets of an enterprise with foreign invested capital shall be decided by the business cooperation parties or the foreign investor.
5. All expenses related to the liquidation of an enterprise or contract shall be borne by the enterprise or the business cooperation parties and payment of these expenses must take priority over the payment of other liabilities.
6. Other liabilities of the enterprise or the business cooperation parties shall be paid in the following priority order:
- Salaries and social insurance payments owed by the enterprise or the business cooperation parties to laborers;
- Taxes and other financial obligations of the enterprise or the business cooperation parties toward the State of Vietnam;
- Borrowings (including interests);
- Other liabilities of the enterprise or the business cooperation parties.
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The investment license granting agency shall issue a decision to withdraw the investment license and notify the concerned agencies of its decision.
2. During the process of liquidation, if it deems that the enterprise has fallen into the state of bankruptcy, the assets of an enterprise with foreign invested capital or of the business cooperation parties shall be dealt with according to the proceduire prescribed by the legislation on bankruptcy.
TECHNOLOGY TRANSFER, ENVIRONMENTAL PROTECTION AND IMPORT OF EQUIPMENT AND MACHINERY
2. The technologies to be transferred into Vietnam to implement investment projects must meet the following requirements:
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b/ They must be capable of improving the technical utility or quality of products or raising the production capacity;
c/ They must ensure economical use of fuel and/or raw materials and efficient exploitation and use of natural resources.
The transfer of technologies that may adversely affect the ecological environment and labor safety is strictly forbidden.
2. The value of the transferred technology as capital contribution shall be agreed upon by the concerned parties and shall not, under any circumstances, exceed 20 per cent of the prescribed capital.
3. When the capital contribution is made in the form of a technology(ies), the investor must draw up a dossier for the technology transfer. The technology transfer dossier shall be attached to the project dossier applying for an investment license and together with the documents related to industrial property, the titles of protection of the industrial property right and the papers certifying the technical properties and the principles for the determination of the value of the technology(ies) by the parties to the joint venture.
The capital contribution in the form of a technology(ies) must be considered and approved by the State agency managing technology and environment.
4. The technology transfer in the form of the purchase of a technology(ies) shall be effected under a technology transfer contract in accordance with the legislation on technology transfer.
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The drawing up and evaluation of the report on the assessment of the impact on the environment shall comply with the provisions of the legislation on environmental protection.
2. With regard to projects outside the aforesaid list, the investor shall have only to describe in the dossier applying for an investment license the factors that may affect the environment, the solutions and give the pledge to protect the environment during the process of construction and business operations.
3. In cases where the investor applies advanced international environmental standards during the process of construction and business operations in Vietnam, he/she shall only need to register them with the State agency managing technology and environment.
2. The value and quality of equipment and machinery to be imported for the implementation of investment projects shall be evaluated before they are imported or installed.
3. For projects of which the installation or construction has been completed but without any evaluation as stipulated in this Decree, the evaluation of the value of the equipment and machinery shall be decided by the investment license granting agency when it is deemed necessary.
4. The organization evaluating the value of imported equipment and machinery may be a Vietnamese expertise company, a joint venture expertise company, an expertise company with 100 per cent foreign invested capital or an expertise company in a foreign country. The investor must supply information to the investment license granting agency on the expertise company of its own choice.
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5. In case of necessity, the investment license-granting agency may mandate an examiner or request the re-evaluation of the value of the imported equipment and machinery.
The rent rate, reduction of or exemption from the rent of land, water surface or sea surface for each project shall be written in the investment license.
With regard to investment projects of which the land rents have been paid at the rates set in their investment licenses before a decision is issued to increase the land rent rate, they shall continue to pay the land rents at the rate set in their investment licenses for a period of five years from the date a decision is issued to increase the land rent.
In cases where the enterprises with foreign invested capital or the business cooperation parties have paid the rent for the whole term of the land, water surface or sea surface lease or for each given period, if the rent rate increases during such period, the rent already paid shall not be readjusted.
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Article 44.- The Prime Minister shall decide the lease of land for projects that use five or more hectares of urban land; and fifty or more hectares of land of other types. The Presidents of the provincial People�s Committees shall decide the lease of land to the other projects.
- The location and area of the land to be used;
- The land rent proposed by the provincial People�s Committee on the basis of the land rent bracket set by the Ministry of Finance;
- The site clearance and compensation plan approved by the provincial People’s Committee.
2. The drawing up of the land lease dossier and the land lease contract, the granting of certificates on the land-use right shall comply with the regulations of the National Land Administration.
3. In cases where the Vietnamese party is allowed to contribute capital in the form of the land-use right value, it shall have to fill the procedures so as to have the land-use right.
In cases where the State of Vietnam leases land, the provincial People�s Committees of the localities where the investment projects are implemented shall have to organize compensation and site clearance and complete the land lease procedures. .
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2. Pursuant to their investment licenses and economic-technical feasibility studies, the enterprises with foreign invested capital or the business cooperation parties shall register their plan on the import of machinery, equipment, spare parts, materials and raw materials ...(hereafter referred to as goods) to be used for the whole duration of capital construction of the projects, or for each year suitable to the construction timetable of the enterprises. In the first month of each quarter or of each year, additions or adjustments may be made to the import plan to match the capital contribution or construction timetable and the business and production program.
3. Pursuant to their investment licenses, each year the enterprises with foreign invested capital and the business cooperation parties shall register their plans on the sale of products for export and/or for domestic consumption. Every December each year, they shall report in writing the results of the execution of the import-export and domestic sale plans, make recommendations(if any) to the Ministry of Trade; and at the same time prepare the plan on export-import and domestic sales for the following year.
In cases where additions or adjustments in quantity, categories and value... may be made to the plan on the import-export and domestic sale of goods, the enterprises with foreign invested capital and the business cooperation parties shall report such additions or adjustments in writing to the Ministry of Trade for consideration and decision.
4. The enterprises with foreign invested capital and the business cooperation parties must give priority to the procurement of goods made in Vietnam instead of imports with similar commercial conditions,.
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2. The enterprises with foreign invested capital which manufacture goods mainly for export may establish bonded warehouses at the enterprises in service of the production of goods for export. The goods put into bonded warehouses of the enterprises shall not be subject to import duties.
The enterprises permitted to establish bonded warehouses for the aforesaid purpose must ensure the following conditions and procedures:
- Exporting at least 50 per cent of the products;
- The goods brought from the bonded warehouses to the production establishments must be registered and supervised by the customs office;
- The goods in bonded warehouses shall not be sold on the domestic markets, except in special cases where the approval of the Ministry of Trade is required and the goods shall be subject to import duties and other taxes in accordance with current provisions of law.
- The goods in bonded warehouses, which are seriously damaged or have deteriorated in quality and no longer meet the production requirements, shall be re-exported or destroyed. The destruction must comply with the regulations of the General Department of Customs and subject to the supervision of the customs office, the tax office and the environment agency.
The General Department of Customs shall base itself on the aforesaid provisions to guide the granting of permits for the establishment of bonded warehouses at the enterprises, to manage and supervise the operations of the bonded warehouses.
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When there is a need to employ foreign labor, the enterprises with foreign invested capital and the business cooperation parties need to send the explanations thereof together with the qualification certificates of the foreign laborers to the Service of Labor, War Invalids and Social Affairs of the province or city where the enterprise�s head office is located for considering the granting of work permits in accordance with the provisions of the labor legislation.
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For the exploration and exploitation of oil and gas and a number of other precious and rare natural resources, the profit tax rate shall comply with the Law on Oil and Gas and the relevant legislation.
Article 54.- In cases where investment is encouraged, the profit tax rate shall apply as follows:
1. 20% with respect to projects that satisfy one of the following criteria:
- Exporting at least 50 per cent of the products;
- Employing 500 or more laborers;
- Raising, planting and processing agricultural, forestry and aquatic products;
- Using advanced technologies, investing in research and development;
- Utilizing large quantities of materials and raw materials available in Vietnam; processing and efficiently exploiting natural resources in Vietnam; producing products with a high percentage of localized contents, meeting the requirements set for each particular field.
The profit tax rate of 20 per cent shall be effective for 10 years from the time the projects start their production and business operations.
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- Exporting at least 80 per cent of products;
- Investing in the fields of metallurgy, basic chemicals, machinery manufacture, petro-chemicals, fertilizers, manufacture of electronic components, automobile and motorcycle parts;
- Building or dealing in infrastructure projects (bridges, roads, water supply and drainage, power, seaports);
- Planting perennial industrial trees;
- Investing in the areas with difficult natural and socio-economic conditions (including hotel projects);
- Transferring without indemnity the assets to the State of Vietnam upon the expiration of the operating duration (including hotel projects);
- The projects that satisfy two of the criteria stated in Clause 1 of this Article.
The profit tax rate of 15 per cent shall be effective for 12 years from the time the projects start their production and business operations.
3. 10 per cent with respect to projects:
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- Investing in the mountainous, remote and deep-lying areas;
- Reforestation;
- The projects on the list of projects enjoying special encouragement of investment.
The profit tax rate of 10 per cent shall be effective for 15 years from the time the projects start their production and business operations.
With regard to investment projects under BOT, BTO and BT contracts, projects to build infrastructure for industrial zones and export processing zones, investment projects in industrial zones and export processing zones, the preferential profit tax rates defined in this Article shall apply throughout the implementation duration of these investment projects.
Article 56.- Profit tax exemption and reduction shall apply to the following cases:
1. The projects defined in Point 1, Article 54 of this Decree may be considered for a profit tax exemption for one year from the time they start making profit and a 50 per cent reduction for two subsequent years.
2. The projects defined in Point 2, Article 54 of this Decree may be considered for a profit tax exemption for two years from the time they start making profit and a 50 per cent reduction for three subsequent years.
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.4. The projects in reforestation and the project to build infrastructure in the mountainous, deep-lying and remote areas and the large-scale projects that may exert great socio-economic impact on the list of projects enjoying special encouragement of investment shall be exempt from the profit tax for eight years from the time they start making profit.
The tax exemption or reduction shall be continuous from the first profit-making year.
5. The aforesaid profit tax exemption and reduction shall not apply to hotel projects (except where investment is made in mountainous, remote and deep-lying areas, areas with difficult economic and social conditions or the assets are transferred without indemnity to the State of Vietnam upon the expiration of the operating duration), investment projects in financial, banking, insurance, service and commercial fields.
6. If the investment projects defined in Article 53 of this Decree are in the production field or located in rural areas, they may be considered for tax exemption for a maximum period of two years from the time they start making profit.
2. The rates of the profit transfer tax are set as follows:
- Five per cent of the profit transferred abroad with respect to foreign investors who contribute ten million USD or more to the prescribed capital or to the business cooperation capital.
- Seven per cent of the profit transferred abroad with respect to foreign investors who contribute from five to less than ten million USD to the prescribed capital or to the business cooperation capital.
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3. The profit transfer tax shall be paid upon each transfer of the profit.
2. In the course of business operation, in case of natural calamities, fires and other force majeure events, the Ministry of Finance shall determine the tax exemption and reduction in accordance with current regulations.
- Reinvesting in the projects in the fields where investment is encouraged as defined in Article 54 of this Decree;
- The reinvested capital is used for three years or more;
- Having contributed sufficiently to the prescribed capital written in the investment license.
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- 100 per cent with respect to the projects defined in Clause 3, Article 54 of this Decree;
- 75 per cent with respect to the projects defined in Clause 2, Article 54 of this Decree;.
- 50 per cent with respect to the projects defined in Clause 1, Article 54 of this Decree.
3. When there is a need to use the profit for reinvestment, the foreign investor shall draw up and submit a dossier to the Ministry of Finance for consideration and decision, which shall consist of:
a/ The request for refund of the tax on the reinvested profit.
b/ The investment license or the decision to amend and/or supplement the investment license with respect to the reinvestment project.
c/ The certificate of the tax agency on the profit tax already paid.
4. Within 15 days after receipt of the full dossier, the Ministry of Finance shall notify the investor of its decision; in case of approval, the investor shall complete the procedure for the refund of the tax on the reinvested profit. After this time limit, if it does not approve, the Ministry of Finance must notify in writing the investor thereof and clearly state the reason.
In cases where the profit is not used for reinvestment, the investor must repay the refunded tax, including interest thereon, and shall be handled in accordance with the provisions of law.
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The enterprises with foreign invested capital and the business cooperation parties may ask the Ministry of Finance to let them use their own 12-month fiscal year for calculating and paying the profit tax.
1. The revenues shall include:
- Revenues from sales of products;
- Revenues from the provision of services;
- Other revenues of the enterprise.
2. The expenditures shall include:
- The costs of materials and raw materials and fuel for the production of main products and by-products or for the provision of services;
- Salaries and allowances, social insurance premiums for the laborers;
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- Spendings for the purchase or use of technical documents, patents, technologies and technical services;
- Managerial costs;
- Taxes, charges and tax-related fees (except profit tax);
- Interest payments on loans;
- Insurance of the assets of the enterprise;
- Other expenses not exceeding five per cent of the total amount of expenditures;
The tax agency shall be entitled to check the validity of the revenues and expenditures.
With regard to the production sharing contracts, the profit tax and other interests of the Vietnamese party(ies) (including the value of the right to use land, water surface or sea surface, the tax on natural resources, etc.) may be included in the production share of the Vietnamese party(ies).
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- Equipment and machinery imported to form the fixed assets of the enterprises or to form the fixed assets for the performance of the business cooperation contracts
- Specialized means of transport as part of the technological chain imported to form the fixed assets of the enterprises or to form the fixed assets for the performance of the business cooperation contracts, and specialized vehicles to transfer workers from and to their working place (automobiles with 24 seats or more, waterway transport facilities);
- Separate components, parts and fittings, samples, accessories of the aforesaid equipment and machinery, specialized means of transport and transport vehicles;
The exemption of import duties on the aforesaid equipment, machinery and transport vehicles shall also apply to those imported for the expansion of the projects or to replace or renew the existing technologies).
- Materials and supplies imported for the implementation of BOT, BTO and BT projects;
- Plant seeds and seedlings, domestic animal breeds and special-use agricultural chemicals permitted to be imported for the implementation of agricultural, forestry and fishery projects;
- Other goods and supplies for the projects in which investment is specially encouraged by decision of the Prime Minister.
2. With regard to materials, separate parts, spare parts and supplies imported for the manufacture of export goods, when imported into Vietnam, import duties thereon must be paid and shall be refunded according to the ratio of the exported finished products when the finished products are exported;
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4. The imported goods stated in Clauses 1 and 2 of this Article shall no be sold on the Vietnamese market. In cases where they are sold on the Vietnamese market, there must be the approval of the Ministry of Trade and import duties, turnover tax or special consumption tax must be paid in accordance with the provisions of law.
5. The patents, technical know-how, technological processes, technical services...as capital contributions shall be exempt from taxes related to technology transfer.
The transfer dossier shall consist of:
- The transfer contract;
- The resolution of the Managing Board;
- The report on the operation situation of the enterprise;
- The legal status, financial situation and the competent representative of the transferee (in cases where the transfer is made to a party outside the enterprise)
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3. The taxable profit is determined as follows:
a/ The taxable profit shall be the value of the transferred capital minus its initial value and minus the transfer costs, in which:
- The value of the transferred capital shall be determined as the total actual value received by the transferor under the transfer contract;
- The initial value of the transferred capital shall be determined on the basis of accounting books and vouchers at the time the capital contribution is made or the statement of final accounts of the invested capital is made;
In cases where the subsequent investors re-transfer their contributed capital, the initial value of the re-transferred capital in each subsequent transfer shall be determined as the value of the transferred capital in the last transfer contract plus the value of the additional contributed capital (if any).
- The transfer costs shall be the actual expenses directly related to the transfer according to the original documents recognized by the tax agency. In cases where the transfer costs arise abroad, such original documents must be certified by an independent notary public or auditing agency at the place where the transfer costs arise.
b/ The rate of the tax levied on the profit earned from the capital transfer shall be 25 per cent of the profit earned.
In cases where the capital transfer is made to a Vietnamese State enterprise or an enterprise where the State owns the predominant share, the foreign investor shall be exempt from such tax.
In cases where the foreign investor transfers his/her capital to Vietnamese enterprises other than the aforesaid enterprises, he/she must pay a 10% tax on the profit earned from the capital transfer.
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ACCOUNTING, STATISTICAL AND INSURANCE REGIMES
1. The accounting, auditing and statistical work in the enterprises with foreign invested capital and of the foreign business cooperation parties shall comply with Vietnam�s legislation on accounting, auditing and statistics.
2. The enterprises with foreign invested capital and the foreign parties to business cooperation shall apply accounting according to Vietnam�s accounting regime.
The enterprises with foreign invested capital and the foreign parties to business cooperation may apply a widely-used foreign accounting regime but they must have plausible reasons and the approval of the Ministry of Finance.
3. The foreign business cooperation parties shall keep accounting records appropriate for the type of business cooperation.
4. The enterprises with foreign invested capital and the foreign parties to business cooperation must register their accounting regime with the Ministry of Finance and submit to the supervision of the financial agency.
1. The measurement units used in accounting and statistics shall be Vietnam�s official measurement units. Other measurement units must be converted into Vietnam�s official measurement units.
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3. The accounting and statistical work shall be written in the Vietnamese language or in both Vietnamese and a widely-used foreign language.
The annual financial statements of an enterprise with foreign invested capital or a foreign business cooperation party shall be audited by an independent Vietnamese auditing company or another independent auditing company licensed to operate in Vietnam in accordance with the auditing legislation before they are sent to the aforesaid agencies.
The audited financial statements of an enterprise with foreign invested capital and a foreign business cooperation party may be used as the basis for determining and settling the tax and other financial obligations toward the State of Vietnam.
The auditing company shall be accountable before law for the independence, objectiveness and authenticity of its auditing results.
Article 69.- An auditing company�s report on the auditing results shall include the following main contents:
1. Certification of the objectiveness, authenticity and reasonableness of the financial statements and accounting data.
2. Comments on and assessment of the performance of the accounting work and observance of the accounting legislation, regime and rules.
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The auditing report must have the signature, name and the serial registration number of the practicing license of the auditor(s), the signature and stamp of the auditing company.
2. The enterprises with foreign invested capital and the foreign business cooperation parties shall buy voluntary and compulsory insurance as prescribed by law.
3. The insured objects shall include human lives, assets, civil liabilities and other objects as prescribed by law.
MANAGEMENT OF FOREIGN EXCHANGE
The enterprises may open accounts for borrowings at banks outside Vietnam if it is so requested by the foreign lender and approved by the State Bank of Vietnam.
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With regard to the investment projects to build infrastructure, manufacture goods to substitute essential imports and a number of specially important projects, the State Bank shall ensure that the enterprises with foreign invested capital and the business cooperation parties can convert the Vietnamese currency into a foreign currency(ies) to meet rational demands in accordance with the foreign exchange management regime of Vietnam.
If the enterprises with foreign invested capital and the foreign parties to business cooperation other than the aforesaid objects which are assured to receive support for meeting the need of foreign currency, have any difficulty in meeting the need of foreign currency, the State Bank may consider and permit them to convert Vietnamese currency into a foreign currency or purchase foreign currency in accordance with the State Bank�s regulations.
- His/her profit earned from business operations;
- Remuneration from the provision of services and technology transfer;
- Principal and interests of foreign borrowings during the operation process;
- Invested capital;
- Other sums of money and properties legally owned by the investor.
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3. In cases where the amount of money transferred abroad under Point 2 of this Article exceeds the initial capital (principal) and the reinvested capital, the excess amount shall be remitted abroad only when it is approved by the investment license granting agency.
Article 75.- The rate at which a foreign currency(ies) is converted into the Vietnamese currency or vice versa in the process of making investment and production and business operations of the enterprises with foreign invested capital and foreign business cooperation parties shall comply with the State Bank�s regulations
CUSTOMS, ENTRY, RESIDENCE AND COMMUNICATIONS
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2. In emergency cases where unforeseeable situations need to be addressed foreigners may be granted with entry visas at the border gate in accordance with current regulations.
3. In cases where foreigners are citizens of the countries that have signed with the Government of the Socialist Republic of Vietnam agreements on the exemption of entry and exit visas, such agreements shall apply.
- Use the post and telecommunication services of Vietnam’s post agency;
- Organize their own information systems for running business within the enterprise.
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2. Evaluating the general planning and architecture with respect to the investment projects with constructions.
3. Evaluating the technical designs of the construction structures and deciding to build the structures.
4. Supervising the bidding for construction and granting permits for the contracting of consultancy and construction to the bid winners to implement the projects and build structures in Vietnam.
5. Managing the quality of the constructions.
The evaluation of the general planning and architectural blueprints of construction structures shall be considered during the process of evaluating the investment projects.
When evaluating the projects, the investment license granting agency must consult the Ministry of Construction and the provincial People’s Committee on the general planning and architecture with respect to the projects having construction structures; and for other projects related to the branch�s general planning, it must consult the Ministry managing the branch on their conformity with the general planning on the construction of the branch and the territorial planning.
Article 84.- The design of a construction structure shall be evaluated in terms of:
1. The legal status of the designing organization.
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3. The observance of Vietnam’s technical standards in designing and construction or foreign technical norms approved by the Ministry of Construction.
The investors shall be accountable before Vietnamese law for the safety of the structure; fighting and preventing fires and explosions and protecting the environment during the period of building the structures as well as throughout the period of operating the structures.
Article 85.- The technical design evaluation and construction decision is stipulated as follows:
1. The Ministry of Construction shall evaluate the technical designs of the structures belonging to Group A projects defined in Article 93 of this Decree. The provincial People’s Committee shall evaluate the technical design of the structures belonging to Group B projects defined in Article 93 of this Decree.
2. With regard to the structures belonging to Group A projects, within 20 days from the date of receipt of the dossier, the Ministry of Construction shall complete the evaluation of the technical design of the structure and notify the investor of its decision. After the technical design is approved, the investor may start building the structure.
3. With regard to the structures belonging to Group B projects, within 20 days from the date of receipt of the dossier, the provincial People�s Committee shall complete the evaluation of the technical design of the structure and notify the investor of its decision. After the technical design is approved, the investor may start building the structure.
4. After the aforesaid time limit of twenty days, if the design evaluating agency fails to notify the investor of its decision, the investor may still start building the structure.
5. Not later than 10 days before starting building the structure, the investor must notify the provincial People�s Committee of the locality where the structure is built of the building.
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The survey and designing organizations and the construction contractors shall be accountable before the investor and Vietnamese law for their work related to the quality of the structure.
In case of necessity the investment license granting agency may revise the statement of final accounts of the invested capital.
PROVISIONS ON THE FORMATION, EVALUATION, LICENSING AND IMPLEMENTATION OF INVESTMENT PROJECTS
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2. Investment projects shall be evaluated in terms of:
- The legal status and the financial capability of the foreign investor and the Vietnamese investor;
- The consistence of the project’s objectives with the general planning;
- The socio-economic benefits (possibilities of creating new production capacity, new jobs and products; expanding market; possibilities of generating employment for laborers; economic benefits of the project and projected revenues to the State budget ...);
- The level of the techniques and technologies applied, rational utilization and protection of natural resources, protection of the ecological environment;
- The rationality of the land use, the site clearance and compensation plan, pricing of the assets contributed as capital by the Vietnamese party (if any);
1. The Prime Minister shall decide Group A projects, including:
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- Projects each with invested capital of 40 million USD or more in the industries of power generation, mineral exploitation, oil and gas, metallurgy, cement, chemicals, seaports, airports, cultural and tourism resorts, real estate business;
- Ocean shipping and aviation projects;
- Post and telecommunications projects;
- Cultural, publishing, press, radio, television, training, scientific research and health projects;
- Insurance, financial, auditing and expertise projects;
- Projects exploiting precious and rare natural resources;
- National defense and security projects;
- Projects using 5 hectares or more of urban land or 50 hectares or more of land of other types;
2. The Ministry of Planning and Investment shall decide Group B projects (which are not defined in Clause 1 of this Article) except for the projects defined in Clause 3 of this Article and the projects to which the Management Boards of the industrial zones is authorized to grant investment licenses.
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1. The evaluation of projects is stipulated as follows:
- With regard to Group A projects, the Ministry of Planning and Investment shall consult the concerned Ministries and provincial People�s Committees and submit their opinions to the Prime Minister for consideration and decision. In cases where there are different opinions on important matters of a project, the Ministry of Planning and Investment shall set up an Advisory Council which shall consist of the competent representatives from the concerned agencies and specialists to consider the project before it is submitted to the Prime Minister. For each specific case, the Prime Minister may request the State Council for the Evaluation of Investment Projects to study and give advice before the Prime Minister makes a decision;
- With regard to Group B projects, the Ministry of Planning and Investment shall consult the concerned Ministries and provincial People’s Committees before considering and deciding them.
2. The time limit for the evaluation of a project is specified as follows:
- Within 15 days from the date of receipt of the project dossier, the Ministries, branches and provincial People’s Committees shall send their written comments to the Ministry of Planning and Investment on the project’s issues within the scope of their management; After this time limit, if no written comment is made, the projects contents shall be deemed to be approved;
- With regard to Group A projects, within 40 days from the date of receipt of the dossier, the Ministry of Planning and Investment shall submit its evaluations to the Prime Minister. Within 7 days from the date of receipt of the Prime Minister’s decision of approval, the Ministry of Planning and Investment shall grant the investment license;
- With regard to Group B projects, within 45 days from the date of receipt of the project dossier, the Ministry of Planning and Investment shall complete the evaluation of the project and grant the investment license.
Within 7 days after the expiration of the time limit defined above, if it does not grant the investment license, the Ministry of Planning and Investment shall notify in writing the investor thereof and clearly state the reason and at the same time notify in writing the relevant agencies of its decision.
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All requests of the Ministry of Planning and Investment to the investor on amendments and supplements to the project dossier must be made within 20 days from the date of receipt of the dossier.
3. The copies of the investment license shall be sent to the concerned agencies.
4. The evaluation of, and granting of investment licenses to, the investment projects under the competence of the provincial People’s Committees shall comply with the provisions in Article 100 of this Decree.
5. The evaluation of, and the granting of investment licenses to, the investment projects in the industrial zones and export processing zones shall be implemented in accordance with the provisions of Article 4 of this Decree and the Government’s stipulations on industrial zones and export processing zones.
- Guiding and coordinating the Ministries, branches and the provincial People’s Committees in drawing up the general planning, plans and a list of projects calling for investment;
- Assuming the main responsibility for evaluating the projects and granting investment licenses thereto and adjusting the investment licenses with respect to the investment projects under its competence;
- Conciliating disputes when requested;
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- Assessing the socio-economic impact of the licensed projects;
- Deciding the dissolution of enterprises with foreign invested capital and the termination of business cooperation contracts ahead of time with respect to projects under its licensing competence.
2. The Ministry of Planning and Investment shall sum up the situation of the granting of investment licenses and the foreign investment activities in Vietnam, report them to the Prime Minister and notify the Ministries, branches and provincial People’s Committees thereof periodically (biannually and annually).
- Contribute comments to the evaluation of projects, adjustment of investment licenses;
- Issue policies as well as technical, technological and environment standards and guide the implementation thereof;
- Conduct specialized supervision; evaluate the socio-economic impact of the investment projects under their charge.
Article 97.- The provincial People’s Committees shall have to:
1. Assume the main responsibility for evaluating the projects, granting investment licenses and adjusting the investment licenses with respect to the projects under their competence, taking part in evaluating investment projects in their localities;
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- Supervising the capital contribution and the observance of the regulations of the investment licenses and other relevant legal documents;
- Supervising the observance of the regulations on financial obligations, labor relations, salaries, social order and safety, protection of the ecological environment, prevention and fighting against fires and explosions;
- Issuing land-use right certificates; organizing and conducting site clearance, permitting the opening of head offices and branches; registering the residence and traveling for foreigners working in the enterprises, recommending Vietnamese employees to the enterprises; registering businesses;
- Together with the Ministries and branches conducting specialized supervision and inspection of the activities of the foreign invested enterprises;
- Assessing the socio-economic impacts of the direct foreign investment activities in their territorial areas.
The inspection and supervision shall be conducted regularly or without advance notice. Inspections and supervisions without advance notice shall be conducted only when the activities of the enterprises and the business cooperation parties show law-breaking signs.
Before conducting specialized inspections and supervisions within the scope of their functions, the State agencies shall notify the Ministry of Planning and Investment and the provincial People�s Committee of the locality where the project(s) is located to ask for their coordination.
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3. The Ministry of Planning and Investment shall detail the organization and coordination of the supervising and inspecting work with respect to foreign investment activities.
ASSIGNMENT OF COMPETENCE IN THE GRANTING OF INVESTMENT LICENSES
- The projects must be consistent with the approved general planning and plans on socio-economic development;
- The projects do not belong to Group A projects defined in Article 93 of this Decree.
2. The assignment of competence in the granting of investment licenses shall not apply to the projects in the following fields (regardless of the size of investment capital):
- Oil and gas exploration, exploitation and service;
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- Building of seaports and airports, national highways, railways;
- Cement, metallurgy, sugar production; production of alcohol, beer and cigarettes;
3. Basing itself on the specific conditions of the provinces and the cities directly under the Central Government, the Prime Minister shall decide a list of projects according to the field and size of investment capital for the assignment of competence in the granting of investment licenses to the provincial People’s Committees. The list of the provincial People�s Committees and this list of projects may be periodically added or amended to suit the practical situation of each locality.
- The contents of the project evaluation shall comply with Article 92 of this Decree.
- Within 30 days from the date of receipt of the project dossier, the provincial People�s Committee must complete the evaluation of the project and grant the investment license.
Within 7 days after the time limit defined above expires, if it does not grant the investment license, the provincial People�s Committee shall notify in writing the investor thereof and clearly state the reason and at the same time notify in writing the concerned agencies of its decision.
The aforesaid time limit does not include the time for the concerned investor to adjust and supplement the investment license application dossier.
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2. The investment license granted to the investor shall conform to the form set and issued by the Ministry of Planning and Investment.
3. Within 7 days from the date the investment license is granted, the provincial People’s Committee shall send the original investment license to the Ministry of Planning and Investment and its copies to the Ministry of Finance, the Ministry of Trade, the branch managing Ministry and the concerned State management agencies.
4. On a quarterly and annual basis, the provincial People’s Committees shall send written reports to the Ministry of Planning and Investment on the situation of the evaluation of the projects and the granting of investment licenses.
INVESTMENT GUARANTEE AND HANDLING OF DISPUTES AND VIOLATIONS
In cases where changes in the provisions of the Vietnamese law cause damage to the interests of the foreign investors already defined in their investment licenses, the investment license granting agency shall take appropriate measures to protect the investors’ interests through negotiations on the following measures:
1. Altering the operation objectives of the projects.
2. Offering tax exemption and reduction within the legal framework.
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4. Satisfactory compensation shall be considered in a number of necessary cases.
For projects to which the provincial People’s Committees have granted investment licenses, the provincial People�s Committees must consult the Ministry of Planning and Investment and the Ministry of Finance before taking these measures.
In cases where the parties fail to reach an agreement, they may agree upon one of the following solutions:
- The Vietnamese Court;
- The Vietnamese Arbitration Agency or a foreign Arbitration Agency or an international arbitration agency;
- An Arbitration body set up by agreement of the concerned parties.
2. Any disputes between the enterprises with foreign invested capital or between the enterprises with foreign invested capital, the foreign parties to business cooperation and the Vietnamese economic organizations shall be settled at an arbitratory organization or a court of Vietnam in accordance with the laws of Vietnam.
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Vietnamese officials and employees and State agencies are strictly forbidden to abuse their powers to cause difficulties or hassle and obstruct foreign investment activities. Any violation shall be, depending on its seriousness, examined for liability in accordance with the provisions of law.
2. The Ministers, the Heads of the ministerial-level agencies and agencies attached to the Government and the Presidents of the People�s Committees of the provinces and the cities directly under the Central Government shall have to implement this Decree.
ON BEHALF OF THE GOVERNMENT
THE PRIME MINISTER
Vo Van Kiet
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- 1Decision No. 321/1998/QD-BTM of March 14, 1998, issuing the detailed regulation on the implementation of provisions of Decree No.12-CP of February 18, 1997 and Decree No.10/1998/ND-CP of January 23, 1998 of the Government concerning the export, import and/or sale of products in Vietnam and processing activities by foreign-invested enterprises and parties to business cooperation contracts
- 2Decision No. 179/1998/QD-BTC of February 24, 1998, of the minister of finance to issue the regulation on the land, water surface and sea surface rents applicable to foreign investment forms in Vietnam
- 3Circular No. 60-TC/CDKT of September 01, 1997 guiding the implementation of The Accoun-Ting and Auditing work at enterprises and organizations having foreign investment in Vietnam
- 4Circular No. 111-GSQL/TT of May 28, 1997 guiding the implementation of Decree No.12-CP of February 18, 1997 detailing the implementation of the law on foreign investment in Vietnam
- 5Law No. 52-L/CTN of Novermber 12 ,1996, on the promulgation of legal documents
- 6Law No. 52-L/CTN/DT of Novermber 12,1996, on foreign investment in vietnam
Decree No. 12-CP of February 18, 1997, of the Government stipulating in detail the implementation of the law on foreign investment in Vietnam
- Số hiệu: 12-CP
- Loại văn bản: Nghị định
- Ngày ban hành: 18/02/1997
- Nơi ban hành: Chính phủ
- Người ký: Võ Văn Kiệt
- Ngày công báo: Đang cập nhật
- Số công báo: Đang cập nhật
- Ngày hiệu lực: Kiểm tra
- Tình trạng hiệu lực: Kiểm tra