Vietnam Regulatory Brief: Import and Export Procedures, Changes to the Investment Law, and VAT Holidays

This edition of Vietnam Regulatory Brief examines new, eased import/export procedures, changes to Vietnam’s Investment Law, and a VAT holiday for troubled investments.

Customs authority to address procedures in imports, exports

The Prime Minister has approved the General Department of Customs’ target to reduce time spent on customs procedures to less than 10 working days for exports and 12 working days for imports by 2016. Among other things, the depart will also attempt to reduce customs clearance time to the legal level of ASEAN-6. Under this project, 87 legal documents related to specialized checks in customs clearance under the management of 13 relevant ministries will need to be amended. The Prime Minister has recommended that 85 out of the 87 documents be amended by the first quarter of 2016, while the rest of the documents by the end of 2016.

The authorities further stated that reforms were necessary to cut time and reduce costs in customs clearances in line with international practices; specialized checks remained a bottleneck. In addition, several businesses have complained that custom policies have changed so quickly and frequently that they have had to follow new regulations without understanding the old policies. While an automatic customs clearance mechanism is in place, some customs officers still ask for unofficial fees. An official with the Central Institute of Economic Management further stated the tax and customs department need to scrutinize regulations and documents so that procedures become streamlined.

New changes to Investment Law

According to a new decree, foreign investors that contribute capital to economic institutions will not have to worry about procedures involved with investment certification. The new law took effect on 27 November and is expected to ease procedures for foreign direct investment. Economic institutions that have investment from investors will be responsible for registering changes in shareholders or members with business registration agencies if there are any.

RELATED: Dezan Shira & Associates’ Corporate Establishment Services

However, foreign investors will have to register with the Department of Planning and Investment and Ministry of Investment and Trade themselves, in places where the economic organizations are headquartered, in the below cases:

• The economic institutions deal in business areas that are accompanied by certain conditions for foreign investment, as ascertained by the authorities.

• The stake acquisition or capital contribution increases the share of foreign investors in the economic institutions from below 51 percent to 51 percent or more; or from 51 percent to higher levels.                                    

After receiving documents from foreign investors who are set to establish companies in Vietnam, they will be able to get investment certificates for their projects within 15 days. Following the decree, the government plans to provide support and incentives to investments in high-tech nursery, biotechnology developments, information technology software manufacturing, and recycle and clean energy production.

Tax breaks for investments with financial difficulties

RELATED: Pre-Investment Services from Dezan Shira & Associates

The authorities have a 60-day deferral of Value Added Tax (VAT) on imports and VAT refund scheme in place for investment projects facing financial problems. Enterprises that are entitled to the scheme are:

• Companies that are newly established and are in the process of investment but yet to start operations.

• Operational firms taking part in investment projects such as construction of new production lines, operational expansion, technological innovation and environmental improvement by direct imports or authorizing the import of machines and equipment to create fixed assets.

When such companies face financial difficulties like failure to pay for VAT on imports, dependence on loans from commercial banks on imports of machines and equipment or losses due to delayed customs clearance of commodities, they are entitled to incentive scheme if they satisfy the following three requirements:

1. Registered for VAT submission and granted Business Registration Certificate or Investment Certificate; have a legitimate corporate seal; have a bank account and implement an accounting scheme as per law

2. The total value of machines and equipment imported is worth more than U.S. $4.5 million

3. The investment projects and trade goods are subject to VAT.

The tax incentives do not apply to machines and equipment used to create specialized fixed assets for credit institutions, businesses of reinsurance, life insurance, and medical and training facilities.

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

Using Vietnam’s Free Trade & Double Tax Agreements
In this issue of Vietnam Briefing we explore how Vietnam’s Free Trade Agreements – and especially those via its membership in ASEAN – will affect foreign investment into Vietnam. We also go a step further and examine the specific, bilateral Double Tax Agreements that Vietnam has enacted, and how these can be further used to minimize profits and withholding taxes that would otherwise be levied upon foreign investors.

Developing Your Sourcing Strategy for Vietnam In this issue of Vietnam Briefing Magazine, we outline the various sourcing models available for foreign investors – representative offices, service companies and trading companies – and discuss how to decide which structure best suits the sourcing needs of your business.

• Previous Article Trademarks in Vietnam – Part Two
• Next Article Vietnam Regulatory Brief: Preferential Customs Treatment, Interest Rate Decrease for Dollar Deposits, and GM Food Labelling