Vietnam Doing Business 2020 - Deloitte

1 Doing Business IN Vietnam 2020 Investing in Vietnam , Engaging the worldMINISTRY OF PLANNING AND INVESTMENTFOREIGN INVESTMENT AGENCYII. Customs Duty and ProceduresE. Human Resources and Employment F. Foreign Exchange ControlUseful websitesAbbreviation A. Country ProfileIntroduction B. Trade and Investment I. Trade Agreement II. Foreign Direct InvestmentC. Setting up an investment in Vietnam3561213131752586568 Deloitte Vietnam71 Foreign Investment Agency72 III. Land Rental Incentives56D. Taxation and Customs I. Taxation 2526 Doing Business in Vietnam 2020. 2 Investing in Vietnam , Engaging the world3 APABOTEZFDIDTACITEPZASEANBLTBTLCPTPPERCA PECBCCBOOBTOEPEBTFCWTA dvance Pricing AgreementBuild-Operate-TransferEconomic ZoneForeign Direct InvestmentDouble Taxation Avoidance AgreementCorporate Income TaxExport Processing ZoneAssociation of Southeast Asian NationsBuild-Lease-TransferBuild-Transfe r-LeaseComprehensive and Progressive PartnershipEnterprise Registration CertificateAsia-Pacific Economic CooperationBusiness Cooperation ContractBuild-Own-OperateBuild-Transfer- OperateExport Processing EnterpriseBuild-TransferForeign Contractor Withholding TaxGSOIRCOECDRCEPVASIMFIPPITO&M VNDFTAM&AVATWTOSSTPPPUSD GDPI nvestment Registration CertificateOrganization for Economic Cooperation and DevelopmentRegional Comprehensive Economic PartnershipVietnamese Accounting Standards International Monetary

2 FundIndustrial ParkPersonal Income TaxOperate & ManageVietnamese DongFree Trade AgreementMergers & AcquisitionsValue Added TaxWorld Trade OrganizationSpecial Sales TaxPublic-Private PartnershipUS DollarGross Domestic Product General Statistics OfficeABBREVIATIONA greement for Trans-PacificDoing Business in Vietnam 2020. 4 Investing in Vietnam , Engaging the world5 INTRODUCTIONIn more than 30 years of social- Vietnam has moved from being one of the poorest nations in the world to a lower middle-income country with a number of convincing social-economic achievements. Joining the Association of Southeast Asian Nations (ASEAN) in 1995 Economic Cooperation (APEC) in 1998 and the World Trade Organisation (WTO) in 2007; expanding gross domestic product (GDP); improving infrastructure; and a steady increase in foreign direct investment (FDI) suggest that Vietnam has transformed into an attractive investment has been enjoying strong economic growth.

3 Since 1990, Vietnam s GDP per capita growth has been among the fastest in the world, averaging per cent a year in the 2000s. Despite crisis and uncertainties in the global environment, Vietnam s economy continues to grow, with GDP expanding by per cent in 2019,and is expected to continue on this path. Overseas businesses are increasinglyattracted by the country s move from a centralized to a market orientedeconomy and its million-strong population, which features a large and young workforce as well as an increase in disposable income in recent years. The Vietnamese Government has done an excellent job percent (2019).This guidebook was prepared by the Foreign Investment Agency of Vietnam in cooperation with Deloitte Vietnam to provide readers with an overview of the investment climate, forms of Business organization, taxation, and Business and accounting practices in Vietnam .

4 Although we do our best to ensure that information contained in this book is current at the time of writing, the rapid changes in Vietnam mean that laws and regulations may change to reflect the new conditions. We hope that you find this book useful in your endeavour to expand your Business in of Planning andInvestment of VietnamForeign Investment Agency A COUNTRY PROFILE Vietnam Strategically located at the centre of Southeast Asia with convenientaccess to commodity and cultural PROFILEV ietnam s economy continues its fast growth driven by free trade agreements (FTAs) with major developed countries and increasingly deregulated Business environment. Competitive productioncost compared toneighboring FTAs with major developed markets. A youthful and vibrant country with digitally-savvy and well-educated workforce,a developing culture of entrepreneurship, and openness to new ideas.

5 A stable political environment, and an attractive Business environment with high incentives for foreign investors. Doing Business in Vietnam 2020. 6 Investing in Vietnam , Engaging the worldFast growing economy with GDP growth projected to be between 6% to 7% during 2016-2019 SNAPSHOTLOCATIONPOPULATION AND WORKFORCEP opulation: was estimated at million peopleRanked 15th in the list of most populated countriesPeople of working age in employment: million people ( of total population)Unemployment rate: 2%ECONOMYN ominal GDP (2019): USD billionGDP in 2019 increase by ,the highest growth since 2011 GDP per capita (2019): USD Business HOURSU nder the Vietnamese Labor Code, normal working hours should be 8 hours/day, or 40 - 48 hours/week. CURRENCY Vietnamese Dong (VND)LAND AREA 330,967 sq. kmCOASTLINE3,260 km5 MUNICIPALITIES & 58 PROVINCES North: Hanoi the capital Centre: Da Nang City South: Ho Chi Minh City the largest cityCLIMATE AND WEATHERThe climate varies from North to South with three distinctive climate zones: tropical in the South (rainy season from April to September; dry season from October to March); monsoonal with hot and rainy season in the Centre and North (May to September); cold and damp in the highlands and the North (October to March).

6 It is also blessed with plenty of sun throughout the AsiaThe country borders with China, Laos, Cambodia,Pacific Ocean and Gulf of ThailandVietnamese (official language)English (taught widely at school as a second language)Source: General Statistics Office (GSO), Economist Intelligence UnitPOLITICAL STRUCTUREV ietnam is a socialist country under the leadership of the Communist Party of Vietnam . The 14th National Assembly of Vietnam (term 2016-2021) has 489 Assembly, which is the highest-level representative body of Vietnamese people, has the power to exercise constitutional and legislative rights and to decide on critical issues of the country. Doing Business in Vietnam 2020. 8 Investing in Vietnam , Engaging the world9 MAIN EXPORT PARTNERS, 2018(share of total)RETAIL SALES GDP BY SECTOR, 20182018(billion USD) : GSOI ndustry &ConstructionAgriculture,Forestry andFisheryProduct tax (net)Services201820192018201920182018 Japan 18%South Korea 16%Germany 11%US 46%China 40% A COUNTRY PROFILE REGULATORY REFORM TO IMPROVE INVESTMENT CLIMATEVIETNAMESE GOVERNMENT S EFFORTS TO IMPROVE INVESTMENT CLIMATE20142015201620172018 The regulatory framework has been constantly revised to incorporate more favorable regulations for businesses to invest and operate in Vietnam .

7 Since the new Law on Investment and the new Law on Enterprises were passed in 2014, many other laws, decrees and circulars have been put in place to provide guidelines for better market Law No. 67/2014/QH13 on Investment- Law No. 68/2014/QH13 on Enterprises- Decree No. 46/2014/ND-CP provides regulations on collection of land rent and water surface rent- Circular No. 78/2014/TT-BTC guides the implementation of the Law on CIT- Circular No. 103/2014/TT-BTC provides guidelines for fulfillment of tax liability of foreign entities Doing Business in Vietnam or earning income in Vietnam - Decree No. 118/2015/ND-CP provides guidelines for some articles of the Law on Investment- Decree No. 96/2015/ND-CP provides guidelines for some articles of the Law on Enterprises- Decree No. 15/2015/ND-CP on investment in the form of public-private partnership- Circular No.

8 38/2015/TT-BTC on customs procedures, customs supervision and inspection, export tax, import tax, and tax administration- Law No. 107/2016/QH13 on Export and Import Duties- Decree No. 134/2016/ND-CP provides guidelines for the Law on Export and Import Duties- Circular No. 83/2016/TT-BTC guides the implementation of investment incentive programs- Circular No. 130/2016/TT-BTC on guidelines on some articles of the Law on Value Added Tax, and the Law on Special Sales Tax- Law No. 04/2017/QH14 about provision of assistance for small and medium-sized enterprises (coming into force from January 1st, 2018)- Decree on state investment credit- Decision No. 3610A/QD-BCT slashes 675 conditions on Business and investment under state management- Decree No. 119/2018/ND-CP on electronic invoices for sale of goods and provision of services- Decree No.

9 09/2018/ND-CP on trading activities of foreign investors- Decree No. 08/2018/ND-CP on Business conditions under State management of the Ministry of Industry and Trade- Circular No. 25/2018/TT-BTC on amendments of some articles of Circular 78/2014/TT-BTC and Circular 111/2013/TT-BTC2019- Resolution No. 50/NQ-TW on the direction of completing institutions and policies, improving the quality and efficiency of foreign investment cooperation by 2030- Resolution 23-NQ/TW on the national industry development strategy during 2018-2030 - Amended Law on Tax Administration No. 38/2019/QH14 (effective from 1 July 2020)- Decree No. 14/2019/ND-CP providing guidelines for the law on special sales tax- Decree No. 05/2019/ND-CP provides a legal framework for the establishment and implementation of Internal Audit- Circular No. 48/2019/TT-BTC on the making and settlement of provisions for devaluation of inventory, losses of financial investments, bad debts and warranty at enterprises- Draft amended Laws on Investment/Enterprises/SecuritiesDoing Business in Vietnam 2020.

10 10 Investing in Vietnam , Engaging the world11 RESTRUCTURING AND EQUITISING STATE-OWNED ENTERPRISESThe Vietnamese Government upholds its commitments to economic reform. The equitisation of state-owned enterprises (SOEs) in recent years is an example economy forward. The 2016-2020 roadmap for the equitisation of SOEs has been outlined in Decision No. 58/2016/QD-TTg. 2011201220132014201520162017201814267317 5220554523 NUMBER OF EQUITISEDSOES DURING 2011-2018 Source: Vietnam Government Report on the equitisation of SOEs (2011-2018)TRADE ANDINVESTMENT1213 According to the Foreign InvestmentAgency under the Ministry of Planningand Investment, the total newlyregistered, adjusted capital, capitalcontributed and shares purchased byforeign investors reached billion USD,increase as compare to the sameperiod in 2018. The realized capital offoreign direct investment projects wasestimated at billion USD, up compared to the same period in FDI disbursement throughout theyears implies the improvement ininvestors confidence in the economicoutlook and their commitment toestablish long-term investments is one of the only few countries in the region that allows 100% foreign ownership for most sectors.