Decree No. 22/1999/NĐ-CP on foreign investment by Vietnamese enterprises

DECREE

Provisions on foreign investment by Vietnamese enterprises

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THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;
To create conditions for Vietnamese enterprises to invest abroad, contributing to expanding and enhancing the effectiveness of economic, technical, and commercial cooperation with foreign countries;

At the proposal of the Minister of Planning and Investment,

DECREE:

Article 1.

1. Foreign investment by Vietnamese enterprises refers to the act of Vietnamese enterprises transferring capital in the form of money or other assets abroad for direct investment abroad in accordance with the provisions of this Decree;

2. This Decree does not regulate foreign investment by Vietnamese enterprises in the forms of credit lending, purchasing shares; foreign investment in the banking and insurance sectors.

Article 2.

1. Vietnamese enterprises eligible for foreign investment include:

a) Enterprises established under the Enterprise Law;

b) Cooperatives established under the Cooperative Law;

c) Enterprises established under the Law on Joint Stock Companies;

d) Enterprises established under the Law on Private Enterprises.

(Enterprises mentioned in this Clause shall hereinafter be referred to as Vietnamese Enterprises).

2. Foreign investment by enterprises with foreign invested capital and parties participating in joint business contracts shall be regulated separately by the Government.

Article 3. Vietnamese enterprises investing abroad must meet the following conditions:

1. The overseas investment project must be feasible;

2. Possess financial capacity to meet the requirements of foreign investment;

3. Fulfill all financial obligations to the State.

Article 4. Vietnamese enterprises may invest abroad using:

1. Machinery, equipment, spare parts; materials, raw materials, fuel;

2. Value of industrial property rights; technical know-how, technological processes, technical services;

3. Foreign currency;

4. Other property rights except those property rights that are not permitted to be transferred abroad according to the provisions of the law.

Article 5.

The transfer of foreign investment capital abroad in the form of money and assets specified in Article 4 of this Decree must comply with current regulations on foreign exchange management, export and technology transfer regulations;

2. The exemption from export tax for the assets invested abroad by enterprises mentioned in Point 1 of Article 4 of this Decree shall be implemented in accordance with the provisions of the law on export tax and import tax.

The Ministry of Trade confirms the list of goods exempted from tax; the General Department of Customs bases on the confirmation document of the list to exempt export tax.

Article 6.

1. Vietnamese enterprises investing abroad must comply with the provisions on applying for permission to invest abroad stipulated in Articles 7, 8, 9, and 10 of this Decree including:

a) State-owned enterprises;

b) Enterprises belonging to other economic sectors but have foreign investment capital valued at US$1,000,000 or more.

2. For cases of investment not covered by Clause 1 of this Article, enterprises only need to register with the Ministry of Planning and Investment according to the prescribed form.

Article 7. Documents for foreign investment submitted to the Ministry of Planning and Investment include:

1. Application for foreign investment;

2. Copy of the Decision establishing the enterprise;

3. Permit for investment issued by the competent authority of the receiving country or contract, agreement with the foreign party regarding the investment project;

4. Explanation of the project's objectives, sources of the enterprise's investment funds; investment form, method of transferring capital, method of repatriating profits;

5. Financial status of the enterprise;

6. Approval for foreign investment issued by the agency deciding to establish the enterprise (if it is a state-owned enterprise).

Article 8. After receiving the project documents, the Ministry of Planning and Investment will organize the review of the project on the following main contents:

1. Financial capacity of Vietnamese enterprises investing abroad;

2. Project efficiency (tax payments, market expansion potential).

Article 9. The authority to decide on foreign investment is as follows:

1. The Prime Minister decides on projects of enterprises established by the Prime Minister or state-owned enterprises with investment capital valued at US$1,000,000 or more;

2. The Minister of Planning and Investment decides on the remaining projects.

Article 10. The review of foreign investment projects is as follows:

1. Vietnamese enterprises investing abroad prepare the documents stipulated in Article 7 of this Decree in eight copies (including one original copy) and submit them to the Ministry of Planning and Investment;

2. Within five days from the date of receipt of valid documents, the Ministry of Planning and Investment sends the project documents to relevant ministries and provincial/municipal people's committees for comments;

3. Within ten days from the date of receipt of documents, the aforementioned agencies send their comments in writing to the Ministry of Planning and Investment on issues within their jurisdiction;

4. For projects within the Prime Minister's decision-making authority, no later than fifteen days from the date of receipt of the project documents, the Ministry of Planning and Investment submits the project documents along with the review opinions and comments of relevant ministries, sectors, and provincial/municipal people's committees to the Prime Minister for consideration and decision. Within seven days from the date of receipt of the Prime Minister's Decision, the Ministry of Planning and Investment notifies the decision to the enterprise;

5. For the remaining projects, after receiving written comments from relevant ministries, sectors, and provincial/municipal people's committees, the Ministry of Planning and Investment notifies the decision to the enterprise. In case of differing opinions, the Ministry of Planning and Investment submits the matter to the Prime Minister for consideration and decision;

6. If the application for investment is approved, the Ministry of Planning and Investment issues an Investment License to the enterprise and sends a copy to relevant ministries, sectors, and provincial/municipal people's committees;

If the application for investment is not approved, the Ministry of Planning and Investment informs the enterprise of its decision and specifies the reasons.

7. The time limit for reviewing and issuing an Investment License for foreign investment does not exceed thirty days from the date of receipt of valid documents.

Article 11. Enterprises are only allowed to proceed with procedures related to transferring money and assets for investment abroad to implement the project after obtaining the Investment License from the Ministry of Planning and Investment and having the project approved by the competent authority of the receiving country.

Article 12. To implement overseas investment projects, the Enterprise must open an account at a bank permitted to operate in Vietnam. All transactions involving transfers of funds abroad and into Vietnam related to the Enterprise's activities must be conducted through this account.

Article 13. The profits and other income of Vietnamese Enterprises operating abroad must be repatriated within the latest period of six months from the end of the fiscal year of the host country. In cases exceeding the aforementioned time limit, the reasons for delay must be clearly stated to the State Bank of Vietnam.

Article 14. If a Vietnamese Enterprise uses profits for reinvestment abroad, such action must be approved by the Ministry of Planning and Investment and registered with the State Bank of Vietnam.

Article 15. Upon completion of the overseas investment project either on schedule or ahead of schedule, the Enterprise must complete liquidation procedures and repatriate all proceeds from the liquidation within the latest period of six months from the date of completion of the liquidation process.

Article 16. Vietnamese Enterprises engaged in overseas investments must fulfill their financial obligations and tax liabilities to the State in accordance with current laws.

If the investment is carried out in a country that has signed a Double Taxation Avoidance Agreement with Vietnam, the Enterprise’s tax obligations shall be implemented according to the provisions of the Agreement.

Article 17. Annually, within six months following the end of the fiscal year of the host country, the Enterprise must report on its operational status and audited financial statements certified by auditing authorities or authorized bodies of the host country to the Ministry of Planning and Investment, the Ministry of Finance, the State Bank of Vietnam, and the authority issuing the establishment decision for the Enterprise.

Article 18. Within their respective functions, state management agencies responsible for managing Enterprises with state-owned assets investing abroad shall oversee and supervise the Enterprises during negotiations, signing, and implementation of activities to ensure the preservation and development of capital.

Article 19. Enterprises and individuals violating the provisions set forth in Articles 11, 12, 13, 14, 15, 16, and 17 of this Decree shall be subject to disciplinary, administrative, or criminal liability depending on the nature and severity of the violation; if damage is caused, compensation must be provided in accordance with the law.

Article 20. This Decree takes effect fifteen days from the date of signature.

Enterprises that have been granted Overseas Investment Licenses prior to the effective date of this Decree may continue operations under the terms of their Licenses and must comply with the provisions of this Decree.

The Ministry of Planning and Investment shall provide guidance for the implementation of this Decree.

Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial and centrally-administered city People's Committees, within the scope of their functions and responsibilities, are responsible for implementing this Decree.