04 Notes Foreign Investors Need To Know Before Investing In Vietnam

If you want to do business in Vietnam as a foreign investor, there are a few important points that foreign investors should be aware of. TPM has selected the top four points for you. Here are some key notes with highlighting information that will be useful for you before investing in Vietnam

 

  • NATIONALITY
  • INVESTMENT CONDITIONS FOR FOREIGN INVESTORS
  • INVESTMENT INCENTIVES
  • FORMS OF INVESTMENT
1. NATIONALITY
 

Ever wondered if non-WTO member countries can invest in Vietnam? The answer is affirmative. Vietnam’s investment landscape is accessible to all global investors, regardless of their WTO membership. Since joining the World Trade Organization (WTO) in 2007, Vietnam has progressively lowered entry barriers across numerous industries as part of its nearly 15-year journey of international economic integration. Vietnam welcomes and encourages investment from nations worldwide, regardless of WTO membership status. However, foreign investors from non-WTO member countries must still adhere to Vietnam’s specific investment regulations and procedures, which may include restrictions or special conditions on certain industries and legal procedures. 

However, The investor’s nationality is an important factor to consider when investing in Vietnam. The Vietnamese government has regulations and incentives for investors based on their nationality, distinguishing between domestic and foreign investors. 

2. INVESTMENT CONDITIONS FOR FOREIGN INVESTORS

Vietnam has specific regulations and restrictions for foreign investors, which may vary depending on the investor’s country of origin and the sectors they wish to invest in. Some industries may have limitations on foreign ownership percentages or require special approvals for investment. 

Market Access: Market access conditions for foreign investors are the same as those for domestic investors under the Law on Investment 2020, except when business investment lines are on the List of Restricted Industries and Trade (Appendix I of Decree 31/2021/ND-CP). That is, Foreign investors are permitted to invest in Vietnam by establishing a commercial presence, as long as it is not in an industry or occupation with restricted market access for foreign investors which includes:

  • Prohibited business lines (comprised of twenty-five lines)
  • Restricted business lines (comprised of fifty-eight lines)

3. INVESTMENT INCENTIVES

Vietnam provides investment incentives to foreign investors, such as tax breaks, customs duty exemptions, investment grants, and streamlined administrative procedures. These incentives may differ depending on the industry, location, and project characteristics. 

Forms of investment incentives:

  •  Corporate income tax incentives, including application of a lower rate of corporate income tax for a certain period of time or throughout the investment project execution; exemption from and reduction of tax and other incentives prescribed by the Law on Corporate Income Tax.
  • Exemption from import tax on goods imported to form fixed assets; raw materials, supplies and components for manufacturing purposes in accordance with regulations of law on import and export tax;
  • Exemption from and reduction of land levy and land rents;
  • Accelerated depreciation, increasing the deductible expenses upon calculation of taxable income.

4. FORMS OF INVESTMENT

According to the Investment Law 2020, there are 5 main forms of investment:

  • Investing in establishing economic organizations.
  • Invest capital, buy shares, buy capital contributions.
  • Implement investment projects.
  • Investment in the form of a BCC contract.
  • New forms of investment and types of economic organizations according to Government regulations.

To ensure smooth business operations in Vietnam, investors need to seek advice from experienced professionals in this field. TPM is a reputable investment consulting company with a team of highly experienced experts knowledgeable about Vietnamese laws and regulations, ready to support investors in the process of establishment and business activities in Vietnam.

Legal basis:

  • Investment Law 2020
  • Decree No. 31/2021/ND-CP guiding the Investment Law 2020
Case Study
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