Decree 118/2015/ND-CP Guiding the Investment Law 2014

Decree 118/2015/ND-CP was issued on November 12th 2015 by the Government. It takes effect from December 27th2015 clearly regulates some regulations of the Law on Investment on the application, control, publish investment business condition; measures to ensuring investment, investment incentives, investment procedures, operational implementation of investment projects and state management of investment projects.

Regarding investment conditions in Vietnam:

– In terms of the business investment sectors, investors may invest in conditional business lines when they meet the conditions of license, practicing certificate, certified professional liability insurance or other forms of required documents under the provisions of the covered agreements that Vietnam has signed or specific regulations of the law of Vietnam.

– In addition, investors also have to meet other conditions such as charter capital (for a certain number of business lines); forms of investment; scope of investment activities; Vietnam partners to join the investment execution.

– The form of investment for foreign investor:

+ Establish economic organization.

+ Capital contribution or share purchase.

+ Business cooperation contract.

+ Receive transfer of investment project.

– Foreign investors when investing in Vietnam in addition to meeting conditions like investor Vietnam, they will have to meet other specific conditions. Particularly for investors that have both Vietnam and foreign citizenships, they will be able to choose to apply the conditions for foreign investor or Vietnam investor.

On the issue of investment incentives, investors will receive incentives from the State in the following cases:

– Projects under the business lines of investment incentives.

– Investing in areas with difficult economic conditions.

– Project with capital from 6000 billion VND and will be disbursed within a period of 3 years.

– Investing in projects in rural areas and use more than 500 employees.

– Investment project in the fields of science and technology.

– For investment projects in Section 3 and 4 above will be entitled to preferential investment projects in areas with difficult economic conditions. The cases that projects simultaneously under both Section 1 and 2 above shall also enjoy incentives according to investment project in areas with difficult economic conditions.

Distinguishes 3 types of projects:

– The investment project that is not subject to the investment policy decision.

– The investment project under the jurisdiction on investment policy decision of the provincial People’s Committee.

– The project that is not subject to the granting of investment certificate.

In particular, for the project’s land that is granted, lease or allow the transfer of land use purposes by the State, it is necessary to deposit to ensure the investment. The deposit rate will be 3%, 2% or 1% depending on the scale of capital is 300 billion VND or above. Depends on the enjoyed incentives that the amount of deposit will be reduced according to different rate (the typical reduction rate is 25% or 50%).

Regarding the transfer of investment project:

Investor is allowed to transfer part or the whole of their investment project to other investor under the provisions of the law on investment (paragraph 1, article 45). In case when the transfer of projects generates income, investors must comply with the relevant tax obligations.

In addition, the Decree 118/2015 also provides details about:

– The procedures for the adjustment of investment projects in the case of division, separation, merger and transformation of economic organization (Article 38);

– The procedures for the termination of investment projects (Articles 41, 42);

– The investment procedures in the form of capital contribution, share purchase and capital contribution of foreign investors.

Decree 118/2015/ND-CP takes effect from December 27th 2015.

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