Vietnam shifted to a market-oriented economy after its Doi Moi policy in the late 1980s and is now known as one of the fastest-growing economies in Asia. Foreign direct investment (FDI) now forms the basis of Vietnam's economy. Since 2013, record-high levels of FDI have been pouring into Vietnam as investors consistently find the country to be a vibrant and attractive destination for business operations. The country's investment potential is regularly touted as one of the top opportunities in the region.

Major industries that contribute to national growth are food processing, garments, textiles, construction, mining, oil and gas, and services and tourism.

The population of Vietnam is currently around 97 million. The majority of the population is of Kinh (Vietnamese) ethnic descent and the government recognises 54 ethnic groups in total.

The official language in Vietnam is Vietnamese. All laws, decrees, rules, regulations and decisions are published in Vietnamese. There are unofficial translations of the legislation published on the Official Gazette and other websites, which are for reference only.

For most jobs, employees work approximately eight hours per day for five days a week. There are now 11 public holidays in the Vietnamese calendar, the most important one is the Lunar New Year, which lasts five days.

The EU-Vietnam Free Trade Agreement (EVFTA) came into effect on 1 August 2020 after nine years of negotiations. The EVFTA is described as the most ambitious trade agreement the EU has ever concluded with a developing country, eliminating 99% of custom duties.

Despite the worldwide catastrophic effect of the 2019 novel coronavirus disease (COVID-19), Vietnam's GDP growth in 2020 remained positive at approximately 2.91%. GDP in the first quarter of 2021 was estimated to increase by 4.48% over the same period last year, which demonstrates the country's adaptability. The trend of economic recovery is increasing.

The Vietnamese Communist Party held its 13th Party Congress in January 2021, following meetings held earlier in each of Vietnam's 63 provinces to select the delegates. The party elected its personnel for the next term after the eight-day congress. Notably, Party General Secretary Nguyen Phu Trong was re-elected for a third five-year term, which was unprecedented for the party.

The three key leadership posts were also appointed, including the President, Prime Minister and Chair of the National Assembly.

On 17 June 2020, the National Assembly of Vietnam passed the Law on Investment 2020 (LOI) and Law on Enterprises 2020 (LOE). The new laws took effect on 1 January 2021, replacing their predecessors from 2014. These are two of the main sources of corporate law in Vietnam, applicable to both domestic and foreign companies.

One of the most notable additions in the 2020 LOI is the introduction of investment policies relating to national defence and security. Accordingly, any business investment activity will be suspended, stopped, or terminated if that activity causes or threatens harm to Vietnam's national defence or security. In addition, a new pre-approval requirement will apply for M&A transactions involving local entities with the right to use land plots located on islands, border or coastal areas, or other areas affecting national defence and security.

Among the changes of the 2020 LOE are changes regarding the organisational structure of limited liability companies (LLCs). Under the new provisions, multiple-member LLCs (other than state-owned enterprises) are no longer required to have a Board of Inspection to be in charge of supervising and ensuring the compliance of functional bodies of the company. Similarly, a single-member limited liability company owned by an organisation that is not a state-owned enterprise is not required to have an inspector.

Some changes will also affect shareholders of joint stock companies. Under the previous LOE, a shareholder or a group of shareholders in a joint stock company holding at least 10% of the total ordinary shares (or a smaller percentage if stipulated in the company's charter) had the right to request a general meeting of shareholders and to ask the Board of Inspection to investigate issues relating to the management and administration of the company. However, to protect minority shareholders, the updated LOE reduces this to 5%. The new law also abolishes the requirement on the duration of holding shares applicable to minority shareholders (or groups of shareholders) in exercising their rights, which was six consecutive months under the 2014 LOE.

Vietnam is primarily a civil law country and possesses a unitary system.

The Vietnamese legal system was initially modelled on the French and Soviet systems until the late 1980s, when Vietnam adopted its Doi Moi policy. This transformed Vietnam's economy from a centrally planned economy to a market-oriented economy. Following Doi Moi, many areas of law have been shifted from socialist-based models to those typically found in a western legal system.

The Law on Organisation of the People's Court of 2014 (which took effect on 1 June 2015) recognised court precedents as a source of law. As of April 2021, the Supreme Court of Vietnam had issued 43 court precedents on commercial, civil and criminal matters for the lower courts to consider and apply.

Foreign investors must register foreign investments. The provincial Department of Planning and Investment or the board of management of the relevant industrial zone or park with jurisdiction over the location of the project has the power to approve foreign investment projects. However, larger scale projects and projects in certain sectors also require a "decision on in-principle investment" approval from higher-level government bodies, such as the National Assembly, the Prime Minister, or the provincial People's Committee, prior to submission to the local investment authorities.

Where applicable, foreign investors may also have to satisfy investment conditions or restrictions. Examples of common investment conditions and restrictions include:

The restrictions for foreign investors investing via the acquisition of shares are applied similarly to those for investment via setting up a subsidiary. As such, foreign investors need to satisfy the conditions on limitation of ownership, scope of investment, conditions on the qualification of Vietnamese partners and other conditions or requirements relating to specific business sectors.

Vietnam acceded to the World Trade Organisation (WTO) in 2007 and, as part of its accession, made a number of commitments to various service sectors through the Schedule on Specific Commitments in Services. If a foreign investment involves the business activities specified under these WTO commitments, the investment conditions and restrictions set out there will apply in addition to relevant local legislation (which is normally in line with Vietnam's WTO commitments). If a foreign investment involves business activities not specified under Vietnam's WTO commitments, only domestic law will apply. If domestic law is silent, the foreign investment may still be approved on a case-by-case basis.

The Law on Investment of 2020 and its guiding regulations provide for specific business activities for which investment by foreign investors is not yet allowed and conditional, respectively.

Generally, there are no restrictions on doing business with certain countries or jurisdictions. However, Vietnam is not obliged to open its market entry to investors from non-WTO member countries, such as the Cayman Islands and the British Virgin Islands. Approval of foreign investment into Vietnam by such investors is granted on a case-by-case basis.

The government heavily regulates transactions in relation to foreign currencies (mostly US Dollars). The primary legislation governing foreign exchange is the Ordinance on Foreign Exchange Control of 2005 (as amended in 2013). The Vietnamese Government and the State Bank have issued many guiding decrees and circulars based on this legislation.

Generally, rules on foreign currency inflow are much more relaxed than those on outflow. Foreign investors bringing capital to the country are welcome. The investor or entity of the project is required to make a deposit to the account of the licensing authority for the purpose of guaranteeing the implementation of certain projects, such as those that use land via allocation or lease from the state.

However, if a Vietnamese investor wishes to invest offshore, the investor must notify and/or obtain the approval of the State Bank of Vietnam for transactions relating to the investor's offshore investment (for example, remittance of the capital amount, and repatriation of the profits). The sale of, or loans in, foreign currencies by a bank in Vietnam are limited to certain transactions, mostly for export-driven purposes. However, in most instances, when a foreign investor has fully paid its tax obligations and other financial obligations with the Vietnamese state, it can repatriate its proceeds back home.

A person leaving or entering Vietnam cannot carry more than USD5,000 in cash, unless the excessive amount is declared with the relevant Vietnamese customs office. Any violation may subject the violator to a fine, confiscation or even a criminal punishment.

The concept of "beneficial ownership" does not exist under Vietnamese laws. The institutional documents of a company (mainly, its enterprise registration certificate and charter) record the legal owner of the company and do not necessarily need to record the beneficial owner.

Under Vietnam's investment laws, investment grants or support are provided in the following forms:

Under Vietnam's investment laws, incentives are available for projects in certain geographic areas and industries, high-tech and scientific/technological enterprises or organisations and start-up enterprises. Additionally, incentives are available for projects where the investment amount is VND6,000 billion or more, of which at least VND6,000 billion will be disbursed within a period of three years or less from the date of investment approval, and for projects located in rural areas and employing 500 employees or more.

The investment incentives can take various forms, the most common of which are:

Generally, there are no grants and incentives that are available only to foreign investors. Foreign investors who wish to have their projects given the grants and incentives need to prove their eligibility, the same as local investors.

The main business vehicles in Vietnam are as follows:

A single-member LLC has a single owner. It does not have shares, it has "charter capital" which is the value of currency or other assets denominated in Vietnamese Dong. A single-member LLC is considered a separate legal entity from the owner. The owner's liability for the single-member LLC's debt is limited to its committed capital contribution amount. A single-member LLC cannot issue shares except for equitisation but can issue corporate bonds. This business vehicle will be applicable for business sectors that contain no limitations on foreign ownership.

For a business venture that is subject to foreign ownership or participation restrictions or where there will be more than one owner of the Vietnamese company, establishing an MLLC or an SC is an option. An MLLC cannot have more than 50 members. An MLLC cannot issue shares except for equitisation but can issue corporate bonds. Similar to the single-member LLC, members have charter capital in the MLLC instead of shares and the liability of the members is limited to each member's committed capital contribution amount.

An SC, also known as a joint stock company, is a Vietnamese corporation in which the charter capital is divided into equal portions called shares. Shareholders can be organisations or individuals, with a minimum of three shareholders and no restriction on the maximum number of shareholders. A shareholder is liable for the debts and other property obligations of the SC only within the amount of capital it has contributed to the SC. With a few exceptions, shareholders can freely assign their shares. A SC can issue corporate bonds and can be listed on Vietnamese stock exchanges.

For investors that do not wish to establish a legal entity to run their own project in Vietnam, other permissible forms of investment include investing by way of a contractual arrangement (for example, a public-private partnership, or business co-operation contract) or by contributing capital or purchasing shares or capital contribution of an existing economic organisation in Vietnam.

In respect of Vietnamese corporate laws, there is no notable difference in the treatment between companies with FDI and domestically invested companies. Similar to a company with only domestic investment, an FDI company may take the form of a single-member LLC, an MLLC or a SC. The most common form chosen by foreign investors is single-member LLC, which requires only one member/shareholder to set up, with relatively simple incorporation documentation.

To establish a single-member LLC, a MLLC or a non-publicly listed SC for the purposes of an initial foreign investment into Vietnam, foreign investors must go through at least the following two stages:

The provincial Department of Planning and Investment or the board of management of the relevant industrial zone or park with jurisdiction over the location of the investment project has the power to approve the IRCs and ERCs. However, larger scale projects and certain types of projects require a "decision on investment planning" approval (DIP) from higher level government bodies prior to submission of the IRC and ERC to the local investment authorities (see Question 4). In addition, approval of the foreign investment from a number of other government bodies may be required, depending on the nature and scale of the foreign investment.

The National Business Registration Portal (NBRP) at https://dangkykinhdoanh.gov.vn/Default.aspx?tabid=101&language=en-GB acts as an official database on business registration, which records all registered information of the enterprises established and operating in Vietnam.

Disclosure of Business Registration Contents. Within 30 days of the establishment or amendment of business registration contents, enterprises must post their business registration information online on the National Business Registration Portal (NBRP). The current cost for publicising this information on the NBRP is VND100,000.

With the exception of certain sectors (such as banking, finance, insurance and real estate) and arrangements in the form of public-private partnerships (PPP), Vietnamese corporations are not required to have a minimum amount of charter or share capital. However, from a foreign investment approval perspective, the charter capital should be sufficient to persuade the licensing authorities of the feasibility of the project as envisioned by the investor's feasibility report submitted for foreign investment approval.

The time limit for capital contribution is 90 days from the date of the issuance of the ERC.

Capital contribution into a business by investors can include non-cash assets (such as gold, land use rights, intellectual property rights, technology, technical know-how, or other assets). Non-cash assets contributed as capital must be lawfully owned by the investors and must be valued and denominated in Vietnamese Dong.

Restrictions on Rights Attaching to Shares. Equity holders in Vietnamese companies cannot withdraw their contributed capital in the company by reducing the company's charter capital during the first two years after establishment. However, the contributed capital can be withdrawn entirely by the company's dissolution or in other statutory conditions.

Additionally, the members of an MLLC are restricted from assigning or selling their contributed capital to other parties who are not members of the company, unless they first offer to sell the capital to all other members, in proportion to their respective shares of capital contribution in the company on equal terms and conditions.

For SCs, during the first three years of company establishment, the founding shareholders are restricted from selling their ordinary shares that were subscribed at the time of the company's establishment to other parties who are not founding shareholders of the company, unless the sale is approved by the company's general meeting of shareholders. In the general meeting of the shareholders, the shareholders may also decide to issue preference shares with special rights and certain restrictions attaching to each type of share. Any restriction on the share assignment must be clearly stated in the share certificate and the company's charter.

Automatic Rights Attaching to Shares. In addition to the rights of first refusal for members of MLLCs, the member/shareholder will also have the following key rights:

Single-Member LLC. A single-member LLC can have a board of directors (called a members' council) or it can choose to have what is essentially a one-person board, in which case that person would be designated as the chairman of the company. If the single-member LLC has a board, one of the board members should be designated as the chairman of members' council.

A general director of a single-member LLC who manages the day-to-day business operations of the company, has executive powers similar to that of the chief executive officer or president in other jurisdictions. Single-member LLC's must also appoint a legal representative whose duties include:

MLLC. The management structure and key positions of the MLLC are very similar to those of a single-member LLC, except that it must have a board of members in which every member is represented. An MLLC may also have an inspection committee at the consideration of the members.

SC. An SC, also known as a joint stock company, typically has the following organisational structure:

The inspection committee acts as an independent auditor and watchdog organisation for the SC. Its members must not be managers or close relatives of managers of the SC and are not required to be shareholders or employees of the SC, unless the charter states otherwise. The inspection committee must have three to five members and more than half must reside in Vietnam. Its chair must be a professional accountant or auditor or have an undergraduate degree in economics, finance, law, business administration or other majors related to the business of the SC. If the SC has only one legal representative, this legal representative must be either the chairman of the board of management or the director/general director of the company. (If the charter does not state otherwise, the chairman of the board of management will fill this role by default.) If the SC has more than one legal representative, both the chairman of the board of management and the director/general director will automatically be legal representatives of the company.

An SC must have a shareholders' meeting at least once a year. The quorum for a shareholders' meeting is over 50% of the total voting shares. An affirmative vote of over 50% of the voting shares present is required to pass a resolution. Resolutions on issues such as classes of shares, the number of new shares to be offered, amendments to the charter, reorganisation or dissolution of the SC and sale of at least 35% of the assets of the SC require 65% of the voting shares present. These are the minimum voting thresholds mandated by law. The shareholders can agree to set higher voting thresholds via the company charter.

There are generally no restrictions on foreign managers. Vietnam enacted new rules on the use of expatriate labour in 2016. Instead of requiring minimum thresholds, the new rules allow local Vietnamese authorities extremely wide discretion as to whether to allow or reject foreign workers. The desired use of foreign employees must be first set out in a request, together with an annual demand report on the use of foreign employees and submitted to the chairman of the local authority by the foreign contractor. There is no mandatory local hire requirement or percentage of local hire required. After submitting the plan, the chairman of the local authority may recommend local agencies and organisations to introduce and supply Vietnamese workers to the foreign contractor. Within a maximum of two months from the submission date of that plan, if Vietnamese workers are not introduced or do not satisfy the demands of the foreign contractor, the chairman of the local authority will, subject to his or her discretion, allow the recruitment of foreign employees to hold certain positions, where Vietnamese recruits are not competent or otherwise deficient.

Related party transactions entered into without proper corporate formality and approval, causing loss and damage to the company, are considered void. In addition, the legal representative, if he/she is the signatory of the contract, and all other signatories and parties to the contract must be jointly responsible for any loss arising, and must return to the company any benefits gained from the performance of the contract or transaction.

The general director is responsible before the law and to the board of the company for the implementation of his or her rights and duties. Such duties include:

A board member of a Vietnamese company is also liable if he or she is a signatory to a related party transaction that was not properly approved and causes harm. In addition, a board member is responsible "before the law" and to the owners of the company for the implementation of their rights and duties. Such duties are the same as those for a general director (see above).

In addition, the legal representative is personally liable to the company for any loss or damage to the enterprise due to a breach of any of his/her duties.

Generally, there is no difference between local and foreign investors in respect of parent company liability. The parent company will be liable for the financial obligations of any subsidiaries to the extent of its capital contribution amount, as registered with the licensing authorities of Vietnam and as stated in each subsidiary's charter.

The main legislation on environmental protection is Law No. 55/2014/QH13 on Environment Protection passed by the National Assembly on 23 June 2014 and its implementing regulations.

Generally, a manufacturing company is imposed with more requirements related to environment protection than a service or trading company. Certain projects, mostly depending on the scope, size and nature of the business activities, are required to formulate and submit an environmental impact assessment report (EIAR) for approval. The EIAR is submitted to the Ministry of Natural Resources and Environment or the provincial People's Committee where the project is located for assessment and approval. The approved EIAR is one of the key bases for the authorities to monitor the company's compliance with the laws and regulations on environmental protection.

Manufacturing, trading and service enterprises are usually required to prepare and register a so-called Plan on Environmental Protection with the local environment management authority.

The main law regulating employment relationships in Vietnam is the 2019 Labour Code and its guiding decrees and circulars, which just went into effect on 1 January 2021. The Labour Code explicitly states that it applies to foreign nationals working in Vietnam, and the general rule is that foreign nationals working in Vietnam must comply with the Vietnamese labour laws, unless an international treaty to which Vietnam is a member provides otherwise. If an employment contract is signed with a Vietnam-based entity, the law of Vietnam must apply, regardless of the choice of law by the parties. For foreign nationals, there is also a set of implementing regulations, Decree 152/2020/ND-CP, which mainly provides guidance on matters related to work permits for foreign workers in Vietnam.

However, the Vietnam labour legislation does not apply to foreign nationals who are working in Vietnam through an internal company transfer under a foreign employment contract. That is, the legislation does not apply to cases where a foreign parent company temporarily assigns its employee to work at its Vietnam-based subsidiary or representative office (and the labour contract is signed with the parent company).

Vietnamese nationals working abroad must comply with the laws of Vietnam (and the laws of the foreign country), unless an international treaty to which Vietnam is a member provides otherwise.

Vietnamese contract law generally allows the parties to choose the law of the contract, subject to some exceptions, one of which relates to labour contracts. Foreign law may apply to a labour contract unless it adversely affects the minimum interests of the employees compared to Vietnamese law. In this case, Vietnamese law must apply instead.

While the meaning of this phrase is not exactly clear, it appears to state that foreign law may apply if it is at least as favorable to the employee as Vietnamese law. Nevertheless, in practice, most employers choose Vietnamese law to govern the labour contract due to the uncertainty of the application of the aforementioned exception.

Employment contracts must be made in writing, with the exception of contracts for temporary work of less than one month, in which case an oral employment contract can be used. An employment contract must contain the following main provisions:

The concept of implied terms in an employment contract is not recognised under Vietnamese labour laws. However, statutory rights and benefits will apply to an employment relationship even if the statutory rights and benefits have been left out of the employment contract or the employment contract contradicts such statutory rights and benefits.

Employers are obliged to implement and comply with a collective labour agreement (CLA). A CLA is binding on the employer when it has been signed by the employer and the representative of the collective labour agreement following a collective bargaining session.

Vietnam's labour laws now provide for sectoral and multi-enterprise collective bargaining. These types of collective bargaining may be carried out through a collective bargaining council, which would be established by the People's Committee in the relevant province. At the time of writing, the country is still awaiting a decree guiding this process to be released by the government.

Foreign nationals must have a work permit in order to work in Vietnam, except for those that qualify for an exemption under law. In addition, a visa/temporary residence card is also required for foreign nationals entering Vietnam to work.

A work permit is applied for by the employer, on behalf of the foreign employee, by submitting an application file to the local labour authority at least 15 business days prior to the date the foreign employee is to commence his or her work in Vietnam. The labour authority must issue the work permit within five business days on receipt of a complete application file. The filing fee for a work permit will be decided by the provincial people's assembly. Currently, the filing fee for issuance of a new work permit in Hanoi is VND400,000, and in Ho Chi Minh City is VND600,000.

In order to obtain a visa to work in Vietnam, there must be an invitation letter issued by a Vietnamese sponsor inviting the foreign employee to come to Vietnam to work. The sponsor must be a Vietnam-based entity and must submit the application file on behalf of the foreign employee to the Immigration Office of Vietnam. The maximum term of a visa to work in Vietnam is two years, and the term of the work visa must align with that of the work permit. The timeframe for obtaining a visa to work in Vietnam varies depending on the type of work visa applied for, and ranges from five to eight working days. The filing fee for a visa to work in Vietnam depends on the type and term of the visa and ranges from USD25 to USD145.

Foreign nationals who wish to work in Vietnam on a long-term basis may be eligible to apply for a temporary residence card instead of a work visa. Foreign nationals eligible to apply for a temporary residence card include those who have obtained a work permit to work for a Vietnamese enterprise or a representative office of a foreign company in Vietnam, among others. A temporary residence card is valid from at least one year up until the expiry date of the foreign national's work permit, work permit exemption certificate or practicing licence, and is issued by the authorised provincial office managing entry and exit under the Ministry of Public Security. The timeframe for obtaining a temporary residence card is five working days from the submission of a complete application file. The filing fee depends on the term of the temporary residence card and ranges from USD145 to USD155.

There is no legislation specifically mandating that employees are entitled to management representation (such as on the board of directors) although the law recognises employees' rights to participate in dialogue with management in accordance with the "democracy in the workplace" regulations of the employer.

Employees have the right to request and participate in discussions with the employer, to implement democratic regulations, and to be consulted in the workplace, in order to protect the employees' lawful rights and interests. However, there is no legislation requiring employees' consultation or consent for major transactions such as acquisitions, disposals or joint ventures. Employees are only entitled to be notified of the final decision of these major transactions.

However, employers are required under the law to consult the employee representative organisation for matters such as:

Previously, all trade unions in Vietnam had been under the Vietnam General Confederation of Labour (VGCL), an arm of the Communist Party. However, under the new Labour Code, independent employee representative organisations are now also recognised and may exist alongside VGCL trade unions within a company. The former Labour Code had also required employers to consult the trade union at a superior level if one had not been established within a company for major labour management steps. This obligation has been removed from the new Labour Code. However, in practice, the Department of Labour, Invalids and Social Affairs still requires employers to follow this step. Once the government releases a decree governing employee representative organisations and collective bargaining, there should be more clarity on this issue.

At-will termination by the employer is not permitted in Vietnam. The employer can only terminate a labour contract based on specific grounds as set out by law. Depending on the grounds for termination, the requirements for compensation, notice periods and procedures differ.

Dismissal is a disciplinary action imposed for a breach of "labour discipline" and is only permitted in a few limited cases, as set out in the labour laws of Vietnam, the employee's labour contract, or recorded in the employer's internal labour rules. Labour discipline is defined as the rules governing compliance with time, technology, and the management of business and production, as set out in the employer's internal labour rules. Dismissal involves the termination of the employment contract.

The time limit for dealing with a breach of labour discipline is a maximum of:

There are strict statutory procedures and sequences for conducting a dismissal procedure, which must include the following steps:

An employee who is dismissed due to a violation of labour discipline is not entitled to any kind of allowance.

If the employee is dismissed for misconduct which is not stated in the labour law, the employee's labour contract or the employer's internal labour regulations, the dismissal will be considered unlawful. In addition, if the employer fails to follow the procedural steps (see above) the dismissal will be unlawful. The consequences of wrongful dismissal are severe. If the dismissal is declared by the court as unlawful, the employer must re-employ the employee or pay significant damages as mandated by law.

Under the Penal Code 2015, which came into effect on 1 January 2018, an unlawful dismissal of an employee or even the use of threats to cause the resignation of an employee can lead to criminal liability.

Certain classes of employees are protected from dismissal. The law prohibits an employer from applying disciplinary action to employees in the following circumstances:

For the above classes of employees, except those suffering from a mental illness, the limitation period to apply disciplinary action will be suspended until they are no longer subject to the relevant circumstances providing the basis for their protection. In this case, the limitation period will be extended for 60 days after their protective circumstances end.

An employer can make employees redundant due to:

Vietnam recognises the concept of tax residency. An employee who is a resident of Vietnam (regardless of nationality) is taxed on his/her taxable income earned inside and outside the Vietnamese territory. An employee who is a non-resident is taxed on taxable income earned inside the Vietnamese territory.

An employee is regarded as a resident of Vietnam if he/she satisfies at least one of the following conditions:

An employee who does not satisfy the conditions set out above is regarded as a non-resident of Vietnam.

Tax. Taxable income associated with an employment relationship includes:

Tax resident employees are subject to personal income tax at progressive rates of 5% to 35%.

Employees must finalise and file (or authorise the employer to file) their tax finalisation return to the Vietnam tax authority within 90 days from the end of the tax year.

Social Security Contributions. Both employers and employees are required to contribute to social insurance, health insurance, and unemployment insurance funds. For Vietnamese employees, the employers' and employees' contributions are calculated as a percentage of the employee's salary and allowance as stated in an employment contract (base salary), as follows:

The employee's salary for calculation of social insurance, labour accident and occupational disease insurance, and health insurance is capped at 20 times the statutory national base salary. The employee's salary for calculation of unemployment insurance is capped at 20 times the statutory minimum regional salary. These minimum salaries are subject to change each year.

For foreign employees working in Vietnam under indefinite-term labour contracts or labour contracts with terms of at least one year with employers in Vietnam, the employer must contribute 3.5% of the employee's salary (including 3% to a sickness and maternity fund and 0.5% to cover labour accident and occupational disease insurance).

From 1 January 2022, employers must also contribute 14% of foreign employees' salaries to a retirement and death fund, while the foreign employees will have to pay a monthly premium of 8% of their income to the fund. The employer and the employee will also be required to pay 3% and 1.5% of the employee's salary, respectively, to health insurance.

Non-resident employees are subject to personal income tax at a flat rate of 20% and social security contributions at the same rate as tax resident employees (see above, Tax Resident Employees).

Employers must withhold income tax of employees at applicable rates for each employee (see above, Tax Resident Employees) and remit the tax to the Vietnamese tax authority on a monthly or quarterly basis by the 20th day of the following month (if on a monthly basis) or by the 30th day of the month following the reporting quarter (if on a quarterly basis).

Vietnam does not explicitly define "tax residence" for business vehicles. However, business vehicles will be regarded as having Vietnamese tax residence if incorporated in Vietnam. Tax resident businesses are subject to corporate income tax (CIT) and taxed on worldwide income.

A non-tax resident business is a business vehicle that is incorporated outside of Vietnam but has Vietnam-sourced income (for example, income derived from carrying out business in Vietnam or engaging in a transaction with a Vietnamese contracting party). Non-tax resident business is referred to as "foreign contractor" under Vietnamese tax laws.

Foreign contractors are subject to foreign contractor tax (FCT), which consists of CIT and VAT, and are taxed through a withholding mechanism. For foreign contractors eligible to pay FCT by the deduction method, the applicable CIT rate and VAT rate follow the general tax regulations. For the remaining foreign contractors who pay FCT via the direct method, FCT rates vary and are specified according to the nature of the service supplied. For the CIT component, the rate varies from 0.1% to 10%. For the VAT component, the rate can range from exempted to 5%.

Business vehicles established under the laws of Vietnam are subject to CIT and taxed on worldwide income. As of 1 January 2016, the standard corporate income tax rate is 20% (reduced from 25% to 22% in 2014 and to 20% presently). Preferential tax rates are available when certain criteria are met. Certain industries may have a higher tax rate applied (for example, oil and gas and other rare natural resources operations (ranging from 32% to 50%) and platinum, gold, silver, tin, wolfram, antimony, precious stones, and rare earth mining (ranging from 40% to 50%)).

VAT applies to the provision of goods and services used for the purposes of production, trading, and consumption in Vietnam. The standard rate of VAT is 10%. Reduced rates and exemptions are provided for certain categories.

SST is a form of excise tax that applies to the production or import of certain goods and the provision of certain services, such as cigarettes, liquor, and lotteries. SST rates range from 5% (electric motor vehicles for transport for 16 to 23 persons) to 150% (motor vehicles for the transport of fewer than nine persons with cylinder capacity exceeding 6,000 cubic centimetres).

Stamp duty applies on the required registration of ownership of certain assets, including buildings, land, transportation vehicles and guns. Stamp duty rates range from 0.5% to 15%.

BLT is imposed on economic organisations in accordance with the registered capital in the business registration licence or the investment licence, ranging from VND1 million to VND3 million per year. Payment of BLT is due on the registration of business for tax purposes and subsequently on an annual basis.

FCT is a system of withholding tax with wide application in Vietnam. It is applicable to foreign entities or individuals deriving income from carrying out business in Vietnam or engaging in a transaction with a Vietnamese contracting party, whether or not they have any legal entity in Vietnam.

All taxes are imposed at the national level. Generally, these tax filings are submitted to the provincial Tax Department where the company is located on a periodic basis (quarterly and/or yearly).

Dividends can only be issued after tax has been paid, as dividends form part of the company profits. Consequently, dividends can only be remitted once a year after a company's tax year has passed and an audited financial statement has been concluded. No withholding tax is imposed on corporate profits paid to foreign shareholders.

Dividends received from foreign companies may be subject to CIT (for Vietnamese corporate shareholders) or personal income tax (PIT) (for individuals), unless provisions under a tax treaty state otherwise.

A withholding tax of 5% applies to interest paid on loans from foreign entities.

Interest paid on bonds (except for tax-exempt bonds), bonuses accompanying interest on the deposits, interest paid on late payments, and certificates of deposit issued to foreign entities are subject to 5% FCT. Sales of bonds and certificates of deposits are subject to a deemed tax of 0.1% of the gross sales proceeds. However, the rates above may be reduced under a tax treaty.

IP royalties paid to foreign entities are subject to a withholding tax of 10%, unless the rate is reduced under a tax treaty.

Currently, there are no specific tax-driven thin capitalisation rules in Vietnam. However, according to Decree No. 132/2020/ND-CP of the Government dated 5 November 2020, the tax deductibility of interest on loans is capped at 30% of EBITDA (earnings before interest, taxes, depreciation and amortisation).

At the end of a fiscal year, a parent company must prepare the following:

A foreign subsidiary must repatriate all profit received and other income earned from the offshore investment within six months from the date of the tax finalisation or document of equivalent validity under the law of the country that receives the investment.

Vietnam's transfer pricing regulations are mainly governed by Decree 132/2020/ND-CP of the Government dated 5 November 2020, which provides a definition of related-party transactions, and guidelines on the calculation of arm's length prices in business transactions between affiliated parties.

There are various factors to determine whether parties are related parties, typically capital participation, control or management. The current regulations provide a wide ranging definition of related-party transactions, and the control threshold required to be a "related party" is 25% for a limited liability company or 10% for a joint stock company, which is lower than in many other countries. The definition also covers significant supplier, customer and funding relationships between otherwise unrelated parties.

If the Vietnamese tax authorities believe the transaction was not priced according to the arm's length principle, they will adjust the value of the transaction and tax accordingly.

Vietnam imposes a tax on almost every type of product that is imported into the country. Imports are subject to import tax, VAT (unless exempt under the VAT regulations) and, for certain goods, SST.

Import duty rates are classified into three categories, including common rates, preferential rates and special preferential rates. The rate applied depends on the country of origin of the product. Certain goods are exempt from import and export duties, including goods in transit and humanitarian aid.

As of January 2021, Vietnam had signed 80 double taxation agreements and there are a number of others at various stages of negotiation or which have not yet officially entered into force (for example, an agreement on avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was made between Vietnam and the US, which was signed on 7 July 2015).

On 12 June 2018, the National Assembly passed the new Competition Law No. 23/2018/QH14 (Competition Law 2018), which took effect on 1 July 2019 and replaced the Competition Law 2004. The Competition Law 2018 provides for anti-competitive practices, economic concentration that causes or may cause anti-competitive effects on the market of Vietnam, unfair competition practices, competition legal proceedings, sanctions against violations of competition and state management of competition.

Under the Competition Law 2018, the main competition authority in Vietnam is the National Competition Commission (NCC), which was formed by a merger of the existing Vietnam Competition Authority and the Vietnam Competition Council. The NCC will be an agency under the Ministry of Industry and Trade (MOIT). A Competition Investigation Agency has been established under the NCC to be in charge of monitoring and investigating breaches of competition law.

The Competition Law 2018 has a broader scope of application than the Competition Law 2004. It includes both Vietnamese and foreign enterprises and individuals who cause or may cause anti-competitive effects on the Vietnamese market. Anti-competitive effects are those which eliminate, reduce, distort or deter competition in the market. Even if the anti-competitive practices or economic concentration of foreign enterprises take place entirely abroad, if the parties participating in such activities operate in Vietnam through their subsidiaries in Vietnam or have their products or services sold or rendered in the Vietnamese market, the enterprises participating in those activities and the activities themselves may also be subject to the Competition Law 2018.

Anti-competitive practices are defined as enterprise practices that reduce, distort or hinder competition in the market, including practices being agreements in restraint of competition, abuse of dominant market position and abuse of monopoly position.

The Competition Law 2018 prohibits certain types of anti-competitive agreements, for example:

Violations of competition-restricting agreements may lead to administrative sanctions or criminal penalties. Regarding the administrative penalties, competition-restricting agreements are penalised with a fine of up to 10% of the total revenue of the enterprise for the previous year and the potential confiscation of material evidence and facilities used to commit the breach.

Vietnam's new Penal Code 2015 as amended in 2017 (effective 1 January 2018), specifically imposes criminal sanctions for violations relating to competition-restricting agreements, and also introduces the concept of corporate criminal liability. Accordingly, a company can be:

Under the Competition Law 2018, an enterprise or a group of enterprises holding a dominant market position may not abuse its position. A dominant market position exists when any of the following applies:

Enterprises holding a dominant market position are not permitted to do the following:

(Competition Law 2018.)

An enterprise will be considered to be a monopoly if there are no enterprises competing in the goods and services in which such enterprise conducts business in the relevant market. Monopolies are prohibited from engaging in the same practices as enterprises holding a dominant market position, and monopolies cannot impose disadvantageous conditions on their customers or abuse their monopolistic position to unilaterally cancel or change a signed agreement.

The competition laws also govern "economic concentration activities" (including mergers, consolidations, acquisitions, and joint ventures) that have or may have a competition-restraining impact on Vietnam's market. In addition to domestic companies and Vietnamese nationals, the Competition Law 2018 also applies to related foreign organisations, establishments and individuals. Accordingly, offshore transactions (for example, foreign-to-foreign acquisitions or mergers) may be subject to a notification requirement under Vietnamese laws, where a party to the transaction and/or its affiliates have assets, sales revenue, or purchase costs in Vietnam, and the transaction triggers any of the applicable notifying thresholds.

Vietnamese competition laws do not contain any exemption to the filing thresholds. Accordingly, any transaction triggering a notification threshold must be notified and approved by the NCC. The NCC may prohibit mergers causing the effect or being capable of causing the effect of significantly restricting competition in the market of Vietnam.

Vietnam's key legislation governing anti-bribery and corruption in Vietnam is the Penal Code 2015 and the Anti-Corruption Law 2018. Vietnam's anti-corruption law focuses on the public sector, but some recent changes also apply these regulations to the private sector.

The Penal Code 2015, which went into effect on 1 January 2018, criminalises bribery, which is defined as a person in a position of power receiving a payment of VND2 million or more to do or to refrain from doing something, for the benefit or at the request of the person making the payment. The payment can be in a monetary or non-monetary form (that is, giving gifts, accepting complimentary holidays or providing job opportunities for relatives). Payments below the VND2 million threshold may also be considered as bribery if the accused individuals have been subject to disciplinary action or a criminal conviction for bribery in the past. Payments made through an intermediary are also included within the definition. Previously, bribes were only criminalised if they involved public employees or government officials, but now they are also criminalised within the private sector. Individuals abusing their positions of power within non-state enterprises and organisations are also captured within the new definition of the Penal Code 2015.

The Anti-Corruption Law 2018 went into effect on 1 July 2019 and requires all non-state enterprises and organisations to establish an anti-corruption compliance programme. All enterprises and businesses must issue an Anti-Corruption Code of Conduct which addresses conflicts of interests and corrupt acts and promotes a corporate culture which discourages corruption. This Code of Conduct should also address business ethics applicable to employees and management. To ensure compliance with these policies, businesses and organisations are expected to periodically conduct internal reviews, and report any findings of corrupt conduct to the authorities.

In respect of non-state organisations, the anti-corruption law applies more strictly to certain institutions including public companies, credit institutions, and certain non-state organisations such as fund-raising charities. These types of organisations must put into place regulations stating the responsibilities of heads and deputies regarding corruption as well as the applicable disciplinary measures for corrupt conduct, and other measures to ensure transparency that are specified under the law. State authorities may conduct inspections of these types of organisations to ensure that these regulations are in place, and to ensure compliance with the same. Heads or deputies of non-state enterprises are held liable for corrupt activities committed by employees or units/departments under their management/supervision, but the enterprise may determine the applicable disciplinary action or sanctions.

Businesses should also take care in their interactions with public employees or state officials (public officials). In general, public officials are prohibited from receiving any gifts connected to their official duties, regardless of the value of the gift. Businesses should also be cautious when engaging any public official to provide services, such as consulting or providing a speech or lecture. The Anti-Corruption Law 2018 and its implementing decree prohibit public officials from acting in a conflict of interest, which includes providing consulting services connected to the public official's public duties.

Definition and Legal Requirements. A patent is defined as a technical solution in the form of a product or process, which is intended to solve a problem by application of natural laws. Certain subject matters are not patentable, including scientific discoveries, theories, mathematic methods, aesthetic solutions, animal varieties and methods of human/animal disease prevention, diagnosis and treatment, and so on. Claims of all formats are accepted excluding use claims, omnibus claims, and claims written as an improvement.

A patent is eligible for protection in the form of the grant of an invention patent when it satisfies the following conditions:

Protection. Unless a patent is common knowledge, it must be protected in the form of the grant of a utility solution patent when it satisfies the following conditions:

Registration. A patent application can be filed:

Enforcement and Remedies. The following enforcement measures and remedies apply:

Damages. Damages can include the following:

Length of Protection. For an invention patent, protection begins from the issue of the patent and continues for 20 years from the date of filing.

For a utility solution patent, protection begins from the issue of the patent and continues for ten years from the date of filing.

There is no procedure for extending patent protection.

Definition and Legal Requirements. Vietnamese law provides that a trade mark is any sign used to distinguish goods or services of different organisations and individuals. It can be in the form of letters, words, pictures, figures, three-dimensional figures or a combination thereof, and in one or more colours. Trade marks include service, certification and collective marks.

A trade mark will be refused registration if it is:

Protection. The Vietnam IP Office is responsible for registration of trade marks in Vietnam. The IP Office's website (http://ipvietnam.gov.vn) provides guidance on the application procedure. Applications for trade mark protection can be filed in person, via post, or using the electronic application system managed by the IP Office.

Unregistered trade marks are only protected if they are well-known. Well-known marks are protected on the basis of use and are not dependent on registration procedures. The scope of protection for unregistered but well-known marks can be extended to not only similar marks for similar goods/services, but also for dissimilar goods/services if the use of such mark may affect the distinctiveness of the well-known mark or the mark registration was aimed at taking advantage of the reputation of the well-known mark. Currently, there is no official list of recognised well-known marks in Vietnam. The recognition of well-known marks is entirely up to the IP Office's discretion and is determined on a case-by-case basis.

Enforcement and Remedies. The enforcement measures and remedies applicable to trade mark infringement are similar to those of patent infringement (see above, Patents).

For administrative measures, the Market Surveillance Department and police are two other authorities that commonly enforce trade mark rights, including trade mark infringements and counterfeit activities.

Length of Protection and Renewability. A trade mark registration is valid for ten years from the filing date and can be renewed without limit.

Definition. An industrial design means the outward appearance of a product embodied in three-dimensional configuration, lines, colours or a combination of such elements.

An industrial design will be eligible for protection when it satisfies the following conditions:

Registration. The Vietnam IP Office registers industrial designs. Its website provides guidance on the procedure (http://noip.gov.vn). The WIPO Hague Agreement Concerning the International Deposit of Industrial Designs 1925 officially came into force in Vietnam on 30 December 2019, allowing users to designate Vietnam in an international design application.

Enforcement and Remedies. The enforcement measures and remedies applicable to industrial design infringement are similar to those for patent infringement (see above, Patents).

Length of Protection and Renewability. An industrial design patent will be valid from the grant date for five years and can be renewed for two consecutive terms, each of five years.

Definition and Legal Requirements. Vietnam does not have a statutory definition for unregistered designs as such. An unregistered design can be protected by well-known trade mark laws, unfair competition laws or copyright laws.

To be eligible for trade mark protection, the unregistered design must be recognised as well-known throughout Vietnam. The competent authorities (such as the Vietnam IP Office or the court) will have the power to recognise the well-known status of a trade mark based on the criteria set out under Article 75 of the IP Law.

To enjoy protection under the unfair competition laws, the unregistered trade mark must be widely used in Vietnam to the effect that it has become the trade indication of the owner.

In some cases, the design of a product can be copyrighted. In order to enjoy copyright protection, such unregistered design must be copyrightable.

Enforcement and Remedies. The enforcement measures and remedies applicable to unregistered design infringement are similar to those of patent infringement (see above, Patents).

Length of Protection. This is not applicable. The owner must establish the well-known status or wide use of the unregistered mark whenever the owner starts a new enforcement action.

Definition and Legal Requirements. Copyright means the right of an organisation or individual to works which such organisation or individual created or owns. The subject matter of copyright consists of literary, artistic and scientific works. The subject matter of copyright-related rights consists of performances, audio and visual fixation, broadcasts and satellite signals carrying coded programmes.

Copyright arises from the moment a work is created and is fixed in a certain material form, irrespective of its content, quality, form, mode and language and irrespective of whether or not such work has been published or registered. Furthermore, the related rights will arise at the moment a performance, audio and visual fixation, broadcast or satellite signal carrying coded programmes is fixed or displayed without causing loss or damage to copyright.

In fact, organisations and individuals who directly create such works are protected by copyright. The organisations and individuals include:

Protection. Copyright holders can register copyright at the Copyright Office of Vietnam (COV) (http://cov.gov.vn). However, the registration for copyright is not mandatory as copyright subsists in a work on its fixation, without any registration process. Still, registering copyright with the COV is recommended in some circumstances, as the copyright owner who is granted a certificate of copyright registration does not have an obligation to prove ownership of such copyright or related rights in case of any dispute that arises, unless otherwise proved.

Enforcement and Remedies. In Vietnam, generally, the legal enforcement actions against copyright infringement include:

Length of Protection and Renewability. The moral rights of authors to give titles to their works, attach their real names or pseudonyms to their works, and protect the integrity of their works are protected for an indefinite term. The moral rights of authors to publish their works and the economic rights of authors are provided as follows:

IP rights holders have the right to prevent unfair competition, including the following acts:

The legal framework surrounding commercial agency agreements in Vietnam is relatively limited and the parties are generally free to decide on the contents of their agency agreement. Agency agreements are mainly regulated by the Law on Commerce No. 36/2005/QH11 adopted by the National Assembly of Vietnam on 14 June 2005 (Commercial Law). The Commercial Law defines "commercial agency" as a commercial activity whereby the principal and the agent agree for the agent to, on behalf of the principal, but in its own name, conduct the sale and purchase of goods or provide services to third parties (customers).

The principal can either be a lawfully established economic organisation or an individual who has a business registration, collectively referred to as a "business entity" under the Commercial Law. Likewise, the agent in a commercial agency relationship can only be a duly registered business entity under Vietnamese law.

There are no requirements under the law as to registration of the agency agreement.

An agent has the right to enter into agency agreements with more than one principal, unless the parties agree otherwise, or the law provides that an agent can only contract with one principal in relation to a certain product or service.

Unless otherwise agreed by the parties, the term of agency will terminate no earlier than 60 days from the date either party serves a notice of termination of the agency agreement on the other party. In case the principal serves such termination notice, the agent has the right to request the principal to pay damages for the period of time during which the agent acted as agent for the principal (unless otherwise agreed). The agent does not have the right to claim damages from the principal for the term for which the agent acted as agent for the principal if the agency agreement is terminated at the request of the agent.

Distribution includes activities of wholesale (that is, sale to organisations), retail (that is, sale to individuals), agency for purchase and sale of goods, and franchising, and is regulated mainly by the Civil Code 2015 and the Commercial Law.

Companies engaged in distribution activities in Vietnam must be fully licensed to do so. Foreign investors can conduct distribution activities in Vietnam by establishing a wholly foreign owned Vietnamese entity. A company located offshore can also enter into a distribution agreement with a local company to distribute the goods in Vietnam (provided that the local company is duly licensed to undertake the distribution activities in question). Vietnamese law regulates which goods are permitted for distribution and which are not.

The parties to a distribution agreement are generally free to agree on its content. There are no requirements under the law as to the registration of a distribution agreement, or requirements to pay compensation for failure to renew the agreement. The parties are further free to agree to exclusive distribution within a specifically appointed territory.

Vietnam has specific legislation regulating franchising, both by local franchisors in Vietnam and foreign franchisors, based outside Vietnam.

A foreign franchisor does not need to have a legal presence in Vietnam. It can franchise in Vietnam without establishing a business entity in Vietnam. However, its franchise system needs to have been operated for at least one year prior to franchising in Vietnam. There are also certain registration requirements that a foreign franchisor will need to carry out. In particular, it must register its intended franchising activities with the Ministry of Industry and Trade (MOIT).

On a successful franchise registration, a foreign franchisor can grant a franchise to a franchisee in Vietnam. However, there are ongoing notification requirements that foreign franchisors must be aware of. As part of the franchise description document, the franchisor would have disclosed certain information in the registration process. Depending on the specific change, a foreign franchisor would need to notify the MOIT of such change either on an annual basis or an ad hoc basis (that is, within 30 days of when such change took place).

Generally, e-commerce transactions are regulated by the provisions of laws such as the:

The above laws are of general applicability and can also apply to brick-and-mortar transactions.

A number of laws specifically regulate e-commerce activities, depending on the circumstances. These include:

E-commerce firms should closely examine the intended functionalities on their websites as these can trigger different regulations. For example, some e-commerce websites may feature simple games that users can play. These may raise different implications under Vietnam's online gaming regulations and position the e-commerce firm as a provider of online games.

Due to the broad definitions under Vietnamese law, if online platforms will be used to market or sell any goods or services to customers in Vietnam (including individual consumers and other businesses in Vietnam), such online platforms could be regarded as e-commerce websites/mobile applications under Vietnamese laws. Under Decree 52, an e-commerce website is defined as "an electronic information page set up to serve part or the whole of the process of buying and selling of goods or providing services, from displaying and introducing goods or services to concluding contracts, providing services, making payment and providing after-sales services".

Decree 52 applies to both local and offshore owners of e-commerce websites or mobile applications engaged in e-commerce activities in Vietnam who have business presence in Vietnam (such as a subsidiary, branch or representative office) or whose websites use Vietnamese domain names.

Key applicable requirements under Decree 52 include:

Mandatory disclosures of information on the website/application and online ordering functions must conform to the requirements set out by law.

In addition, the operation of the platforms and marketing and promotional activities conducted through such platforms must also to comply with Vietnam's laws/ regulations on e-commerce, consumer protection, advertising and commerce enhancements, which govern commercial activities in general.

Vietnam does not have any rules specific to digital advertising, such as online behavioural advertising or influencer marketing. General advertising rules will also apply to digital advertising.

Decree 91 on Anti-Spam sets out regulations regarding unsolicited messages sent via emails, text messages (SMSs) and phone calls. In general, advertising emails, text messages and phone calls can only be sent after obtaining affirmative opt-in consent from the intended recipients in accordance with forms set out by Decree 91. No advertising messages (including SMSs and calls) can be made to phone numbers registered with the Do-Not-Call registry. No more than three advertising emails can be sent to an email address in a 24-hour period, unless otherwise agreed by the recipient. The details of each advertising email and text message must include opt-out information permitting recipients to decline receiving further advertising emails or text messages. Advertising emails must be labelled with "QC" (quang cao) (which means advertisement in Vietnamese). There must be information about the advertiser and, in the case of advertising chargeable services, complete information about the fees/charges. Senders must immediately cease sending advertising emails and text messages once they receive a notice of refusal from the recipient.

In Vietnam, some advertising-related legislation applies generally, such as the:

There are also sectoral laws/regulations governing the advertising of specific goods/services. For example, there is specific legislation relating to advertising pharmaceuticals, which would not apply to other types of advertisements.

Advertising falls within the larger concept of "commercial enhancement", which is a legal term of art. Commercial enhancement additionally includes:

Those wishing to advertise should exercise care in determining if their intended advertising activities could also be regarded as and/or trigger the requirements applicable to other "commercial enhancement" activities. For example, sales promotion is defined as an act of commercial enhancement by a business entity aimed at enhancing the purchase and sale of goods and the provision of services by giving specified benefits to customers. These acts may include giving samples or trial goods, gifts or free services, discount programmes, coupons, contests, lucky draws and customer loyalty programmes, among other matters.

Promotional activities will also require that notifications are made to certain government authorities, and depending on the facts at hand, government approvals may be required.

The law relating to promotions is unique in that it is the only type of "commercial enhancement" that prohibits entities based outside of Vietnam from hiring Vietnamese business entities to engage in promotion activities on their behalf. In comparison, for the other three types of commercial enhancement (see above) including advertising, such entities are specifically allowed to hire Vietnamese entities to engage in the relevant types of commercial enhancement activities desired.

Sales promotions are regulated primarily by the Civil Code, the Commercial Law (as amended), and Decree No. 81/2018/ND-CP of the Government dated 22 May 2018 detailing the Commercial Law regarding commercial enhancement activities.

Vietnamese law allows traders to conduct promotion to enhance the purchase and sale of goods and the provision of services by giving specified benefits to customers. The law also imposes specific restrictions for holding promotions, for example, goods and services that are prohibited from being used for promotions, and the maximum limit on the value used in promotions.

Some of the forms of sales promotion programmes permitted in Vietnam include offering free samples, giving goods or services as gifts, offering discounts, lucky draw promotions, and customer rewards programmes. Traders conducting these promotional activities must comply with the restrictions prescribed by Vietnamese commercial laws.

Under Article 91.1 of the Commercial Law, only a Vietnamese business entity, a branch of a Vietnamese business entity and a branch of a foreign business entity in Vietnam has the right to hold its own promotions or to hire a business entity engaging in the business of promotion services to hold a promotion for it. Therefore, strictly speaking, an overseas company is not permitted to conduct promotional activities targeted at local residents.

The law prohibits traders from using the following goods and services for promotions:

Various limits are also placed on the value of the promotions. For example, the total value of goods and services used in the promotion must not exceed 50% of the total value of the promoted goods or services, except for promotions in the form of customer participation programmes, sample promotions, and gift promotions (without the purchase and sale of such goods or services).

These limits often have exceptions when a promotional programme is concentrated (held for an hour, day, week or month or for a promotional season), or is conducted within the framework of commercial enhancement programmes and activities as decided by the Prime Minister.

Data protection, more specifically, the right to privacy and confidentiality of information is a fundamental right enshrined in the Vietnamese Constitution.

Currently, there is no single comprehensive legal document regulating data privacy in Vietnam. However, there are a number of laws and regulations with provisions to protect personal data privacy. The key principle across these documents is that the information owner must consent to the collection, processing and use of their personal information and the use of such information must be in accordance with prior stated purposes. In addition to this requirement for consent, in certain sensitive transactions, such as the transfer of information classified as a state secret or sensitive data under banking laws/regulations (that is, confidential information, information restricted to internal circulation within the entity, or information the entity manages which, if leaked, could have an adverse impact on the entity's reputation, finances or activities), the person transferring such information must also encrypt the information.

As of May 2021, there is no specific requirement for cross-border transfer of personal information from Vietnam to overseas (such as requirements on the qualifications of the transferees and/or measures the transferees are required to perform). Therefore, as long as prior consent of the data subject is obtained, the data can be transferred to any third parties overseas. However, the Ministry of Public Security (MPS) is drafting a decree guiding the implementation of the Cybersecurity Law of 2018. According to this draft decree, which is expected to be issued in 2021, customer data collected and/or processed by certain industries (such as telecom, e-commerce, online payments and so on) may need to be stored in Vietnam for a period of time prescribed by law if the service providers are warned by the MPS that its online services/platforms have been used for and/or involved with activities prohibited by the Vietnamese law and such service providers failed to rectify the situation following a request from the MPS.

The MPS is also drafting a new Decree on Personal Data Protection (Draft PDPD), which would become the first comprehensive legal document regulating data privacy in Vietnam. The Draft PDPD suggests imposing restrictions on cross-border data transfer, requiring that before transferring Vietnamese citizens' personal data out of Vietnam, the following four conditions must be fulfilled:

(Article 21, Draft PDPD.)

The Draft PDPD provides an exemption to this requirement when there is:

It is unclear from the wording of the Draft PDPD whether the data transferor needs to meet one or all of these criteria to be eligible for the exemption, but presumably all four must be met. In order to obtain a written approval from the PDPC, an application must include an impact assessment report with an assessment of potential harm and measures to manage, minimise or eliminate such harm. The PDPC has 20 working days from the date of submission to process applications for approval.

The Draft PDPD has been released for public comment, but the government has not set out any clear timeline regarding when the draft should be finalised and promulgated. Depending on feedback and pressures from the business community, the process may take years to complete.

Sanctions, ranging from administrative sanctions and fines to criminal liability for particularly serious violations, are set out in legislation. Additionally, compensatory damages may be awarded in successful lawsuits.

The Law on Protection of Consumers' Rights provides that consumers' information must be kept safe and confidential when they participate in transactions, or use goods or services, except where competent state agencies require the information. Where there is collection, use or transfer of consumer information, the entities trading goods or services must:

Moreover, contracts for consumers, arguably including terms and conditions and privacy policies, must be translated into Vietnam, unless the consumer particularly agreed otherwise.

Product liability law in Vietnam is still underdeveloped. Law provisions on product liability are scattered between the following laws:

However, the provisions of the laws listed above are general and difficult to apply. So far, there have not been many cases in Vietnam's courts related to product liability. Generally, all entities involved in the introduction of the product to the consumer can be liable, including the manufacturer, importer and seller/retailer. In practice, product liability law in Vietnam mostly concerns compliance by producers with national product standards, and the administrative handling of violations of such standards. For example, if a product is found to not meet standards, it is most likely that the company will be subject to an administrative fine and sanctions (for example, being ordered to cease production). Few civil cases are concurrently taken. However, since Vietnamese nationals have become more cautious of their health and security conditions, it is possible that civil cases will increase in the future.

Main Activities. The National Competition Committee (NCC) is tasked with the following under the laws on competition:

Since the establishment of the NCC has just been regulated for the first time in the Law on Competition of 2018, the Ministry of Industry and Trade is still in the process of preparing the legislation on the duties, authority and organisation of the NCC for the government's approval. In the meantime, competition matters are handled by the Vietnam Competition and Consumer Authority (VCCA).

Main Activities. The Ministry of Natural Resources and Environment (MONRE) administers affairs related to land, natural resources, environment, meteorology, hydrology and climate change. The MONRE carries out the following main activities, among others:

Main Activities. The Ministry of Finance (MOF) is responsible for the administration of state budget, taxation, regulating official fees, charges and other state receivables, financial investment, corporate financial regulations, customs, pricing, securities business, insurance business, financial services as well as acts as the representation of the state's shares in state-owned enterprises.

The MOF carries out the following main activities, among others:

There is nothing else important relating to doing business in Vietnam.