Business Operations in Vietnam provides information on the salient features of the business environment in Vietnam from both a  tax and a general legal perspective. Written by Fred Burke and Thanh Vinh Nguyen, both of Baker & McKenzie LLP, this Portfolio introduces the forms of doing business in Vietnam and analyzes related legal issues on corporate establishment, foreign participation, exchange control, intellectual property, labor, and financing.

In addition to providing a detailed explanation of the Vietnamese system of income taxation, and in particular the enterprise income tax, which applies to the income of business organizations and individuals carrying on business the Portfolio covers Vietnam’s other principal taxes, including value added tax, the special consumption tax, and land rental and land tax.

Included worksheets list the detailed conditions for obtaining enterprise income tax incentives and provide a number of  registration forms and tax returns.

Business Operations in Vietnam allows you to benefit from:

• A perspective that addresses the concerns of foreign investors/enterprises and their advisors looking to invest/do business or already invested/doing business in the country
• Identification of those features of the country’s system that are likely to prove most problematic to outside investors
• Emphasis on those aspects of the tax system that impact transactions and structures with a cross-border dimension
• Information and insight to enable users  to anticipate the pitfalls and opportunities likely to arise in making an initial investment, carrying on operations and devising potential exit strategies
• Invaluable practice documents including tables, charts and lists
• Time-saving citations to relevant sections of tax laws, regulations, court cases, and more.

This Portfolio is part of the Foreign Income Portfolios Library, a comprehensive series containing more than 100 Portfolios, which covers critical transactions and issues in international taxation. This highly-regarded resource library offers commentary on a wide range of foreign income topics including: Foreign Tax Credit, Business Operations in Italy, Business Operations in Puerto Rico, Branch ProfitsTax, Source of Income Rules, Subpart F (Controlled Foreign Corporations), Foreign Partnerships and Partners, Transfer Pricing, and more.

Detailed Analysis

I. Vietnam - The Country, Its People and Economy

A. Country and Population

B. Political Organization

C. Economy

II. Operating a Business in Vietnam

A. Foreign Investment Regulation

1. Opportunities

2. Incentives

a. Tax Incentives

b. Non-tax Incentives

3. Restrictions

B. Currency and Exchange Controls

1. Vietnamese Currency

2. Exchange Control

C. Trade and Commerce Regulation

1. Imports and Exports

a. Licenses and Quotas

b. Customs Duties and Other Taxes

c. Customs Documentation

2. General Regulation of Business

a. Monopolies and Restrictive Trade Practices

b. Mergers

c. Price Controls

d. Securities and the Securities Market

3. Licensing and Franchising in Vietnam

a. Copyright

b. Industrial Property

c. Technology Transfer

d. Franchising

(1) Choice of Law

(2) Requirements for a Franchisor and Franchisee

(3) Contents of a Franchise

(4) Franchising Contract

(5) Protection of Franchisees

(6) Intellectual Property

(7) Disclosure Requirements

D. Immigration Regulations

1. Entry Visas

2. Work Permits

3. Temporary Residence

E. Labor Relations

1. Employment Contract

2. Termination

3. Retrenchment

4. Working Hours, Annual Leave, Remuneration

5. Social Insurance and Health Insurance

6. Trade Union

7. Collective Labor Agreement

8. Settlement of Labor Disputes

F. Financing the Business

1. Investor Financing

2. External Financing

III. Forms of Doing Business in Vietnam

A. Principal Business Entities

1. General Introduction on Forms of Business Entities

2. Enterprise with 100% Foreign-owned Capital Under the LFI

a. Formation

b. Licensing

c. Charter

d. Capitalization

e. Management

f. Restructuring and Transfer of Ownership

g. Profit Distribution

h. Term and Termination

3. Joint Venture Enterprise Under the LFI

a. Formation

b. Licensing

c. Joint Venture Contract and Charter

d. Capitalization

e. Management

f. Restructuring and Transfer of Ownership

g. Profit Distribution

h. Term and Termination

i. Drawbacks of JVs

4. Business Cooperation Contract Under the LFI and the IL

a. Formation

b. Comparison with JVs

c. Licensing

d. Capitalization

e. Management

f. Transfer of Contractual Interest

g. Profit Distribution

h. Term and Termination

5. Limited Liability Company Under the EL

a. Formation

b. Licensing

c. Charter

d. Capitalization

e. Foreign Participation

f. Management and Control

(1) Multiple Member LLC

(2) One Member LLC

g. Restructuring and Transfer of Ownership

h. Profit Distribution

i. Term and Termination

6. Joint Stock Company Under the EL

a. Formation

b. Licensing

c. Charter

d. Capitalization

e. Foreign Participation

f. Management

g. Restructuring and Transfer of Ownership

h. Profit Distribution

i. Term and Termination

7. Branch of a Foreign Company Under the Commercial Law

a. Formation

b. Licensing

8. Representative Office Under the Commercial Law

a. Formation

b. Licensing

c. Management and Operation

B. Other Business Entities

1. Partnership Under the EL

a. Formation

b. Licensing

c. Charter

d. Foreign Participation

e. Management

f. Restructuring

g. Term and Termination

2. Private Enterprise Under the EL

a. Formation

b. Licensing

c. Foreign Participation

d. Management

e. Sale of a Private Enterprise

f. Term and Termination

3. Foreign Contractor

a. Formation

b. Licensing

IV. Principal Taxes

A. Enterprise Income Tax

B. Value Added Tax

C. Special Consumption Tax

D. Personal Income Tax

E. Land Rental and Land Tax

F. Registration Fee

V. Taxation of an Enterprise Established in Vietnam

A. What Is an Enterprise Established in Vietnam?

B. Enterprise Income Tax

1. Taxation of Worldwide Income

2. Accounting

a. General

b. Accounting Period

c. Accounting Method

d. Reserves

3. Calculation of Income

a. General

b. Capital Gains

c. Dividend Income

d. Income from Foreign Sources

e. Interest Income and Royalty Income

4. Business Expenses

a. General

b. Non-deductible Expenses

c. Organizational Expenses

d. Interest and Royalties

e. Depreciation and Amortization

f. Charitable Contributions

g. Casualty Loss

h. Reserves

(1) Reserve for Price Decline of Inventories

(2) Reserve for Price Decline of Financial Investments

(3) Reserve for Bad Debts

i. Salaries and Wages

j. Social Insurance and Health Insurance

k. Advertising, Marketing, Promotion, Reception, Entertainment Expenses, Brokerage Commissions, Conference Expenses, Payment Discounts and Volume Discounts

l. Taxes and Fees

5. Capital Expenditures

6. Loss Carryforward

7. Foreign Tax Credits

8. Calculation of Taxable Income and Tax Rates

a. Taxable Income

b. Tax Rates

9. Assessment and Filing

10. Official Dispatches

VI. Taxation of a Branch of a Foreign Company

VII. Taxation of Foreign Contractors

A. What Is a Foreign Contractor

B. Methods of Taxation and Registration Requirement

1. Foreign Contractors Who Adopt the VAS

2. Foreign Contractors Who Do Not Adopt the VAS

3. "Hybrid" Method

VIII. Taxation of Representative Offices

A. Permanent Establishment Exposure

B. Registration Requirement and Method of Taxation

IX. Taxation of Offshore Institutional Investors in Securities

X. Taxation of Individuals

A. Scope of Taxation

B. Resident and Nonresident

C. Taxable Income and Tax Rates

D. Deductions, Exemptions and Credits

E. Assessment and Filing

F. Taxation of Individual Agents

G. Newly Adopted Personal Income Tax Law

XI. Value Added Tax

A. Scope of Taxation

B. Taxpayers

C. Taxable Supplies

D. Zero-Rated Supplies

1. Exported Goods

2. Exported Service

E. Exemptions

F. Methods of Taxation

1. Tax Credit Method

a. General

b. Input Tax Credit

2. Direct Calculation Method

G. Filing and Refund Procedures

1. Filing Procedure

2. Refund Procedure

XII. Special Consumption Tax

A. Scope of Taxation

B. Taxpayers

C. Tax Rates

D. Taxable Value

E. Filing Procedures

XIII. Land Rental and Land Tax

Introductory Material

A. Land Rental

B. Land Tax

XIV. Registration Fee

XV. Intercompany Pricing

XVI. Avoidance of Double Taxation

A. Foreign Tax Credit Under the Domestic Law

B. Tax Treaties

1. Existing Tax Treaties

2. Taxation of Business Income

a. Permanent Establishment

b. Business Profits

3. Taxation of Other Income

a. Dividends

b. Interest

c. Royalties

4. Tax Treaty Application

XVII. Tax Legislative Agenda for 2008

Working Papers

Table of Worksheets

Worksheet 1 Enterprise Income Tax Incentives

Worksheet 2 Tax Registration Form for Business Organizations

Worksheet 3 Tax Registration Form for Foreign Contractors

Worksheet 4 Tax Registration Form for Vietnamese Contracting Parties Withholding Tax of Foreign Contractors

Worksheet 5 Tax Registration Form for Individuals Paying Personal Income Tax

Worksheet 6 Provisional Quarterly Enterprise Income Tax Return

Worksheet 7 Annual Finalization Enterprise Income Tax Return

Worksheet 8 Monthly VAT Return

Worksheet 9 Monthly Special Consumption Tax Return

Worksheet 10 Foreign Contractor Withholding Tax Return

Worksheet 11 Finalization Foreign Contractor Withholding Tax Return

Worksheet 12 Monthly Personal Income Tax Withholding Return (Applicable to Residents)

Worksheet 13 Monthly Personal Income Tax Withholding Return (Applicable to Foreign Non-Residents)

Worksheet 14 Annual Finalization Personal Income Tax Withholding Return

Worksheet 15 Details of Personal Income Tax Finalization for Employees

Bibliography

OFFICIAL