The revised Investment Law 2020 was passed by the National Assembly of Vietnam on June 17, 2020 and will take effect from January 1, 2021. The following are some important changes to this Law that investors should pay special attention to.
(i) Supplement of conditions to value the effectiveness of investment projects during the procedure of approving investment policies and selecting investors, in order to ensure national defense, national security and sustainable development of the projects.
(ii) Supplement of conditions for contributing capital, buying shares, buying capital contributions of foreign investors related to the ensurance of national defense and national security, and complying with the provisions of land law on conditions to receive land use rights, conditions to use land near borders, in coastal islands, communes, rural wards and towns.
(iii) In cases where foreign investors have investment projects on borders and coastal islands, communes, rural wards and towns, they would have to consult with relevant ministries and government branches (the Ministry of Defense, Ministry of Public Security and Ministry of Foreign Affairs) during the procedure of issuing investment registration certificate / investment certificate.
(iv) Supplement of regulations on determining the value of investment capital; assessing the value of investment capital; appraising machines, equipments and production lines. Accordingly, the investor will be solely responsible for determining the value. However, in some circumstances, competent state management agencies shall request an independent assessment of investment capital value, quality and value of machinery, equipments and production lines once the project has gone into operation.
(v) Competent authorities shall apply a termination of investment projects to investors who make investments on the basis of fake civil transactions (using Vietnamese employees to establish companies and register investment projects, but actually run by foreign investors; perform capital transfer transactions or commercial transactions with foreign investors to conceal the true nature of capital ownership; transfer of price and land ownership in sensitive investing areas).
(vi) Abolishment of several conditional business sectors and at the same time supplement a number of conditional business sectors.
(vii) Five cases in which investors are not required to prove guarantee of project implementatiion:
The investor must pay a deposit or have a bank guarantee for the deposit obligations to ensure the implementation of a project to be allocated to leased land by the State, gain permission to change land use purposes, except for the following 5 cases:
· The investor who wins the land use right auction to execute an investment project is allocated land with land use levy or leased land by the State, with one-off rental payment for the entire lease term;
· The investor wins the bidding to execute land use investment projects;
· Investtor is allocated or leased land by the State on the basis of transfer of investment projects that have made deposits or completed capital contribution, capital mobilization according to the schedule specified in the registration certificate and the investment policy approval document.
· Investor is allocated or leased land by the State to execute investment projects on the basis of transferring land use rights and properties attached to land of other land users.
· Investor is a non-business unit with revenue and/or a hi-tech development company established under the decision of competent state agencies to implement investment projects on the development of infrastructure of industrial zones, export processing zones, hi-tech zones and functional areas in economic zones.
(viii) Amending and supplementing the list of subjects entitled to investment incentives
Under the amended Investment Law, subjects eligible for investment incentives are:
· Investment projects belong to the sectors and lines of investment incentives as prescribed in Clause 1, Article 16 of this Investment Law.
· Investment projects in geographical areas eligible for investment incentives as prescribed in Clause 2, Article 16 of this Investment Law.
· Investment projects with a capital from 6.000 billion VND, disbursing at least 6.000 billion VND within 3 years from the date of issuance of the investment registration certificates or approval of investment policies, while at the same time fulfilling one of the following criteria: having a total minimum revenue of 10.000 billion VND in a year within 3 years at the latest since the point of revenue; or having employed over 3000 employees.
· Investment projects for construction of social housing; investment projects in rural areas with more than 500 employees; investment projects employing people with disabilities in accordance with the law on the disabled.
· Hi-tech enterprises, science and technology organizations; projects with technology transfer on the list of technologies encouraged for transfer under the law technology transfer; technology incubator, science and technology business incubator in accordance with regulations on hi-tech.
· Investment projects for creative start-up or innovation center.
· Investment in product distribution chains of small and medium-sized enterprises; investment in technical facilities supporting small and medium-sized enterprises; incubators of small and medium-sized enterprises; investment in a common working area to support small and medium-sized enterprises in their creative start-ups in accordance with the law on supporting small and medium-sized enterprises.
· The Government also decided to apply special investment incentives and supports to encourage the development of a number of investment projects that bring great socio-economic impacts, including:
- Investment projects on establishment or expansion of research and development centers (R&D), innovation centers with a total investment capital of 6.000 billion VND or more; on national innovation centers established under the decision of the Prime Minister.
- Investment projects in industries and sectors eligible for special investment incentives, with an investment capital of over 30.000 billion VND and disbursing at least 10.000 billion VND within 3 years.
- Other investment projects with great socio-economic impacts according to the Prime Minister.
Updated by Skylar Bui
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