Foreigners can take part in biddings for doing projects and other business undertakings in Vietnam. However, it is quite confused for them to do business in Vietnam because of the absence of general regulations on this matter.
At the moment, Decree No.15/2021/ND-CP dated 3 March 2021 of the GoV, on the management of construction investment projects (“Decree 15/2021”); Circular No.06/2021/TT-BXD dated 30 June 2021 of the Ministry of Construction (“MOC”), providing for classification of building works and guidance on application in management of construction investment activities (“Circular 06/2021/TT-BXD”); and Circular No. 103/2014/TT-BTC dated 6 August 2014 of MOF, providing guidelines for fulfilment of tax liability of foreign entities doing business in Vietnam or earning income in Vietnam (“Circular 103/2014/TT-BTC”), are the most reference legal documents. Subject to the nature of business, the contractor activities shall be subject to the specific sectorial regulations, including technology transfer, construction, etc.
Below are some regulations on foreign construction contractors and sub-contractors.
To become a foreign construction contractor or sub-contractor in Vietnam, a foreign applicant must satisfy the following criteria:
- Having been granted with a license for construction activities when there is a contract award or contractor selection made by the owner, main contractor or sub-contractor; and
- Setting up a partnership with a Vietnamese contractor or employing Vietnamese sub-contractors, unless the Vietnamese contractor is not qualified to execute any tasks of the bidding package. When entering into a partnership with or using a Vietnamese contractor, the contents, volume and value of the work(s) performed by the Vietnamese contractor in the partnership or Vietnamese subcontractor(s) must be clearly defined; and
- Committing to fully comply with the provisions of Vietnamese law related to contracting activities in Vietnam.
For a construction license, 1 set of application file must be submitted directly or by post to the licensing agency (including the specialized construction authority directly under the MOC or the DOC of the locality where the project is conducted).
Each set of application file applicable to organizations must contain the following papers:
- Application for licence made in Vietnamese according to set form;
- A certified copy or an electronic copy of a report on bidding results or decision on lawful contract award;
- A certified copy or an electronic copy of the Establishment license or the Business registration certificate of organizations, which has been consularly legalized (except for cases entitled to exemption from consular legalization as prescribed by international treaties to which Vietnam and relevant countries are members) and the professional practice certificate (if any) granted by the country of which the foreign contractor bears the nationality;
- A report on experiences in activities related to the contracted jobs and a certified copy or an electronic copy of the synthesis report on financial auditing for the latest three years (for cases not subject to the application of the provisions of Vietnamese bidding legislation);
- A certified copy or an electronic copy of the partnership contract with a Vietnamese contractor or an official contract or an in principle contract with Vietnamese sub-contractor to perform the contracting (already included in the bids or bidding dossiers);
- Lawful authorization letter, for persons other than the contractor’s legal representative; and
- A certified copy or electronic copy of the decision approving the project or the investment decision or the investment certificate of the project/ building works.
If papers and documents specified at Points (ii), (iii), (v) and (vi) are in a foreign language, they must be translated into Vietnamese and the translations must be notarized and authenticated according to regulations of Vietnamese laws.
Application files for contracting licenses arising in the same year are not necessary to include the documents referred to in (iii) and (iv).
Each set of application file applicable to individuals must contain the following papers:
- Application for licence made in Vietnamese according to set form;
- A certified copy or a digital file containing a colour copy of the original which is an image or other format (*.pdf) of a report on bidding results or decision on lawful contract award;
- A consularly legalized copy or a digital file containing a colour copy of the original which is an image or other format (*.pdf) and Vietnamese translation of the operation license or professional practice certificate granted by the country of which the foreign contractor bears the nationality, and a notarized/certified copy and Vietnamese translation of passport;
- A digital file containing a colour copy of the original, which is an image or other format (*.pdf) of the decision on investment in the project or the investment certificate or the written approval for the investment policy.
Subject to the nature and scale of the bidding projects, construction contractor license shall be issued by either the specialized construction authority directly under MOC or provincial-level DOC, within 20 days from the full receipt of the application file.
Foreign construction contractor shall pay a fee of VND2 million/license when receiving the license.
Once being licensed, foreign construction contractors have the following obligations:
- To set up their Executive offices at the localities where the projects are implemented after being granted with a construction operation license; to register the addresses, phone number, fax number, email address, seal, accounts and tax code of their work executive offices. Regarding contracts pertaining to the formulation of construction planning, formulation of construction investment project, construction survey or building works construction design, the foreign contractor may establish an Executive office at the place where the office of the project owner is headquartered or establish no executive office in Vietnam. Regarding the contract on construction and supervision over construction of the building works that will be constructed in multiple localities, the foreign contractor may establish an Executive office in any locality where the building works will be constructed. The Executive office only exists during the contract performance period and dissolves when the contract terminates.
After registering the above-mentioned information about the Executive office, the foreign contractor shall send a written notice such information directly or by post to the provincial-level DOC of the locality where the Executive office is set up, the specialized construction authority directly under the MOC and relevant agencies using the standard form. If any information about the executive office is modified, the foreign contractor shall notify such agencies;
- To register and cancel specimens of seals as well as to return seals of their Executive offices at the Police Offices of the provinces and centrally-run cities where building works are located when the contract is terminated in accordance with the laws. Foreign contractors shall only use these seals for affairs in service of contract performance in Vietnam according to the provisions of their construction operation licenses;
- To register and pay taxes according to provisions of Vietnamese laws; to observe the accounting regime, open accounts and make payments as guided by the MOF and the SBV in service of business activities under contracts;
- To recruit and employ Vietnamese and foreign workers according to the Vietnamese labour legislation. To register only economic managerial and technical management experts and highly skilled workers whom Vietnam lacks for entry into Vietnam;
- To carry out the procedures for exporting or importing supplies, machines and equipment related to the awarded contracts in Vietnam according to provisions of Vietnamese laws;
- To perform partnership contracts already signed with Vietnamese contractors or use Vietnamese subcontractors already determined in the application file for the issuance of a construction licence;
- To purchase insurance according to provisions of Vietnamese laws for contractor’s works, including: insurance for professional liability of contractors providing investment and construction consultancy; insurance for assets and goods for procurement contractors; insurances of various kinds for construction contractors and other insurance regimes according to provisions of Vietnamese laws;
- To register for inspection of the quality of supplies and equipment imported and supplied under the contracts;
- To register the safety of construction equipment and means of transport related to business activities of foreign contractors according to provisions of Vietnamese laws;
- To observe the regulations on norms, standards, management of quality of building works, labour safety and environmental protection as well as other relevant Vietnamese law provisions;
- To implement reporting regimes as prescribed in the construction operation license; and
- Upon the completion of building works, to compile dossiers on completion of building works; provide warranty for building works; make the settlement of imported supplies and equipment; handle unused supplies and equipment under contracts for construction of building works according to the regulations on export and import; re-export construction supplies and equipment already registered for temporary import – re-export; and liquidate the contracts. And at the same time, to notify the concerned State management agencies of the expiry of the contracts, terminate operation of their Executive offices.
Taxes applicable to foreign contractors and sub-contractors in Vietnam are well described in Section 16 hereunder.