Investment Incentives for IT area in Vietnam

Vietnam is attracting investors from around the world to make investment through setting up IT service company in Vietnam

Since 2010, Vietnam has initiated and invested more resources in the information technology which has been realized as an area that could create a competitive edge for Vietnam. Recently, the Vietnam government has put a legal frameworks to attract more investment in this area, with the issuance of Decree No.154/2013/ND-CP, taking effect from Jan 1st, 2014 guiding particularly on management of the focused information technology areas.

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Accordingly, the enterprises at focused information technology areas will enjoy tax benefits i.e. income tax rate of 10% within 15 years, in some specific cases, extended to 30 years; exempt 50% within 5 continuous years. They are exempted the import tax when importing goods to build fixed properties, manufacture such as machines, equipment, parts, assembles.

Besides, these enterprises may enjoy convenient conditions in customs procedure, incentives in export tax, investment credit, import credit and favorable policies for enterprises business in high technology area.

The focused information technology area must have at least 2,000 employees specialized in information technology; in case of emphasizing in software manufacture, digital content, information technology service, 1,000 specialized employees will be employed at least.

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List of Investment Sectors With Conditions Applied to Foreign Investors

In general, investment is encouraged in Vietnam. However, when setting up a company in Vietnam, foreign investors need to be aware of investment sectors with conditions applied to foreign investors in Vietnam.

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The following sectors with investment conditions are issued with Decree 108/2006/ND-CP dated September 22nd 2006 of the Government on guiding the implementation of some Articles in the Law on Investment:

1. Radio and television.

2. Production, publication and distribution of cultural products.

3. Mining and mineral processing.

4. Set up telecommunication network infrastructures, broadcasting, provide telecommunications and internet services.

5. Construction of the public postal network, provide postal services, delivery services.

6. Construction and operation of river ports, sea ports, airports.

7. Transportation of goods and passengers by railway, airway, road, sea, inland waterway.

8. Fishing.

9. Tobacco production.

10. Real estate business.

11. Businesses in the field of export, import and distribution.

12. Education and training.

13. Hospital and clinic.

14. Other areas of investment in the international treaties to which Vietnam is a member that restricting the market access for foreign investors.

The investment conditions applicable to foreign investors with investment projects in the fields of investment provided with this list shall be in accordance with the provisions of the international treaties to which Vietnam is a member.

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Handling Labour Matters in Post M&A Transaction

While undertaking M&A transaction, the buyer may face legal risks regarding license, assets, compliance, including labor matters. One of the challenges of the buyer post M&A is the integration of the labour force into the new structure while ensuring rights and interests of their existing employee complying with the laws.

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When negotiating a deal, the buyer and target company may try to retain the advantage combining the strengths of both side. However, it’s challenging to just merely add personnel of the existing of departments with same functions together and group them under i.e. administration departments, sales department, accounting department…Further, one of the benefits of M&A is to improve the effectiveness of the operation through managing the similar scale of the combined business with less resources. Therefore, the re-arrangement of personnel is required and therefore conflicts will have to be managed between employees and employer.

Pursuant to Article 45 of Labor Code: in case of merging, consolidating, splitting or separating an enterprise, the successive employer shall continue employing the existing workforce and modify and supplement their labor contracts; if the existing workforce cannot be fully employed, the successive employer shall prepare a suitable labour plan and implement a labor utilization plan. In case of transferring asset ownership or use rights of an enterprise, the preceding employer shall have to prepare a labor utilization plan.

The labor utilization plan shall have the following contents: the lists and numbers of workforce to be continued employment and workforce to be re-trained for continued employment; the list and number of employees to be retired; the lists and numbers of employees to be assigned part-time jobs and those to terminate their labor contracts; measures and financial sources for implementing the plan. This is responsibility of the employer when the business arise change which greatly affects employee.

Regarding dismissed employee, the employer shall pay a job-loss allowance to the employee who has worked regularly for the employer for 12 months or longer. The job-loss allowance is equal to 1 month of salary for each working year, but must not be lower than 2 months of salary. The working period used for the calculation of job-loss allowance is the total time during which the employee actually works for the employer minus the time during which the employee benefits from unemployment insurance in accordance with the Law of Social Insurance and the working period for which the employer has paid a severance allowance to the employee.

It is important that the seller to retain M&A law firm to assist with the post M&A process to ensure the labour compliance is followed during the integration of labour resources.

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How to apply for a baby birth certificate in Vietnam?

For children of foreigner and Vietnamese born in Vietnam, the procedure to apply for birth certificate in Vietnam is carried out at the Vietnam’s provincial Department of Justice.

Registration of Birth inVietnam

In today’s globalized world, it has become more common that people from different cultural backgrounds travel, and meet their spouse. Their children were born with happiness however they would face difficulties when applying for birth certificate for the newborn in Vietnam. For the parents, the difficulties of registering birth certificate in Vietnam could range from the choice of name, nationality, or whether or not the child is born out of wedlock.

When a child between a foreigner and a Vietnamese is born in Vietnam, according to the regulation on the registration and management of civil status, the Department of Justice will be the Vietnam government agency issuing the birth certificate.

In cases where parents choose foreign nationality for the child, they must obtain the agreement of the parents about the choice of nationality. The valid agreement of the parents about the choice of nationality shall be certified by the local authority.

After receiving a application dossier for birth certificate for newborn in Vietnam, civil status officials of the Department of Justice records in the birth registration and original birth certificate. The director of the Department of Justice shall sign and issue an original birth certificate for the newborn. Copies of birth certificates are issued at the request of the applicant.

For children born out of wedlock, if the father is not identified, the information about the father in the birth registration book and birth certificate are left blank. When the father officially agrees to recognize father for a child, he has to carry out the procedure at the Vietnam’s provincial Department of Justice. The birth certificate could also be revised to reflect the father’s details into the new birth certificate. This birth certificate will be very important when the father applies foreign citizenship for the child.

The child can be named according to parental choice to be recorded on the birth certificate.

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