Rights and Obligations of Foreign-Invested Enterprises and Key Investment Certificates

Foreign-invested enterprises (FIEs) in Vietnam play a vital role in the country in growing economy. These businesses, however, must navigate a complex legal landscape to ensure compliance with local regulations. The most critical aspect of this process is securing an investment certificate in Vietnam, a mandatory requirement for foreign investors. In case you need advice, please contact Apolo Lawyers via email at contact@apolo.com.vn or hotline: (+84) 903 419 479 for the best advice and support it outlines the primary rights and obligations of FIEs and the necessary investment certificates under Vietnamese law.

1. Key Rights of Foreign-Invested Enterprises in Vietnam

FIEs enjoy several rights under Vietnamese Investment Law. These rights ensure that foreign investors can operate their businesses efficiently and with confidence in the legal framework. Some of the key rights include:

• Investment Autonomy: Foreign investors are free to choose their sector and field of investment, provided that it does not fall under restricted sectors. The investment certificate in Vietnam acts as a license for legally permissible activities.
• Profit Repatriation: FIEs are entitled to transfer profits abroad after fulfilling tax obligations. This includes the right to remit profits in foreign currency, ensuring flexibility in managing international business operations.
• Expansion and Diversification: FIEs can expand their operations or diversify their activities by applying for new or adjusted investment certificates. The business license may need to be amended depending on the change in business scope.

Rights and Obligations of Foreign-Invested Enterprises and Key Investment Certificates 

2. Obligations of Foreign-Invested Enterprises

While FIEs benefit from various rights, they are also bound by certain obligations, which include:

• Compliance with Vietnamese Law: FIEs must strictly adhere to the applicable laws and regulations in Vietnam, including labor laws, tax regulations, and environmental protection laws. The investment certificate in Vietnam plays a critical role in defining the legal boundaries of their operations.
• Reporting Requirements: FIEs are required to submit periodic reports to the relevant authorities. These reports typically include financial statements, tax filings, and updates on project progress. Failure to comply with reporting requirements may result in penalties or suspension of the investment certificate.
• Investment Project Implementation: FIEs are obligated to implement their investment projects as approved in the investment certificate. Any deviation from the approved plans requires prior consent from the authorities.

3. Essential Investment Certificates and Licenses

Securing the right investment certificates is crucial for foreign investors in Vietnam. Some of the essential certificates and licenses include:

• Investment Registration Certificate (IRC): This certificate is the first step in establishing a foreign-invested enterprise in Vietnam. The IRC serves as proof that the investor has complied with local regulations and that the government has approved the project. It is issued by the Department of Planning and Investment.
• Enterprise Registration Certificate (ERC): After obtaining the IRC, FIEs must apply for the ERC to establish their legal entity in Vietnam. The ERC functions as the business license and allows the company to operate commercially.
• Adjustment License: If an FIE wishes to modify their project, such as expanding or changing the business scope, it must apply for an adjustment to the investment certificate. This includes changes in capital, location, or operational objectives.

Rights and Obligations of Foreign-Invested Enterprises and Key Investment Certificates 

4. Regulatory Considerations for Foreign Investors

Foreign investors must consider several legal factors when establishing a business in Vietnam, particularly regarding investment certificates:

• Investment Sectors: Vietnam categorizes the industries into those open, restricted, or conditional for foreign investment. Certain sectors may require government approval or specific licenses, such as those related to defense, real estate, or telecommunications.
• Land Use Rights: For FIEs planning to lease or purchase land for their projects, it is essential to secure the necessary land use rights. Vietnamese land laws require specific documentation and permissions, which often tie into the investment certificate process.
• Capital Contribution Requirements: Investors must meet the capital contribution requirements set out in the IRC. Failure to contribute capital within the specified time frame can lead to revocation of the investment certificate.

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