Commercial Business Management Authorities

In the age of integrated growth, commercial activities play a vital part in developing Vietnam’s economy. In conjunction with economic development, the business and trade management authority aids in the establishment of work that is sustainable, transparent, and competitive.

This article will give a general overview of Vietnam’s commercial business management authorities system.

Ministries and Ministerial-level Authorities

These authorities primarily deal with macro-level issues by releasing guidance documents and allocating management duties to lower-level authorities.  In some circumstances. However, in some case, ministries and ministerial-level authorities will administer several vital positions directly related to the investor’s business, such as:

Ministry of Planning and Investment

Decree 86/2017/ND-CP specifies the functions, tasks, powers, and organizational structure of Ministry of Planning and Investment.  The Ministry of Planning and Investment is an agency of the Government, performing the function of state management of planning, development investment and statistics, including: general advice on strategies, master plans, socio-economic development plans, national public investment plans; economic management mechanisms and policies; domestic investment, foreign investment in Vietnam and Vietnam’s investment abroad; economic sector; official development assistance (ODA), concessional loans, and foreign non-governmental aid; bidding; enterprises development, collective economy, cooperatives; statistical; state management of public services in the branches and domains under the management of Government.

Normally, when it comes to investor business, the Ministry of Planning and Investment handles applications for Vietnamese enterprises looking to invest abroad (depending on the size of the required project, the Ministry of Planning and Investment can approve the project on its own, report to the Prime Minister, or seek the National Assembly for approval).

Ministry of Industry and Trade

Decree 98/2017/ND-CP specifies the functions, tasks, powers, and organizational structure of the Ministry of Industry and Trade.  The Ministry of Industry and Trade has the jurisdiction to approve strategies, master plans, and development programs for branches and fields related to industry and commerce, as well as inspect and carry out the guiding work after they have been approved.

Especially, enterprises in Vietnam should note that trade remedy issues (anti-dumping, anti-subsidy, safeguard) will be handled by the Ministry of Industry and Trade.  In particular, the Trade Remedies Department – an authority under the Ministry of Industry and Trade will receive requests for investigation or request to apply safeguard measures to goods imported into Vietnam.  Following the investigation, the Minister of Industry and Trade will make a decision on whether to apply temporary or permanent safeguard measures to the items under examination.

State Bank of Vietnam

Decree 16/2017/ND-CP specifies the functions, tasks, powers, and organizational structure of the State Bank of Vietnam.  The State Bank of Vietnam is a ministerial-level government authority that performs state management of currency, banking activities, and foreign exchange; performs Central Bank functions in terms of money issuance, banking of credit institutions, and provision of monetary services to the Government; and state management of public services under the State Bank’s management.  One of the State Bank’s authorities and duties is to oversee the borrowing and repayment of foreign loans by residents who are legally permitted to self-borrow and self-repay foreign obligations; direct the process of coordinating and implementing the registration and registration for modifications in government-guaranteed foreign loans.

When enterprises in Vietnam desire to invest cash overseas or borrow capital from abroad in certain circumstances, they must have the approval of the State Bank.  The State Bank will have the authority to confirm the registration and registration of amendments to foreign exchange transactions relating to external investment operations under the provisions of Circular 12/2016/TT-NHNN.  Besides, the State Bank is the authority that performs the certification of registration and registration of changes for loans with a loan turnover of over 10 million USD (or other foreign currency of equivalent value) and foreign loans denominated in Vietnam Dong, according to Article 18 of Circular 03/2016/TT-NHNN.

Provincial Authorities

Provincial administrative authorities are responsible for implementing the provisions of the law, guidelines and policies set forth by ministries and ministerial-level authorities.  Therefore, in the process of operating in Vietnam, enterprises and economic organizations will mainly work with provincial authorities.  Some notable authorities and their general duties can be mentioned as follows:

Provincial-level People’s Committee

The Provincial People’s Committee is the authority in charge of the administrative management of a province or a municipality.  Because of the broad scope of management, the People’s Committee will enlist the help of specialist authorities in each subject to do their work.  Enterprises must pay attention to the following authorities in the realm of commercial business:

  • Department of Planning and Investment: This department directly oversees foreign organizations’/individuals’ investment projects in Vietnam, as well as handling enterprises registration in Vietnam (including enterprises with 100 percent Vietnamese capital and enterprises with foreign capital).
  • Department of Labor, War Invalids, and Social Affairs: This authority oversees labor-related jobs and enterprise internal affairs, such as processing license issue, renewal, and re-issue foreigner work permit, receive labor regulations registration, and process labor subleasing dossiers; and
  • Department of Industry and Trade: This authority oversees trade promotion administrative procedures (registration of promotional activities, organization of fairs, etc.). Furthermore, under the terms of Decree 07/2016/ND-CP, international traders who wish to open a representative office in Vietnam must register with the Department of Industry and Trade in the city where the office will be located to get the operating license.

Immigration Department of Provincial Police

In the case of enterprises employing foreigners, the arrangement of places of residence for employees is an urgent issue that enterprises need to solve.  The Immigration Department is responsible for issuing and renewing temporary or permanent residency cards, issuing visas to foreigners that reside in the area, and ensuring the residence of foreign workers employed by the enterprise is lawful.

Provincial Tax Department

Foreign enterprises with a permanent resident or without a permanent resident in Vietnam, when generating taxable income from production and business activities in Vietnam, not only have to pay corporate income tax, but also pay some other taxes, e.g., value added tax, etc.

According to the provisions of Article 3.2.a, the Tax Department directly manages a number of enterprises such as foreign-invested enterprises; central enterprises doing bookkeeping for the whole sector, enterprises operating in multiple areas (such as hydropower, postal, telecommunications, general construction…); enterprises with large business scale; enterprises whose budget revenues are distributed to many provincial-level localities or many district-level areas in the same province or city as beneficiaries according to the provisions of law, or enterprises engaged in business in complex fields as finance, banking, insurance, etc.

District Level Authorities

Social Security at District Level

Compulsory social insurance payment for employees is the obligation of employers. Therefore, enterprises will have to work with the Social Security Administration – the Social Insurance Authority to be able to properly and fully fulfill their insurance obligations for their employees.

District Tax Sub-Department

According to the provisions of Decision 2845/QD-BTC issued by the Minister of Finance on the assignment of tax authorities to manage taxpayers, the Tax Sub-department will directly manage enterprises with operating locations in the district and not under the management of the Tax Department.

Note

The functions, duties and powers of the authorities mentioned above are just common contents for reference purposes only.  Such content may not be appropriate under certain exceptions.  For example, the Department of Planning and Investment will handle the business registration of most enterprises in Vietnam; however, for some special enterprises, the registration will be handled by other authorities.  For example, the business registration of law firms will be handled by the Justice Department of the Provincial People’s Committee, the business registration of commercial banks will be handled by the State Bank of Vietnam, the business registration of insurance enterprises will be handled by the Ministry of Finance, etc.

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If you have any questions or concerns about commercial business managing authorities in Vietnam, please contact our experienced attorneys at letran@corporatecounsels.vn.