Foreign investment is the act of an investor transferring capital or paying to purchase a part/whole business system in order to directly manage investment activities. Foreign investment activities are encouraged by the state to expand and develop the Vietnamese market. So to carry out this process, a foreign investment license is required. So what are the conditions for granting a foreign investment licenses? Find out the details in the article below.

1. What is a foreign investment license?

A foreign investment registration certificate is a hard copy or electronic copy recording the registration information of a Vietnamese investor about an investment project abroad.

According to the provisions of the Investment Law 2020, the foreign investment registration certificate includes the following contents:

• Investment project code.
• Investor.
• Name of the investment project, name of the economic organization abroad (if any).
• Investment objectives and locations.
• Investment form, investment capital, investment capital sources, investment capital forms, progress of overseas investment activities.
• Rights and obligations of investors.
• Investment incentives and support (if any).

2. Conditions for granting foreign investment licenses

To be granted a license to register for overseas investment, Vietnamese investors and projects must satisfy the following conditions:

– When carrying out overseas investment activities, investors must comply with the provisions of the Investment Law and other relevant legal provisions, the laws of the country or territory receiving the investment (referred to as the investment receiving country) and relevant international treaties; investors are solely responsible for the effectiveness of overseas investment activities

– The investment project is not in an industry or profession prohibited from overseas investment and meets the conditions for overseas investment for conditional overseas investment industries.

– Investors must have a commitment to arrange foreign currency themselves or a commitment to arrange foreign currency to carry out overseas investment activities from a licensed credit institution.

– Investors must have a decision to invest overseas.

– There must be a document from the tax authority confirming the foreign investor’s fulfillment of tax obligations. The time for calculating the confirmation of the tax authority is no more than 03 months from the date of submission of the investment project dossier.

3. General regulations on foreign investment activities?

3.1. Types of foreign investment forms

Overseas investment has the following forms:

– First is establishing an economic organization according to the law of the country receiving the investment;

– Second is investing in the form of a contract abroad;

– Third is contributing capital, buying shares or buying capital contributions of an economic organization abroad to participate in the management of that economic organization;

– Fourth is buying or selling securities, other valuable papers or investing through securities investment funds and other intermediary financial institutions abroad;

– Fifth is other forms of investment according to the law of the country receiving the investment.

3.2. Industries allowed to invest abroad

– When applying for a foreign investment certificate, investors must note that they are not allowed to invest abroad in industries that are prohibited from investing abroad. These are usually dangerous industries or for some special reasons, investors are not allowed to invest abroad. So where are the industries prohibited from investing abroad regulated? These industries are regulated in the following documents:

+ Industries and professions prohibited from investment and business according to the provisions of the Investment Law and relevant international treaties.

+ Industries and professions with technology and products that are subject to export prohibition according to the provisions of the law on foreign trade management.

+ Industries and professions prohibited from investment and business according to the laws of the country receiving the investment.

– In addition, investors also need to note that when carrying out foreign investment procedures, they need to meet the conditions for conditional industries. Conditional investment industries include: banking; insurance; securities; press, radio, television; or real estate business.

Thus, when investing abroad, it is also necessary to pay attention to the necessary legal regulations to ensure that the investment is in accordance with the law and the investment is protected by law.

3.3. Assets used to carry out foreign investment procedures

Foreign investment can be carried out with different assets as follows:

– First, the investor is responsible for the capital contribution and mobilizes capital sources to carry out investment activities abroad.

– Second, borrowing capital in foreign currency or transferring investment capital in foreign currency must comply with the conditions and procedures prescribed by the law on banks, credit institutions and foreign exchange management.

– Third, based on the monetary policy objectives and foreign exchange management policies in each period, the State Bank of Vietnam shall stipulate that credit institutions and foreign bank branches in Vietnam lend capital in foreign currency to investors in accordance with the law to carry out investment activities abroad.

– Fourth, foreign investment capital is expressed in the following forms:

• Foreign currency in accounts at licensed credit institutions or purchased at licensed credit institutions or foreign currency from other legal capital sources in accordance with the law.
• Vietnamese currency in accordance with the law on foreign exchange management of Vietnam.
• Expressed in machinery, equipment, supplies, raw materials, fuel, finished goods, semi-finished goods.
• Represented by the values ​​of industrial property rights, technical know-how or technological processes, technical services, intellectual property rights, trademarks.
• Other legal assets recognized by foreign law

It can be seen that investment will be made with a variety of assets in different forms based on the value recognized by the country. Therefore, investors do not only invest in currency but can also invest in other forms as above.

4. Application for foreign investment license

To apply for a foreign investment license, the following documents must be prepared:

– Overseas investment registration form;

– Copy of citizen identification card or passport for individual investors; copy of Certificate of establishment of organization or other equivalent document confirming legal status for investors being organizations such as one of the following documents: Investment license or Investment certificate; Investment registration certificate for investors being foreign-invested enterprises in Vietnam; Business registration certificate; establishment decision.

– Foreign investment decision as prescribed in Article 57 of the Investment Law;

– For foreign investment projects of enterprises in which the State holds 100% of charter capital, the decision to invest abroad as prescribed in Point e, Clause 1, Article 55 of the Investment Law is the following documents:

The approval document of the owner’s representative agency allowing the investor to implement investment projects abroad, including the following contents: Investor, form, objectives, scale, investment location, total investment capital, capital mobilization plan, capital structure, project implementation progress, investment efficiency indicators to be achieved;

Internal appraisal report on the foreign investment project, the report will serve as the basis for the approval of the owner’s representative agency as prescribed.

– The following investment projects must have documents confirming the location of the investment project implementation:

a) Energy projects;

b) Projects for raising, growing, catching, and processing agricultural, forestry, and aquatic products;

c) Investment projects in the field of surveying, exploring, exploiting, and processing minerals;

d) Investment projects for building production, processing, and manufacturing facilities;

e) Investment projects for building and trading real estate and infrastructure.

– Documents confirming the location of the investment project include one of the following types:

a) Investment license or equivalent document of the country or territory receiving the investment, which specifies the location and scale of land use;

b) Decision on land allocation or land lease by a competent agency or organization;

c) Winning bid contract, contract for land allocation or land lease; investment and business cooperation contract, which specifies the location and scale of land use;

d) Agreement in principle on land allocation, land lease, business location lease, investment and business cooperation agreement of competent agencies, organizations and individuals in the country or territory receiving the investment.

– Document committing to self-balancing foreign currency sources of the investor or document from a credit institution committing to arrange foreign currency for the investor as prescribed in Clause 3, Article 58 of the Investment Law;

– For foreign investment projects in the fields of banking, science and technology, securities and insurance, the investor shall submit a document approving the competent state agency on meeting the conditions for foreign investment as prescribed in the Law on Credit Institutions, the Law on Science and Technology, the Law on Securities, and the Law on Insurance Business.

– Document from the tax authority confirming the fulfillment of tax payment obligations of investors up to the time of submission of investment project dossiers as prescribed in Article 58 of the Investment Law.

Thus, it can be seen that in order for foreign investment to be licensed, investors need to fully satisfy the conditions on investment fields, financial sources, and investment cash flows in accordance with the provisions of the Investment Law and other relevant laws.

Above are the findings of Viet My Accounting on the regulations on conditions for granting Foreign Investment Licenses in 2024. Hopefully, the above information has helped readers better understand the regulations on Foreign Investment Licenses or can contact VIET MY LAW AND ACCOUNTING when having questions about related Foreign Investment Licenses.