Socialist Republic of Vietnam

GOVERNMENT

No. 57-1998-ND-CP, Hanoi, 31 July 1998
(as amended 2 August 2001)


DECREE
MAKING DETAILED PROVISIONS FOR IMPLEMENTATION OF THE COMMERCIAL LAW WITH RESPECT TO IMPORTATION, EXPORTATION, PROCESSING AND SALE AND PURCHASE AGENCY INVOLVING
FOREIGN PARTIES


The Government

Pursuant to the Law on the Organization of the Government dated 30 September 1992;

Pursuant to the Commercial Law dated 10 May 1997;

Following the proposal of the Minister of Trade;

Decrees:


CHAPTER I

General Provisions

Article 1 Applicability

This Decree makes detailed provisions for the implementation of the Commercial Law with respect to importation and exportation of goods, processing and sale and purchase agency by business entities which are established and operate in accordance with the law of Vietnam involving foreign business entities.

Article 2 Interpretation

In this Decree, the following words and phrases shall have the meanings ascribed to them hereunder:

1. Import and export of goods is the sale and purchase of goods by Vietnamese business entities under contracts for sale and purchase of goods with foreign business entities, including temporary import for re-export, temporary export for re-import and transhipment of goods.

2. Processing of goods involving foreign business entities is the activity whereby Vietnamese business entities or enterprises established under the Law on Foreign Investment in Vietnam agree to process goods in Vietnam for foreign business entities or to have their goods processed abroad.

3. Sale and purchase agency involving foreign business entities is the activity whereby Vietnamese business entities act as agents to sell goods in Vietnam for foreign business entities or as agents to purchase goods in Vietnam for foreign business entities for export or for manufacture in Vietnam for export.


CHAPTER II

Importation and Exportation of Goods

Section 1

Provisions on Goods to be Imported and Exported

Article 3 Goods to be Imported and Exported

All categories of goods, other than those ones included in the list of goods the import or export of which is prohibited, may be imported or exported. In respect of goods the import or export of which is prohibited or conditional, the provisions of articles 4 and 5 of this Decree shall apply.

Article 4 Goods the Import or Export of Which is Prohibited

1. The list of goods the import or export of which is prohibited shall be issued by the Prime Minister of the Government from time to time on the basis of proposals of the Minister of Trade and other relevant ministries and branches.

2. The goods included in the list of goods the import or export of which is prohibited may only be imported or exported in special cases upon approval of the Prime Minister of the Government.

Article 5 Goods the Import or Export of Which is Conditional

1. Goods the import or export of which is conditional shall comprise:

(a) Goods imported or exported in accordance with quotas;

(b) Goods imported or exported in accordance with permits of the Ministry of Trade;

(c) Goods imported or exported subject to management of specialized line ministries;

(d) Goods imported or exported in accordance with separate provisions of the Prime Minister of the Government.

2. The list of goods the import or export of which is conditional and the regulations on import and export of goods included in this list shall be issued by the Prime Minister of the Government from time to time on the basis of proposals of the Minister of Trade and ministers of specialized line ministries.

Article 6 Goods Temporarily Imported for Re-export, Temporarily Exported for Re-import and in Transhipment

Goods traded by way of temporary import for re-export, temporary export for re-import and transhipment shall be subject to separate regulations issued by the Minister of Trade upon agreement with relevant ministries and branches and in accordance with international practices.

Article 7 Temporary Suspension of Importation or Exportation of Goods

Where necessary, the Prime Minister of the Government shall decide on temporary suspension of exportation or importation to or from certain markets or of certain types of goods in order to exercise the right of self-protection in accordance with law and international practice.

The Ministry of Trade shall inform relevant international economic organizations and countries in accordance with the agreed procedures (if any) upon specific decision of the Prime Minister of the Government on temporary suspension of importation or exportation of goods.

Section 2

Provisions on Import and Export Business

Article 8 Import and Export Business

1. With respect to Vietnamese business entities:

Business entities established under the provisions of the law shall have the right to export all categories of goods, irrespective of the lines of business or lines of goods stated in their certificates of business registration, except those goods which are included in the list of goods the export of which is prohibited; and shall be permitted to import goods in accordance with the lines of business or lines of goods stated in their certificate of business registration.

With respect to goods which are included in the list of goods and commercial services the trading of which is restricted, or in the list of goods and commercial services the trading of which is conditional, business entities must fully comply with the current regulations of the law regarding trading of such goods prior to commencement of importation or exportation.

Branches of business entities shall be permitted to import or export goods as authorized by the business entities.

In particular, with respect to enterprises with foreign owned capital and business co-operation parties, in addition to exportation of their products, they shall be permitted to export other categories of goods, except for those goods which are included in the list of goods the export of which is prohibited and certain categories of goods as may be determined by the Ministry of Trade from time to time. With respect to those goods which are included in the list of goods the export of which is conditional, enterprises with foreign owned capital and business co-operation parties shall carry out exportation in accordance with the provisions of their issued investment licences, of the Law on Foreign Investment in Vietnam and of other relevant legal instruments.

The importation of goods by enterprises with foreign owned capital and business co-operation parties shall be carried out in accordance with the provisions of their issued investment licences, of the Law on Foreign Investment in Vietnam and of other relevant legal instruments.

2. With respect to branches of foreign business entities in Vietnam:

Branches of foreign business entities in Vietnam shall carry out importation or exportation of goods in accordance with the provisions of Decree 45-2000-ND-CP of the Government dated 6 September 2000 on Representative Offices and Branches of Foreign Business Entities and Foreign Tourism Enterprises in Vietnam and other relevant legal instruments.

3. Prior to commencement of import or export business, business entities stipulated in clauses 1 and 2 of this article must register for a code for import or export business at the provincial or municipal Customs Department.

The General Department of Customs shall establish the above code system and provide guidelines for registration for codes for import or export business.

Article 9 Import and Export by Authorized Dealers

1. Business entities and their branches referred to in article 8 of this Decree shall be permitted to authorize dealers, or to act as authorized dealers, to import or export goods within the scope provided for in this Decree.

Enterprises with foreign owned capital and business co-operation parties and branches of foreign business entities in Vietnam shall be permitted to authorize dealers to import or export goods within the scope provided for in this Decree.

2. The rights and obligations of import and export principals and import and export authorized dealers shall be specifically agreed in contracts for import and export authorization.

Article 10 Import and Export Associations in Lines of Business

Business entities engaged in the same line of business shall, irrespective of their economic sectors, be permitted to establish import and export associations in that line of business on a voluntary basis for the purposes of co-ordination of activities, improvement of business and production efficiency, assurance of the legitimate rights and interests of members and assurance of the national interests.

The Ministry of Trade shall issue regulations on establishment and operation of import and export associations in lines of business after discussion and agreement with the Personnel and Organization Committee of the Government and relevant ministries and branches.


CHAPTER III

Processing Involving Foreign Business Entities

Section 1

Processing for Foreign Business Entities

Article 11 General Provisions

Vietnamese business entities of all economic sectors shall be permitted to process for foreign business entities without limitation in respect of the quantity and types of processed goods. In respect of processed goods included in the list of goods the import or export of which is prohibited or temporarily suspended, business entities shall only be permitted to enter into contracts upon obtaining the written approval of the Ministry of Trade.

Article 12 Processing Contracts

A processing contract must be made in writing and include the following terms:

(a) Names and addresses of contracting parties;

(b) Name and quantity of processed products;

(c) Prices for processing;

(d) Time-limit for and method of payment;
(dd) List, quantity and value of imported raw materials, sub-materials and supplies and domestically produced raw materials, sub-materials and supplies (if any) for processing; level of use of raw materials, sub-materials and supplies; level of consumption of other supplies; and wastage rate of raw materials in processing;

(e) List and value of machinery and equipment leased, lent or donated for the purpose of processing (if any);

(g) Measures to treat scraps and discharged matter and principles for dealing with leased or borrowed machinery and equipment and with left-over raw materials, sub-materials and supplies upon expiry of the processing contract;

(h) Location and time of goods delivery;

(i) Trade mark of goods and appellation of origin of goods;

(k) Duration of validity of contract.

Article 13 Level of Use of Raw Materials, Sub-materials and Supplies, Level of Consumption of Other Supplies and Wastage Rate of Raw Materials, Sub-materials and Supplies

The level of use of raw materials, sub-materials and supplies, the level of consumption of other supplies and the wastage rate of raw materials, sub-materials and supplies shall be agreed by the parties in processing contracts. Directors of enterprises being processors shall be responsible for the use of imported raw materials, sub-materials and supplies solely for the purpose of processing; any breaches shall be dealt with in accordance with law.

Article 14 Leasing, Borrowing or Importing Machinery and Equipment of Suppliers for Implementation of Processing Contracts

1. A processor may lease or borrow machinery and equipment from a supplier for the purpose of implementation of a processing contract. The lease, borrowing or donation of machinery and equipment must be agreed in the processing contract.

2. The importation of machinery and equipment, including used machinery and equipment, for the purpose of implementation of a processing contract must comply with the provisions of the laws of Vietnam on importation of technology and management of import and export activities.

Article 15 Rights and Obligations of Suppliers and Processors

1. In respect of suppliers:

(a) To provide all or a part of the raw materials and supplies for processing as agreed in the processing contract;

(b) To take back all processed products, leased or lent machinery and equipment and left-over raw materials, sub-materials, supplies and scraps after liquidation of the processing contract (except in cases of on-the-spot export, destruction, giving as a gift or donation thereof as stipulated in this Decree);

(c) To send experts to Vietnam to provide instructions on production techniques and inspect the quality of processed products as agreed in the processing contract;

(d) To be responsible for the right to use trademarks of goods and appellations of origin of goods; where trademarks of goods and appellations of origin of goods have been registered in Vietnam, a certificate of the Department of Industrial Property in Vietnam shall be required;

(dd) To comply with the provisions of the law of Vietnam relating to processing activities and the terms of the signed processing contract;

(e) To be permitted to conduct on-the-spot export of processed products, leased or lent machinery and equipment and left-over raw materials, sub-materials and supplies, faulty products and scraps in accordance with written agreements between the parties concerned and consistent with the applicable regulations on control of import and export of goods from time to time; provided that all tax obligations and other financial obligations stipulated by law must be fulfilled.

2. In respect of processors:

(a) To be exempted from import duties in respect of machinery, equipment, raw materials, sub-materials and supplies temporarily imported in accordance with the agreed limits for the purpose of implementation of a processing contract;
(b) To employ other business entities as processors;

(c) To be provided with a part or all of the raw materials, sub-materials and supplies for processing as agreed in the processing contract and to pay export duties in accordance with the provisions of the Law on Import and Export Duties in respect of the raw materials, sub-materials and supplies purchased locally;

(d) To receive payment from the supplier in the form of processed products, except in cases where such products are included in the list of goods the import or export of which is prohibited. In respect of products included in the list of goods the import or export of which is conditional, the approval of the competent authority shall be required;

(dd) To comply with the provisions of the laws of Vietnam on processing, exporting, importing and manufacturing goods locally and the terms of the signed processing contract;

(e) To carry out procedures for on-the-spot export of processed products, leased or lent machinery and equipment and left-over raw materials, sub-materials and supplies, faulty products and scraps as authorized by principals.

3. Conditions for on-the-spot import and export of processed products, leased or lent machinery and equipment and left-over raw materials, sub-materials and supplies, faulty products and scraps:

(a) The provisions of the law relating to import goods and duties and other financial obligations must be complied with;

(b) A contract of sale and purchase must be entered into between the foreign business entity and an import business entity.

Article 16 Customs Procedures

On the basis of processing contracts entered into by parties as stipulated in article 12 of this Decree, customs offices shall carry out import and export procedures and monitor importation and exportation related to processing contracts.

Article 17 Transitional Processing

1. Transitional processing is the form of processing whereby the processed products under one processing contract are used as materials for processing under another processing contract.

2. Processed products under a processing contract in one phase shall, under instructions of the supplier, be provided for the purpose of the processing contract of the following phase.

3. The procedures for delivery and receipt of transitional processed products and the importation and exportation of processed products shall be carried out in accordance with the guidelines of the General Department of Customs.

Article 18 Finalization and Customs Clearance of Processing Contracts

1. Upon termination or expiry of a processing contract, the parties to the processing contract must finalize the contract and carry out clearance procedures with customs offices.

In respect of processing contracts having a duration of more than one year, the processors shall carry out the clearance procedures for such contracts every year with customs offices.

2. The basis for finalization and customs clearance of a processing contract is the quantity of imported raw materials, sub-materials and supplies and the quantity of products exported against the level of use of raw materials, sub-materials and supplies, the level of consumption of other supplies and the wastage rate of raw materials, sub-materials or supplies as agreed in the processing contract.

3. Upon completion of a processing contract, any machinery and equipment leased or borrowed under the contract, left-over raw materials, sub-materials and supplies, faulty products and scraps shall be dealt with as agreed in the processing contract which must be consistent with the provisions of law. The procedures for re-export, sale and purchase, giving as a gift, donation, destruction and transfer for implementation of other processing contracts shall be carried out at customs offices.

4. The destruction of faulty products and scraps (if any) must be carried out under the supervision of customs offices. In cases where destruction in Vietnam is not permitted, re-exportation to the supplier shall be required.
5. The donation of machinery, equipment, raw materials, sub-materials, supplies, scraps or faulty products shall be stipulated as follows:

(a) The supplier must issue a written document of gift;

(b) The donee must fulfil import procedures in accordance with the provisions on import and export; and must pay import duties (if any) and register assets in accordance with applicable provisions;

(c) The approval of the Ministry of Trade shall be required.


Section 2

Processing of Goods in Foreign Countries

Article 19 General Provisions

1. Business entities of all economic sectors may have any type of good which is permitted to be circulated in Vietnam processed in foreign countries for business purposes in accordance with the provisions of the law.

2. The exportation of machinery, equipment, raw materials, sub-materials or supplies for processing and the importation of processed products must comply with the provisions of the laws on import and export.

3. Contracts for processing of goods in foreign countries and the customs procedures in respect of the import and export of such processed goods shall be in accordance with the provisions of articles 12 and 16 of this Decree.

Article 20 Rights and Obligations of Enterprises Having Goods Processed in Foreign Countries

1. To export temporarily machinery, equipment, raw materials, sub-materials or supplies or to tranship machinery, equipment, raw materials, sub-materials or supplies from a third party to the processor for the purpose of implementation of a processing contract;

2. To re-import processed products and, upon completion of a processing contract, to re-import left-over machinery, equipment, raw materials, sub-materials or supplies;

3. To sell processed products and exported machinery, equipment, raw materials, sub-materials or supplies for the purpose of implementation of a processing contract in the market of the country of the processor or any other market and to pay tax in accordance with applicable provisions;

4. To be exempted from import duties and export duties in respect of machinery, equipment, raw materials, sub-materials or supplies temporarily exported for re-import and in respect of processed products imported; or to pay export duties where re-import is not carried out in accordance with the provisions of the Law on Import and Export Duties;

In respect of raw materials, sub-materials or supplies purchased in foreign countries for processing of processed products which are then imported, import duties shall apply in accordance with the provisions of the Law on Import and Export Duties;

5. To send experts and technical workers abroad for the purpose of inspection and acceptance of processed products.


CHAPTER IV

Sale and Purchase Agency for Foreign Business Entities

Article 21 Conditions for Vietnamese Business Entities to Conduct Sale and Purchase Agency for Foreign Business Entities

1. Vietnamese business entities having business registration in lines of business which are consistent with the goods being the subject matter of the agency shall be permitted to conduct sale and purchase agency for foreign business entities.

2. A Vietnamese business entity acting as a sale agent must open a separate bank account for the purpose of payment for goods sold by way of agency in accordance with the guidelines of the State Bank of Vietnam. Business entities may make payment in the form of goods which are not included in the lists of goods the import or export of which is prohibited or conditional. The approval of the competent authority shall be required in the case of payment in the form of goods included in the list of goods the import or export of which is conditional.

3. A Vietnamese business entity acting as a purchase agent must require the foreign business entity to transfer money in convertible currencies through banks for the purpose of purchase of goods by the Vietnamese business entity in accordance with the agency contract.

Article 22 Goods Being the Subject Matter of Agency

1. Business entities satisfying all conditions stipulated in article 21 of this Decree shall be permitted to enter into contracts for sale and purchase agency in respect of goods which are not included in the list of goods the import or export of which is prohibited.

2. In respect of goods included in list of goods the import or export of which is conditional, business entities may only enter into agency contracts within the quantity or value of goods approved by the competent authority as stipulated in article 5 of this Decree.

Article 23 Agency Contracts for Sale and Purchase of Goods with Foreign Business Entities

The signing and implementation of agency contracts for sale and purchase of goods with foreign business entities must comply with the provisions on goods sale and purchase agency in Section 6 of Chapter II of the Commercial Law.

Article 24 Tax Obligations

1. Goods under sale and purchase agency contracts shall be subject to taxes and other financial obligations in accordance with the provisions of the law of Vietnam.

2. Vietnamese business entities shall be responsible for registering, declaring and paying all kinds of taxes and other financial obligations relating to goods under sale and purchase agency contracts and their business activities in accordance with the provisions of the law.

Article 25 Import and Export Procedures

Vietnamese business entities shall carry out the same import and export procedures in respect of goods under sale and purchase agency contracts with foreign business entities as in the case of imported or exported goods stipulated in this Decree.

Article 26 Return of Goods

Goods under agency contracts for sale for foreign business entities in Vietnam must be re-exported if they are not able to be sold in Vietnam. Tax refunds shall be carried out in accordance with the provisions of the legislation on taxation of Vietnam.


CHAPTER IV.1

Engaging Foreign Business Entities To Conduct
Sale Agency Overseas

Article 26a Conditions for Engaging Foreign Business Entities To Conduct Sale Agency Overseas

1. Business entities referred to in article 8 of this Decree shall be permitted to engage foreign business entities to conduct sale agency overseas.

2. Business entities shall be permitted to engage agents to sell overseas all categories of goods, except those included in the list of goods the export of which is prohibited. With respect to goods included in the list of goods the export of which is conditional, business entities may only enter into contracts for sale agency overseas as provided for in article 5 of this Decree.

3. Business entities engaging agents to sell goods overseas must enter into an agency contract with the foreign business entity and must have a bank account for the purpose of receipt of payments from sales of goods by agents in accordance with the guidelines of the State Bank of Vietnam.

4. In cases where payments from sales of goods by agents are received in kind, the Vietnamese business entity must comply with the provisions of laws currently in force regarding imported goods.

Article 26b Tax Obligations

1. Goods under overseas sale agency contracts shall be subject to taxes and other financial obligations in accordance with the provisions of law of Vietnam.

2. Vietnamese business entities shall be responsible to register, declare and pay all types of taxes and to fulfil other financial obligations arising in relation to engaging foreign business entities to conduct sale agency overseas.

Article 26c Return of Goods

1. Goods exported under overseas sale agency contracts shall be imported back into Vietnam if they not able to be sold overseas.
2. Goods imported back into Vietnam as referred to in clause 1 of this article shall not be subject to import duty and shall be entitled to export duty refunds (if any).

The Ministry of Finance shall provide guidelines on the provisions on duties referred to in this clause.

Article 26d Import and Export Procedures

The procedures for import and export of goods under overseas sale agency contracts, including the import of goods back into Vietnam because they are not able to be sold overseas, shall be carried out in accordance with the guidelines of the General Department of Customs.


CHAPTER V

Dealing with Breaches

Article 27 Dealing with Breaches of Business Entities

Business entities breaching the provisions of this Decree shall, depending on the seriousness of the breach, be subject to administrative penalty or prosecuted for criminal liability in accordance with the provisions of the law.

Article 28 Dealing with Breaches of State Officials and Employees

State officials and employees who abuse their positions or powers to breach the provisions of this Decree shall, depending on the seriousness of the breach, be subject to administrative penalty or prosecuted for criminal liability in accordance with the provisions of the law.


CHAPTER VI

Implementing Provisions

Article 29 Implementing Provisions

1. This Decree shall take effect after thirty (30) days from the date of its signing. All previous provisions which are inconsistent with the provisions of this Decree are hereby repealed.

2. The General Department of Customs shall be responsible for providing data on enterprises which have registered their codes for import and export business and on import and export turnover according to lists of goods and markets and relevant data on import and export of goods for the Ministry of Trade in accordance with the provisions agreed by the Ministry of Trade and the General Department of Customs.

3. The Ministry of Trade shall, in co-ordination with the General Department of Customs, the Ministry of Finance and peoples committees of provinces and cities under central authority, be responsible for examining the implementation of the provisions of this Decree.

4. Ministers, heads of ministerial equivalent bodies, heads of Government bodies, and chairmen of provinces and cities under central authority shall be responsible for guiding the implementation of, and for implementing, this Decree.


For the Government
The Prime Minister


PHAN VAN KHAI