1. Definition of a foreign contractor
According to Clause 29, Article 4 of the Law on Bidding 2023, a foreign contractor is defined as an organization established under foreign law or an individual holding foreign nationality who participates in bidding activities in Vietnam.
This definition establishes the legal identity of foreign contractors, whether as organizations or individuals, and confirms their eligibility to engage in bidding and project implementation within Vietnam.
2. Accounting regime applicable to foreign contractors
Under Article 10 of Circular No. 200/2014/TT-BTC, the accounting regime applicable to foreign contractors is as follows:
- Foreign contractors with a permanent establishment or residency in Vietnam, where such establishment or residency is not an independent legal entity, must implement the Vietnamese accounting regime in the following ways:
- Contractors subject to a specific accounting regime issued by the Ministry of Finance must comply with that regime.
- Contractors without a specific regime issued for them may either adopt the full Vietnamese Enterprise Accounting System or apply certain provisions of the system in accordance with their operational characteristics and management requirements.
- If a contractor chooses to apply the full Vietnamese Enterprise Accounting System, it must be applied consistently for the entire fiscal year.
- Contractors must notify the tax authority of their chosen accounting regime within 90 days from the official commencement of operations in Vietnam. Any change in the adopted regime must be reported to the tax authority within 15 working days from the date of the change.
- Foreign contractors must maintain detailed accounts for each awarded contract (or each license for contracting work) and for each transaction, serving as the basis for contract settlement and tax finalization.
- In cases where a foreign contractor applies the full Vietnamese Enterprise Accounting System but wishes to supplement or modify certain contents, registration must be made under Article 9 of Circular No. 200/2014/TT-BTC, and such changes may only be implemented after obtaining written approval from the Ministry of Finance. Within 15 working days from the receipt of a complete application dossier, the Ministry of Finance must provide a written response to the contractor regarding the proposed amendments or supplements.
3. Rights and obligations of foreign contractors
Pursuant to Article 119 of Decree No. 175/2024/ND-CP, the rights and obligations of foreign contractors are set out as follows:
Rights of foreign contractors
- To request guidance from competent authorities on preparing applications for construction operation permits and other matters related to contractor activities under the Decree.
- To lodge complaints or denunciations against violations committed by organizations or individuals in connection with the implementation of the Decree.
- To be legally protected in their business activities in Vietnam in accordance with the granted construction operation permit.
Obligations of foreign contractors
- Establish a project management office after receiving the permit, register all required information, and dissolve it after project completion.
- For planning, survey, or design consultancy contracts, the office may be located at the investor’s office or may not be established.
- For projects in multiple provinces, the office must be in the province issuing the permit.
- Register, use, and return the official seal upon project completion.
- Comply with tax, accounting, and banking regulations under Vietnamese law.
- Recruit labor in accordance with Vietnamese labor law; only bring in foreign experts when local manpower is insufficient.
- Complete customs procedures for import/export of materials and equipment.
- Perform only the approved joint venture or subcontracting arrangements.
- Purchase required insurance (professional, property, construction, etc.).
- Ensure quality and safety inspections for imported materials and construction equipment.
- Comply with Vietnamese laws on standards, quality, labor safety, and environmental protection.
- Upon project completion: finalize dossiers, fulfill warranty duties, handle imported materials and equipment, re-export temporary imports, liquidate the contract, and notify authorities of office dissolution.
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