Since early this year, the Ministry of Finance has been circulating for public comment its draft Law on Corporate Income Tax as well as a draft decree that would implement the law in replacement of Government Decree No 24/2007/ND-CP of February 14, 2007, which guides the current Law on Corporate Income Tax. The two drafts embody a number of changes to the current law, changes that would have a significant impact on businesses.

Since the passage of the Commercial Law, its provisions on logistics services, contained in Articles 233, 234 and 238, have cried out for clarification. Article 233 of the Commercial Law defines logistic services as such commercial services as receipt, transportation, warehousing, and yard storage of goods and cargo, completion of customs procedures and other formalities and paperwork, provision of consultancy to customers, services of packaging, marking, and delivery of goods, or other services for a fee related to goods.

Many foreigners are keen to invest in the trading (import/export) and distribution (commission agents’, wholesale and retailing) sectors in Vietnam. However, foreign involvement in these areas is largely dependent on Vietnam’s commitments to open these sectors in international agreements. The Government has recently released Decree 23/2007 implementing the Commercial Law (“Decree 23”) establishing a legal framework for foreign-invested enterprises (“FIEs”) wishing to engage in trading and/or distribution in accordance with Vietnam’s WTO commitments.

As part of its accession package to join the World Trade Organization (“WTO”), Vietnam has committed to allow foreign involvement in numerous service sectors that were formerly tightly controlled.

Foreign investors are very keen to acquire ownership stakes in domestic enterprises operating in such sectors to establish a presence in the Vietnamese market. However, there is confusion as to the level of foreign involvement that is permitted under the WTO commitments. It is important that this issue is clarified so that the next wave of foreign investment into Vietnam can take place.

In the past three years, Viet Nam has completed a landmark course of legal reform in the field of investment, with the National Assembly passing such legislation as the Bankruptcy Law and Competition Law in 2004; the amended Civil Code, the Commercial Law, the Intellectual Property Law, and the Foreign Exchange Law in 2005; and the Law on Enterprises, Law on Investment, and Securities Law in 2006. Legal reform is the first step towards changing the institutional framework for investment. It is only effective, however, if it results in changes on the ground.

In October, Vietnam concluded negotiations on the terms of Vietnam’s accession to the World Trade Organization (“WTO”). The terms of accession were accepted by the National Assembly on November 29 with the passage of Resolution 71/2006/QH11 ratifying the WTO Protocol of Accession of the Socialist Republic of Vietnam (“Resolution 71”).

The Technology Transfer Law is regarded as one of the most important pieces of legislation for the business community and is expected to solve various issues arising out of technology transfer activities in Vietnam.

On November 21, 2006 the Vietnamese National Assembly passed the Law on amendment of Chapter XIV - Labour Dispute Resolution - of the Labour Code (producing the “Amended Labour Code”).

Vilaf