During the implementation of an investment project under an Investment Registration Certificate (“IRC”), one of the obligations that the Investors/ Project Implementing Organizations (hereinafter referred to as the “Investors”) need to comply with is to report investment activities to competent authorities by laws. However, not all Investors are mindful of this reporting issue. Even though some Investors have implemented some projects for many years, they have not yet made any reports on investment activities. Some of them even thought that the Vietnamese competent authorities will not have enough time to review and check such kinds of reports.
Why does BLawyers Vietnam raise the above question? Let’s find out the answer underneath.
1. What is a periodic investment activity report?
The prevailing laws of Vietnam have not had specific regulations on what is the investment activity report. However, it can be understood that during the project implementation, the Investor is responsible for reporting to the investment registration authority (“IRA”) and the statistical authority in the province on the specific/ detailed situation of the investment project implementation annually and quarterly.
2. How is the report on investment activity implemented?
The Investors will report to the competent authority including the following contents: implemented investment capital, investment results, information on labor, payment to the government budget, investment in research and development, environmental protection, and specialized targets by field of operation.
Investors make an online report through the National Investment Information System and report in writing to the competent authority.
3. Legal consequences of not implementing the investment reporting regime
Based on each specific case, Investors shall bear the below legal consequences:
a. Regarding the administrative sanctions
Vietnamese law stipulates administrative sanctions in case of violations of the investment reporting regime. Specifically, Investors will be fined up to VND50,000,000 (~USD2,127) when they commit the following acts:
- Failing to comply with the investment reporting regime or to report on time as prescribed;
- Submitting an untruthful or inaccurate report on investment activities;
- Failing to send notification documents to the IRA where the operating office is located within 07 working days from the date on which the decision to terminate the operating office of the foreign investor under a BCC contract;
- Failing to send a notice to the IRA within 05 working days from the date on which the decision on investment project termination is issued; or
- Failing to notify or send the decision on investment project termination to the IRA within 15 working days from the date of investment project termination.
b. Regarding the additional sanctions
Investors are forced as follows:
- Forcing to supplement the contents in case the investment monitoring and evaluation report is incomplete;
- Forcing to implement the periodic reporting regime on the investment monitoring and evaluation as prescribed;
- Forcing to implement the reporting regime on investment activities in case the reporting regime is not implemented; or
- Forcing to send the notice or the decision to terminate the operation of the investment project to the IRA.
c. Regarding risks when amending IRC
When the Investor wishes to amend the IRC, one of the bases for the IRA to consider for amending it is the Investor’s investment reporting regime. In case the Investor has not yet implemented the investment reporting regime, the IRA will request the Investor to review and supplement the report within a certain period. Exceeding this time, if the Investor has not yet finished the investment report regime, it will bear some risks such as:
- The IRA will transfer the dossiers to the inspecting authority to handle investment violations as mentioned in Items 3.a and 3.b above; and
- The IRA will stop processing Investors’ dossiers for amending the IRC. If there is a need to continue to amend the IRC, the Investor will have to re-submit the dossiers.
Thus, the Investor not only costs a sum of money to pay the fine but also being affected by the project implementation. In particular, in case there is a need to amend the content related to the investment capital to implement the project, the operational objectives, the delay in the investment reporting regime will lead to great losses such as (1) Investor is unable to carry out business activities within the scheduled time; (2) loan contracts that cannot be disbursed on time; and/or (3) Investors face the loss of potential partners, even big deals.
In conclusion, the implementation of the investment activity report plays a necessary role. To minimize/ reduce unnecessary risks for clients being domestic and foreign investors, BLawyers Vietnam provides a legal retainer service to support clients in making this reporting work fully and legally.
For further information, please contact:
Minh Ngo Nhat, Partner, BLawyers
minh.ngo@blawyersvn.com
