Investment Law 2014 – Foreign investors, domestic investors, and foreign economic organisations
The Investment Law 2014 introduces a brand new system to classify entities with foreign capital into different concepts and groups. Under the Investment Law 2014:
- A “foreign investor” (nhà đầu tư nước ngoài) is a foreign individual or a foreign organization incorporated in a foreign country.
- “Economic organisations” (tổ chức kinh tế) are organisations incorporated in Vietnam (Vietnam EO).
- A “domestic investor” (nhà đầu tư trong nước) is a Vietnamese individual or a Vietnam EO which has no shareholder/member being foreign investors.
- An economic organization with foreign capital (tổ chức kinh tế có vốn đầu tư nước ngoài) (Top-level Foreign EOs) is a Vietnam EO which has at least one shareholder/member being foreign investors.
- An investor (nhà đầu tư) includes foreign investors, domestic investors and Top-level Foreign EOs.
- A Top-level Foreign EO is no longer regarded as a foreign investor or a domestic investor even if the Top-level Foreign EO can be majority owned by foreign investors or domestic investors.
- A domestic investor could include a Vietnam EO which is owned by a Top-level Foreign EO (Low-level Foreign EO).
When an entity with foreign capital invests in another company in Vietnam, such entity may be treated as if it is a foreign investor or a domestic investor depending on the classification of such entity under the Investment Law 2014 and the level of foreign ownership (direct or indirect) in such entity as shown in the diagram below.