In recent years, Vietnam has significantly focused on promoting and supporting foreign investment. With the development of the economy and a potential market, more and more foreign investors are choosing to do their business in Vietnam. However, not all business lines are allowed by Vietnamese law. Therefore, before carrying out investment activities in Vietnam, foreign investors should be fully aware of this issue. In order to solve these problems, NPLaw Law Firm would like to provide the most basic knowledge regarding these banned business lines under Vietnamese law.
Definition of banned business lines
Any busineses that have a negative impact on economic and social values, violate common ethical standards and unbalance the ecosystem as well as natural resources… are therefore considered as banned business lines.
The business investment activities below are banned pursuant to Law on Investment 2020:
a) Business in narcotic substances specified in Appendix I hereof;
b) Business in chemicals and minerals specified in Appendix II hereof;
c) Business in specimens of wild flora and fauna specified in Appendix 1 of Convention on International Trade in Endangered Species of Wild Fauna and Flora; specimens of rare and/or endangered species of wild fauna and flora in Group I of Appendix III hereof;
d) Prostitution business;
dd) Human trafficking; trade in human tissues, corpses, human organs and human fetuses;
e) Business activities pertaining to asexual human reproduction;
g) Trade in firecrackers.
h) Provision of debt collection services.
Penalties for violating banned business lines regulations
In addition to not being granted an Investment Registration Certificate, when an investor invests in banned business lines as stipulated in Investment Law, they will be subject to a fine of between VND 30.000.000 and 40.000.000 dong.
In addition, violating individuals and organizations must also bear criminal liability corresponding to each type of violation, such as: Business in narcotic substances - 2 to 20 years of imprisonment, life imprisonment or death penalty; prostitution - up to 20 years or life in prison; human trafficking, trade in human tissues, corpses, human organs and human fetuses - up to 20 years or life in prison.
Investment on Cryptocurrencies in Vietnam
In recent years, virtual currencies have exploded in many countries around the world, including Vietnam. More and more people invest in virtual currency but they do not fully understand the current legal regulations in Vietnam related to this currency.
Pursuant to the provisions of Decree 80/2016/ND-CP on amendments to Government's Decree No. 101/2012/ND-CP dated November 22, 2012, non-cash payment instruments in payment transactions including: Cheques, payment orders, collection orders, bank cards and other payment instruments as prescribed by the State Bank; and other payment instruments beyond the ones mentioned earlier are regarded as illegal.
Thus, in Vietnam, Bitcoin and Cryptocurrencies are not considered legal payment instruments and therefore investment in these kinds of currencies is a form of investment that is not recognized by law.
In Vietnam, leaders of the State Bank of Vietnam have repeatedly sent a clear message that Bitcoin and other similar virtual currencies are not legal currencies and payment methods in Vietnam. Issuing, supplying and using Bitcoin and other similar virtual currencies as a means of payment is prohibited in Vietnam (see more in Official Letter 5747/NHNN-PC dated 21/7/017).
In addition, based on the provisions of the 2015 Penal Code, organizations and individuals that issue, provide or use illegal payment instruments will be fined from VND 50,000,000 to VND 300,000,000 or imprisonment from 6 months to 3 years.
Although Vietnam currently does not have any document specifically regulating virtual currency, in the near future, Vietnam may recognize this currency. In Decision 942 of the "Prime Minister" approving the strategy for developing e-government towards digital government in the period of 2021 - 2025, with a vision to 2030, the Government set out research, development and mastery goals. core technologies in which Vietnam has advantages, capable of creating strong breakthroughs such as QR code, artificial intelligence (AI), blockchain ( blockchain) and virtual/augmented reality (VR/AR), Big Data facilitates early deployment of advanced digital technologies in digital government. In particular, the Government also assigned the State Bank (SBV) to research, build and pilot the use of virtual currency based on blockchain technology in the period of 2021 - 2023 (according to Youth Newspaper dated July 2, 2021).
Above are the basic information regarding banned business lines under Vietnam’s regulations. Ngoc Phu Law Firm specializes in providing comprehensive legal services professionally related to Domestic and Foreign Investment; Enterprise; Real estate; Intellectual Property; Labor; Consulting, drafting, negotiating and supporting the signing of commercial contracts, domestic and foreign service contracts; Consulting and supporting the process of applying for all kinds of sub-licenses,.. With a team of profession lawyers and well-trained specialists, allow us to ease the burden by doing the paperwork for you.
