Regulations on selling goods to foreign enterprises

I. Overview of selling goods to foreign enterprises

Selling goods to foreign enterprises is a commercial activity whereby a company established in Vietnam supplies goods or services to an organization or company headquartered overseas.

Such transactions may be conducted in various forms, including direct export, entrusted export, or cross-border service provision. Proper determination of the nature of the transaction is of significant importance for the application of regulations on taxation, contracts, and payment methods.

II. Legal regulations on selling goods to foreign enterprises

1. Definition of selling goods to foreign enterprises

Selling goods to foreign enterprises is understood as a commercial activity in which a Vietnamese enterprise supplies goods to an enterprise headquartered overseas under a purchase and sale contract.

Such a transaction may be conducted in various forms, such as direct export, entrusted export, or the sale of goods to export processing enterprises located in Vietnam.

2. Notes when selling goods to foreign enterprises

When conducting sales to foreign enterprises, the parties should pay attention to the following matters:

• Clearly determining the legal status of the foreign enterprise.
• Agreement on contractual terms in writing to avoid disputes.
• Complying with regulations on taxation and customs.
• Selecting an appropriate payment method to minimize the risk of bad debts.
• Ensuring that the goods meet the quality standards required by the counterparty.

3. Is it permissible to choose the dispute resolution forum when selling goods to foreign enterprises?

Under current regulations, parties to a contract involving foreign elements may agree to select a foreign court to resolve disputes, except for cases falling under the exclusive jurisdiction of Vietnamese courts as prescribed in Clause 1, Article 470 of the Civil Procedure Code 2015, including:

• Civil cases relating to rights over immovable property located within the territory of Vietnam;
• Divorce cases between a Vietnamese citizen and a foreign citizen or stateless person, where both spouses reside, work, and live long-term in Vietnam;
• Other civil cases where the parties choose Vietnamese courts for dispute resolution in accordance with Vietnamese law or international treaties to which the Socialist Republic of Vietnam is a member, and the parties agree to such choice.

Accordingly, the parties are entitled to select the dispute resolution forum when selling goods to foreign enterprises in accordance with the above provisions.

III. Questions regarding selling goods to foreign enterprises

1. Can Zalo messages be considered evidence of selling goods to foreign enterprises?

Clause 1, Article 119 of the Civil Code 2015 provides: A civil transaction may be established verbally, in writing, or by specific acts.

Clause 7, Article 683 of the Civil Code 2015 stipulates with respect to contracts: The form of a contract shall be determined in accordance with the law applicable to such contract.

Where the form of a contract does not conform to the form required by the law applicable to the contract but conforms to the form required by the law of the country where the contract is entered into or by Vietnamese law, such contract form shall be recognized in Vietnam.

In addition, Clause 1, Article 95 of the Civil Procedure Code 2015 defines evidence as follows: Readable documents shall be considered evidence if they are originals or notarized or lawfully certified copies, or are provided and certified by competent agencies or organizations.

Accordingly, Zalo messages may be considered a source of evidence demonstrating the sale of goods to foreign enterprises according to the above provisions.

2. Is it permissible to impose a sanction exceeding 20% when selling goods to foreign enterprises?

Article 301 of the Commercial Law 2005 provides on sanctions for breach as follows: The sanction for breach of contractual obligations or the aggregate sanctions for multiple breaches as agreed by the parties in the contract shall not exceed 8% of the value of the breached contractual obligation, except for cases prescribed in Article 266 of this Law.

Therefore, traders, organizations, and individuals engaged in commercial activities may not agree on a sanction exceeding 8% of the value of the breached contractual obligation.

3. If one party remains silent but delivers goods to a foreign enterprise, is the contract deemed to have been concluded?

Clause 1, Article 400 of the Civil Code 2015 provides: A contract is concluded at the time when the offeree receives the acceptance of the offer.

At the same time, Clause 2, Article 393 of the Civil Code 2015 stipulates: Silence of the offeree shall not be deemed acceptance of an offer, except where otherwise agreed or where such silence is consistent with established practices between the parties.

In judicial practice, silence may be deemed acceptance of contract formation in the following circumstances:

• The silent party knows that the other party is executing contractual obligations but does not object;
• The silent party has executed its own obligations toward the other party;
• The party remains silent during contract formation but subsequently requests the other party to execute the contract.

Accordingly, where there is an agreement or established practice between the parties, a party’s silence accompanied by delivery of goods may be deemed that the contract has been concluded.

4. Is an export processing enterprise required to pay value-added tax when selling goods to foreign enterprises?

Clause 20, Article 4 of Circular No. 219/2013/TT-BTC provides for non-VAT-taxable subjects as follows: 

• Non-tariff zones include export processing zones, export processing enterprises, bonded warehouses, bonded zones, duty-free warehouses, special economic-commercial zones, commercial-industrial zones, and other economic zones established and entitled to tax incentives similar to non-tariff zones pursuant to decisions of the Prime Minister. Transactions involving the purchase, sale, and exchange of goods between these zones and external parties shall be deemed export and import activities.

Accordingly, export processing enterprises fall within non-tariff zones; therefore, when selling goods to foreign enterprises, they are not subject to value-added tax pursuant to the above regulations.

5. May sales to foreign enterprises be conducted in foreign currency? Why?

Article 3 of Circular No. 32/2013/TT-NHNN sets out the principle of restricting the use of foreign exchange within the territory of Vietnam as follows: 

• Within the territory of Vietnam, except for cases permitted to use foreign exchange as provided in Article 4 of this Circular, all transactions, payments, listings, advertisements, quotations, pricing, price recording in contracts or agreements, and other similar forms (including conversion or adjustment of prices of goods, services, or contract values) by residents and non-residents shall not be conducted in foreign exchange.

Accordingly, except for cases permitted to use foreign exchange within the territory of Vietnam under Article 4 of Circular No. 32/2013/TT-NHNN, transactions, payments, listings, advertisements, quotations, pricing, and price recording may not be conducted in foreign currency.

IV. Legal consulting services related to selling goods to foreign enterprises

The above is NPLaw’s article on the current regulations regarding selling goods to foreign enterprises. With a team of experienced lawyers and legal professionals, NPLaw provides reputable and professional legal services, ensuring optimal protection of the lawful rights and interests of clients. Should you require legal assistance, please contact NPLaw for consultation and support.