New regulations on overseas investment in oil and gas activities

According to the Decree, overseas investment capital in oil and gas activities includes money and other legal assets of investors, including equity capital, loans in Vietnam transferred abroad, recovery costs, profits and other amounts distributed from overseas oil and gas projects retained for overseas investment.

Other legal money and assets include: Foreign currency in accounts at licensed credit institutions or purchased at licensed credit institutions in accordance with the provisions of law; Vietnamese Dong in accordance with the law on foreign exchange management of Vietnam; machinery, equipment, supplies, raw materials, fuel, finished goods, semi-finished goods; value of intellectual property rights, technology, trademarks, rights to assets; shares, capital contributions, projects of investors that are exchanged at economic organizations in Vietnam and economic organizations abroad; other legal assets according to the provisions of civil law.

Overseas investment capital is used to contribute capital, pay for the purchase of shares, purchase of capital contributions, perform arising guarantee obligations (if any) and other financial obligations of investors according to the provisions of the law of the country receiving the investment, petroleum contracts, licenses and other related agreements to carry out petroleum activities, petroleum projects abroad from the project's formation to the project's completion and completion of all obligations according to regulations. Capital transferred abroad, when recovered and transferred back to the country, is not counted into the capital transferred abroad.

Vietnamese investors are allowed to use their shares, capital contributions or investment projects in Vietnam to pay or exchange for the purchase of shares, capital contributions or oil and gas projects of economic organizations abroad. In this case, Vietnamese investors must first carry out procedures for granting certificates of overseas investment registration, then foreign investors must carry out investment procedures in Vietnam in accordance with the provisions of law.

The Article 12 of Decree No. 132/2024/ND-CP stipulates that in order to carry out activities of forming an overseas oil and gas project or implementing an overseas oil and gas project, investors are allowed to establish or participate in establishing an operating company in Vietnam, in the country receiving the investment or in a third country in accordance with the laws of the country receiving the investment and the oil and gas contract.

In case the investor decides to establish an operating company for the purpose of participating in or implementing an overseas petroleum project on behalf of the investor, the operating company and the investor will be named in the overseas investment registration certificate. The operating company may use the overseas investment registration certificate to serve activities related to the implementation of the petroleum project.

The investor may use an operating company to manage and operate one or more overseas petroleum projects in accordance with the regulations of the investment-receiving country. The costs for each petroleum project must be allocated and accounted for independently.

The Article 19, Decree No. 132/2024/ND-CP Decree regulating the transfer of overseas petroleum projects. Accordingly, investors are allowed to transfer part or all of an overseas oil and gas project in accordance with the provisions of the oil and gas contract, agreements, related licenses, the laws of the country receiving the investment and related countries and the provisions of this Decree. The authority competent to decide on investing in an overseas oil and gas project is the authority competent to decide on the transfer of the project.

In case of transferring the entire overseas oil and gas project to a domestic investor, the investor shall carry out the procedures to adjust the overseas investment registration certificate in accordance with the provisions of Article 63 of the Investment Law. In case of transferring the entire overseas oil and gas project to a foreign investor, the investor shall carry out the procedures to terminate the validity of the overseas investment registration certificate in accordance with the provisions of Article 64 of the Investment Law.

In case the transfer of an overseas oil and gas project generates profits, the investor shall fulfill its financial obligations in Vietnam in accordance with the provisions of tax laws, relevant laws and the Agreement on the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and properties between Vietnam and other countries and territories.

The Decree also stipulates that investors are responsible for fully fulfilling their financial obligations related to oil and gas activities and overseas oil and gas projects to the Vietnamese State in accordance with the provisions of tax laws, relevant laws and the Agreement on the avoidance of double taxation and the prevention of tax evasion with respect to taxes on income and properties between Vietnam and other countries and territories.

For petroleum contracts and overseas petroleum projects in which the investor's revenue (shared) is not divided into capital recovery and investor's income, the investor shall register with the Ministry of Finance on the mechanism for determining the investor's revenue for the purpose of State management and fulfilling obligations in Vietnam (if any).

The exemption from export tax and import tax on capital in goods, machinery and equipment transferred abroad to carry out investment activities and transferred from abroad to Vietnam shall comply with the provisions of the law on export tax and import tax.

This Decree takes effect from December 5, 2024 and replaces Decree No. 124/2017/ND-CP dated November 15, 2017 of the Government regulating overseas investment in petroleum activities.