Guidance on the transfer of overseas oil and gas projects in Vietnam from December 5, 2024

Guidance on the transfer of overseas oil and gas projects in Vietnam from December 5, 2024​ (Image from the Internet)

On October 15, 2024, the Government of Vietnam issued Decree 132/2024/ND-CP stipulating overseas investment in oil and gas activities.

1. Guidance on transfer of overseas oil and gas projects in Vietnam from December 5, 2024

According to the provision in Article 19 of Decree 132/2024/ND-CP, the process for transferring overseas oil and gas projects is as follows:

- An investor may transfer a portion or the entirety of an overseas oil and gas project in accordance with the provisions of the oil and gas contract, agreements, related licenses, the law of the host country, and the countries involved, and regulations at Decree 132/2024/ND-CP. The authority authorized to decide on overseas oil and gas project investment is also the authority to decide on the project's transfer.

- In cases of transferring the entire overseas oil and gas project to a domestic investor, the investor must carry out the procedures to adjust the certificate of offshore investment registration as stipulated in Article 63 of the Investment Law 2020. When transferring the entire overseas oil and gas project to a foreign investor, the investor must carry out the procedures to terminate the validity of the offshore investment registration certificate as stipulated in Article 64 of the Investment Law 2020.

- In cases where transferring an overseas oil and gas project generates a profit, the investor must fulfill financial obligations in Vietnam as per the tax law, relevant laws, and the agreement on avoidance of double taxation and prevention of tax evasion on income and assets taxes between Vietnam and countries and territories involved.

2. Regulations on capital (cost) recovery from overseas oil and gas projects in Vietnam from December 5, 2024

The recovery of capital (cost) from overseas oil and gas projects is specifically regulated in Article 18 of Decree 132/2024/ND-CP as follows:

- An investor is responsible for transferring the recovered capital (cost) from an overseas oil and gas project back to Vietnam within 6 months from the date of the tax finalization report or an equivalent legally valid document under the law of the host country, except for cases prescribed in Clause 3, Article 18 of Decree 132/2024/ND-CP.

- Within the time limit specified in Clause 1, Article 18 of Decree 132/2024/ND-CP, if the recovered capital (cost) from an overseas oil and gas project is not transferred back to Vietnam, the investor must notify in writing the Ministry of Planning and Investment, Ministry of Finance, Ministry of Industry and Trade, State Bank of Vietnam, and the representative owner agency for appropriate monitoring and management according to their assigned functions and duties. The extension period for capital (cost) recovery remittance to Vietnam shall not exceed 12 months from the end of the period specified in Clause 1, Article 18 of Decree 132/2024/ND-CP.

- In case the total overseas investment capital is less than the registered capital or in cases of increasing overseas investment capital, the investor may retain recovered capital (cost) to reinvest in that project if stipulated in the offshore investment certificate or adjusted offshore investment certificate or offshore investment registration certificate or adjusted offshore investment registration certificate.

Refer to Decree 132/2024/ND-CP (effective from December 5, 2024) replacing Decree 124/2017/ND-CP of the Government of Vietnam on regulations for overseas investment in oil and gas activities.

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