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Accounting services – from WTO commitments to domestic legislation?

The article with the title: “Accounting services – from WTO commitments to domestic legislation?” written by Lawyer Pham Thi Hai Yen[1] – Partner of Phuoc & Partners is published in Saigon Economic Times dated 23/04/2009.   


In 2007, Vietnam joined the World Trade Organization (“WTO”). Accordingly, Vietnam is in the process of opening up many service sectors to foreign investors. There is, however, a big difference between commitment, incorporation, and enforcement. Difficulties for foreign investors in providing accounting services are one such example.

From WTO commitments

A foreign investor may wish to establish a 100% foreign owned company to provide accounting services in Vietnam. The corporate establishment will be governed by Vietnam’s Schedule of Commitments on Trade and Services with WTO Members (WTO Commitments). Pursuant to the WTO Commitments, foreign investors coming from WTO member countries may establish 100% foreign owned companies or joint ventures without any restriction on accounting services (CPC 862) and the WTO commitments clearly state that there is “no restriction” on commercial presence.[2]

To domestic legislation, and so forth

However, the Vietnamese Accounting Law 2015 stipulates that foreign enterprises that provide accounting services are only allowed to provide them in Vietnam under three forms: (i) capital contribution to an enterprise that has been established and is operating in Vietnam to set up an accounting service business conducting enterprises; (ii) establishment of branches of foreign accounting service enterprises; and (iii) provision of cross-border services.[3] In addition, organizations can contribute up to 35% of the charter capital in a limited liability accounting company with two or more members.[4] In case of many capital contributors, the aggregate capital contribution of such contributor organizations will not exceed this maximum ratio. Thus, under the Accounting Law, a foreign company cannot set up a 100% foreign owned company, but in case of its capital contribution, it can hold no more than 35% of the charter capital. It is obviously a material contradiction between WTO Commitments and the Accounting Law.

Which one do investors apply?

In essence, the WTO commitments belong to Vietnam’s international treaties with WTO member territories upon accession to the WTO. Commitments at times are only in generalised basic principles. Therefore, in order to implement the treaties, these commitments and applications to individuals and organizations should pass through local legalisation or these treaties should be converted into the Vietnamese law.

Pursuant to the Law on International Treaties,[5] Vietnam will accept binding international treaties and concurrently decide to directly apply a part or the whole of international treaties to agencies, organizations and individuals if an international agreement is clearly and adequately detailed for implementation.

In keeping with this principle, Resolution No. 71/2006/NĐ-CP of the National Assembly ratifying the Protocol of Accession to WTO (“Resolution 71”) also explicitly states that Vietnam directly applies its commitments to the World Trade Organization, which are detailed in the Protocol, the Annexes and the report of the Working Party on Vietnam’s Accession to the Agreement Establishing the World Trade Organization.[6]

As such, Vietnam’s commitment with respect to accounting services has been converted into Vietnamese law by Resolution 71 and is indeed clear enough to be enforced. Strangely enough, the Accounting Law is not in line with the WTO commitments despite its promulgation in 2015 – namely, nine years after Vietnam’s accession to the WTO.

Reverting to the said story, the conflict between WTO commitments and the Accounting Law poses difficulties to both investors and state authorities. Foreign investors want to apply WTO commitments while Vietnamese state authorities require them to comply with Vietnamese law. Despite clear WTO commitments, Vietnamese state authorities have still enacted and applied divergent rules, leaving foreign investors at a disadvantage. So, for the issues that have not yet been clearly defined in the WTO commitments, how will Vietnamese state authorities interpret the law? This then tests investor confidence in Vietnam’s commitment to the WTO and free trade and enterprises – if investor confidence is broken, will investors turn away from investing in Vietnam?

[1] Lawyer of Phuoc & Partners Law Co., Ltd

[2] Working party on Vietnam’s accession to WTO, Schedule CLX – Vietnam, Part II – Schedule of Specific Commitments on Services, List of Article II Most Favored Nation Exemptions, accessed at, dated 27/03/2017.

[3] Article 59.4 of the Accounting Law 2015

[4] Article 26 of Decree No. 174/2016/NĐ-CP dated 30/12/2016 detailing a number of articles of the Accounting Law

[5] Article 6.2 of the International Treaties 2016

[6] Article 2 of Resolution No. 71/2006/NQ-QH11

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