Does your Vietnamese company incur overseas payments under the royalty fee, regular technical consultation, or technology transfer fees? If so, does the company know the obligation of the compulsory register for a new/revised/auto-renewed technology transfer contract in accordance with the Law on Technology Transfer 2017?
Risks in not complying with registration obligations could be administrative penalties. More importantly, the tax authority can exclude expenses deducted from costs associated with the payment of a technology transfer contract.
To mitigate these risks, Nova Law provides Technology Transfer Related Services, including consulting, reviewing, and registering technology transfer contracts with authorities. Since the technology Transfer Law 2017 came into effect, we have had the opportunity to work with many customers, mainly manufacturing businesses, so Nova Law's services ensure quality and professionalism, with the most practical experiences.
Nova Law’s scope of work for technology transfer services
The following article is some brief advice of Nova Law related to legal regulations on technology transfer for your reference.
1. Identification of technology transfer contracts that require to register
Condition 1: A contract or agreement involving the transfer of the ownership or the right to use of one or more of the technology objects as follows:
- Technical secret, technological know-how;
- Technology plan and process; solutions, specifications, drawings, technical diagrams; formulas, computer software, data information;
- Production rationalization solutions, technology innovation;
- Machinery and equipment accompanying one of the above subjects.
Condition 2: A contract to transfer technology from abroad to Vietnam
2. Registration deadline
Within 90 days from the signing date of the technology transfer contract
3. Checklist of the application dossier for a technology transfer contract
- A written request for registration of technology transfer, clearly stating the parties' liability commitments to ensure that the contents of the contract comply with relevant law provisions;
- The technology transfer contract
- Other supporting documents requested by the authority
4. The contents must be specified in the technology transfer contract
- Name of transferred technology.
- Technology objects to be transferred, products created by the technology, and product standards and quality.
- Transfer of ownership, transfer of the right to use technology.
- Method of technology transfer.
- Rights and obligations of the parties.
- Price, payment method.
- Term and effective time of the contract.
- Concepts and terms used in the contract (if any).
- Technology transfer plan and schedule, and location for the technology transfer.
- Responsibility to warrant transferred technology.
- Contract violations.
- Liability for breach of contract.
- Dispute settlement agency.
- Other contents agreed by the parties.
5. Competence to grant technology transfer registration certificates
In case of technology transfer through the implementation of an investment project:
- The Ministry of Science and Technology: for technology transfer of investment projects in Vietnam that fall under the competence to decide on investment policies of the National Assembly, the Prime Minister, ministries and central agencies according to regulations of law on investment, law on public investment and offshore investment projects;
- Department of Science and Technology: for technology transfer of an investment project in the area under its management under the authority to decide on investment policies of the People's Committees at all levels, the Management board of industrial zones; projects subject to investment registration certificates which are not required to have investment policy decisions of competent authorities (the most common); voluntary registration cases.
6. RISKS in case of failure to comply with the contract registration obligation
- Imposing an administrative fine of between VND 60 million and 80 million for the act of transferring technology from abroad to Vietnam without a certificate of technology transfer registration;
- Additional administrative sanctions: confiscation of material evidence and means of administrative violations;
- In addition, the tax authority could exclude expenses deducted from costs associated with the payment of a technology transfer contract.