For further information, please contact:
Tran Manh Hung Partner +84 24 3936 9398 email@example.com
Jenny Dang Paralegal +84 24 3936 9608 Jenny.Dang@bmvn.com.vn
New Regulations on Technology Transfer
On 15 May 2018, the Government issued Decree No. 76/2018/ND-CP ("Decree 76") detailing and guiding the implementation of the new Law No. 07/2017/QH14 on Technology Transfer (the "Law"), which was promulgated by the National Assembly on 19 June 2017. Both the Law and Decree 76 took effect on 01 July 2018. Some significant provisions under the Law and Decree 76 are as follows:
1. Broad definition of "technology"
Under this new Law, technology is broadly defined as "a solution, process or know-how with or without accompanying instruments and facilities to convert resources into products." Furthermore, technology transfer refers to "the transfer of the ownership or the right to use a given technology from the party that has the right to transfer such technology to the transferee."
2. Registration of technology transfer is required
According to Article 31.1 of the Law, the technology transfer agreements and parts of technology transfer in the following agreements must be registered with the state management agencies of science and technology:
Technology transfer agreements from foreign countries to Vietnam;
Technology transfer agreements from Vietnam to foreign countries;
Domestic technology transfer agreements using state capitals or
state budgets, except for those which have been granted Certificate of registration of science and technology missions results.
Within ninety (90) days from the execution of the technology transfer agreement, the transferee (in case of domestic technology transfer or the transfer of technology from foreign countries to Vietnam) or the transferor (in case of the transfer of technology from Vietnam to foreign countries) (the "Applicant") shall send the application dossier to competent science and technology authorities.
Registration of Contracts which were Signed and Executed Before 01 July 2018
Technology transfer agreements which were signed and executed before the effective date of this Law (which was 01 July 2018) and are subject to the registration requirement under Article 31.1 of the Law as specified above, will have to be registered should the parties in the contract wish to renew such agreements after 01 July 2018.
Registration of the Renewal of, Amendment and Supplement to Registered Technology Transfer Agreements
If the registered technology transfer agreement is renewed, amended, or supplemented, the Applicant will have to register such renewal, amendment, or supplement with the competent science and technology authority which originally granted the Certificate of registration for such technology transfer agreement.
The process which the competent authority will follow to grant a Certificate of registration for the renewal, amendment, or supplement of the registered technology transfer agreements is similar to the registration process.
3. Transfer of restricted and forbidden technologies
The list of technologies which are restricted and forbidden to be transferred are provided in Article 10 and Article 11 of the Law respectively. These lists are further detailed in Decree 76 under Article 3 and its attachments.
According to Article 28 of the Law, an organization and/or individual involved in the transfer of technologies which are restricted to be transferred must apply for a technology transfer permit. The issuance of such technology transfer permit must comply with a licensing process in which the involved party must obtain (i) an approval and (ii) a permit from Ministry of Science and Technology (the "MOST") to transfer technologies restricted to be transferred.
Furthermore, an annual report on the execution of the technology transfer agreement must be submitted to the MOST by either the transferee (in case of transferring technology within the country or transferring technology from foreign countries to Vietnam) or the transferor (in case of transferring technology from Vietnam to foreign countries).
4. Effective date of the technology transfer agreement
The effective date of the technology transfer agreement is agreed upon by the involved parties, except for the following:
The technology transfer agreement relating to technologies restricted to be transferred will be effective as of the issuance date of the technology transfer permit.
The technology transfer agreement which are subject to the
registration requirement under Article 31 of the Law shall become effective as of the issuance date of the Certificate of registration of technology transfer. If a technology transfer agreement is renewed, amended, or supplemented, the written agreement containing such renewal, amendment or supplement will become effective as of the issuance date of the Certificate of registration of such renewal, amendment or supplement.
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5. Technology transfer fee and payment method
Payment Methods The technology transfer fee, as agreed upon by the parties in the contract, shall be paid following one of the methods below:
One-off or multiple payments in cash or by goods; Transfer of technology value as capital contribution to the investment
project or enterprise under regulations of law; Payment by percentage (%) of the net selling price; Payment by percentage (%) of the net revenue; Payment by percentage (%) of the earnings before income taxes of
the transferee; or Other payment method as agreed upon by the parties. Audit Technology Transfer Fee If (i) the technology is created or bought using state capitals, and (ii) the transfer of such technology is made between the parties among which one or both parties are using state capitals, fee valuation must base on the valuation consultancy of technology price as required by laws. In situations where technology is transferred between the parties having a parent-subsidiary relationship or an association according to the laws on taxation, if requested by tax authorities, the audit of the technology transfer fee must be in the form of a technology price valuation as provided by laws.
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6. Incentive policies to encourage the transfer of technologies
Certain incentive policies are provided both in the Law and in Decree 76 to encourage the transfer of technologies and to improve the science and technology market. For instance, technologies which, among others, create new and highly competitive products, use new energy or environment-friendly energy, protect human life or help to prevent diseases, etc., or technologies which are encouraged to be transferred to rural and mountainous areas shall enjoy tax reduction policies. Furthermore, the Law also allows the organization creating new technologies while using state budgets to be the owner of such technology. Enterprises are allowed to use part of its pre-tax profits for research and development activities. A national fund used for technology renovation is established to support small and medium enterprises to renovate, transfer, or perfect their technologies, as well as to encourage the transfer of technology for the development of agriculture, forestry, and fishery sectors.
If you would like to discuss with us on how our Firm can assist you with the application of the New Law on Technology Transfer and its guiding Decree No. 76 in Vietnam, please do not hesitate to contact us.
www.bakermckenzie.com/bmvn BMVN International LLC (in alliance with Baker & McKenzie) Unit 1002, 10th Floor, Indochina Plaza Hanoi 241 Xuan Thuy Street, Dich Vong Hau Ward, Cau Giay District, Hanoi, Vietnam Tel: + 84 24 3936 9398 Fax: + 84 24 3825 1432
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