Question:
Our company is currently operating in the restaurant industry. We are interested in franchising a Korean food brand to Vietnam. Can you please advise what fees and taxes our company and our Korean partner would be subject to? I understand that Vietnam and South Korea have an investment agreement that offers tax incentives for both parties. Does the restaurant industry qualify for these incentives?
Answer:
– According to the WTO, the ASEAN-Korea Free Trade Agreement (AKFTA), and the Vietnam-Korea Free Trade Agreement (VKFTA), Vietnam does not have any commitments related to franchising. Therefore, this activity will be regulated by Vietnamese domestic laws.
– Regarding taxes and fees related to franchising, as per the regulations of the Ministry of Finance, the aforementioned free trade agreements do not contain any provisions related to tax or fee exemptions or reductions for this activity. These trade agreements primarily focus on tariff reductions for goods. Vietnam and South Korea also have agreements on investment protection and agreements to avoid double taxation, but there are no provisions related to tax or fee incentives for franchising.
