Individuals and businesses who wish to participate in online gambling in Vietnam are required to obtain a license from Vietnamese authorities. The regulations state that foreign investors can operate their own e-gambling business as long as they meet the requirements of Vietnamese law and regulations. It is important for foreign businesses seeking to engage in e-gambling in Vietnam to familiarize themselves with local laws and consult with experienced legal professionals. Breaking the law can lead to severe legal penalties, including imprisonment, fines, and deportation.
Regulations on e-gambling
The issuance of Decree No. 121/2021/ND-CP by the Vietnamese government has brought changes to regulations on electronic gambling for foreign businesses. This decree replaces the previous Decree No. 86/2013/ND-CP, Decree 175/2016/ND-CP, and Decree 151/2018/ND-CP that used to govern this sector. Decree No. 121, which was effective from February 12th, 2022, has been detailed further by Circular 39/2022/TT-BTC and Circular 09/2022/TT-NHNN, issued on June 24th, 2022, and July 12th, 2022, respectively. In this article, we will summarize the most notable changes that have significant implications for foreign businesses operating in this sector.
Individuals eligible for participating in e-gambling
The new regulations pertaining to E-gambling have stricter eligibility criteria compared to those outlined in Decree 86. Specifically, Decree 121 mandates that only foreigners and overseas Vietnamese who legally enter Vietnam and possess valid passports or international travel documents issued by competent foreign authorities, along with valid visas, can participate in e-gambling. These individuals must also have full civil capacity as per Vietnamese law and willingly adhere to the Game Rules and other provisions listed in Decree 121.
Additionally, Decree 121 states that individuals who are illegally staying in Vietnam or have entered legally but fail to leave before their visa expires, are not eligible to participate in E-gambling activities.
Business conditions and licenses
To operate a business for prize-winning electronic games under the regulations of Decree 121, an enterprise must obtain two sublicenses, one for a certificate of eligibility issued by the Ministry of Finance for this type of business and another for the collection and payment of foreign currency and other foreign exchange transactions issued by the State Bank. It is only after they obtain these sublicenses that they can commence their operations.
The conditions outlined in Decree 121 that must be fulfilled by enterprises to obtain the certificate of eligibility are more rigorous than the earlier Decree 86 regulations. While the basic requirements such as having a five-star tourist accommodation establishment, an area that satisfies regulation conditions for the Business Location, trained managers or operators with over three years of experience, and a business plan are still in effect, Decree 121 sets higher standards for the following requirements:
+ The minimum charter capital has been raised from VND 200 billion to VND 500 billion, with the previous fiscal year’s profit serving as a qualifying criterion.
+ The requirement for at least 180 days of continuous 24/7 surveillance from the date of recording has resulted in a significant increase in the storage time of electronic equipment and camera systems. The previous regulations only required a minimum storage period of 30 days for certain areas and 15 days for others.
+ Operators must operate brand new slot machines that adhere to the technical specifications announced by manufacturers and have been certified by an independent inspection organization from a state member of G7.
The regulating authorities strictly control the number of licensed slot machines. They continue to maintain a maximum limit of one machine per five operational accommodation rooms.
The administration of traditional currency
The Department of Finance and tax authority had to issue or register traditional currency under the previous mechanism, but Decree 121 replaces this requirement. This previous mechanism required registering the currency’s model, quantity, and type before its use and updating information in case of any changes. Instead, the new decree introduces a notification mechanism. The notification serves as the foundation for issuing invoices that calculate the enterprise’s revenue. Moreover, Decree 121 has abolished the provision mandating specific information that enterprises must incorporate in their traditional currency. Instead, the currency only needs to have distinguishing marks and signs.
The new regulation concerning traditional currency, as stipulated in Decree 121, has simplified the form, quality, and procedures required to utilise such currency in operations. This, in turn, has reduced the burden of enterprises for obtaining licences or approvals from the relevant authorities to use traditional currency.
There has been no change pertaining to the payment of traditional currency under Circular 09 regulations as compared to earlier stipulations. Players can use payment methods such as cash, overseas account transfers, or payment from a foreign currency payment account opened with approved banks in Vietnam to the operator’s specialised foreign currency accounts, or credit card payments. These regulations seem outdated, given the emerging trend of several non-cash payment options today.
Conclusion
In short, foreign businesses may still engage in e-gambling activities if they comply with Vietnamese law and regulations. The government has clearly defined the legal framework for foreign investors to operate e-gambling businesses in Vietnam, with the condition of acquiring a valid license from Vietnamese authorities. To avoid serious legal consequences, it is crucial for foreign businesses to adhere to the local laws and regulations governing e-gambling in Vietnam. The regulations have relaxed accounting expenses for this type of business. The previous restriction on management fees, limited to 4% of revenue, is no longer in effect. Decree 121 and its accompanying regulations aim to not only tighten state management on conditional businesses but also create a suitable environment for businesses, provided they satisfy all the required conditions.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn