As a foreign-invested enterprise (FDI) operating in Vietnam, have you ever felt confused or even concerned upon receiving a notice of an administrative violation from a competent authority? Differences in language, legal culture, and a complex regulatory framework can make the standard administrative violation handling process more challenging for FDI enterprises that are not yet familiar with local requirements. In this article, KMC will guide you through each step of the process, helping you clearly understand your rights and obligations in order to respond effectively, minimize risks, and protect your corporate reputation.
What is an Administrative Violation?
According to the Law on Handling of Administrative Violations, this refers to a culpable act committed by an individual or organization that violates state management regulations but does not rise to the level of criminal liability. For enterprises, this is commonly related to errors in “day-to-day” areas such as labor (contracts, insurance), taxation (declarations, invoices), customs, environment, fire prevention and fighting, or advertising.
Why Do FDI Enterprises Need to Pay Attention to This Issue?
Broad Scope, High Risk of Errors
The wide range and complexity of administrative regulations applicable to FDI enterprises increase the risk of procedural and documentation mistakes. This may unintentionally lead to administrative violations.
Dual Consequences
In addition to direct financial penalties (which can be substantial), administrative sanctions may significantly affect the company’s reputation and compliance assessment. This is particularly important for multinational corporations, as parent companies abroad place strong emphasis on their local compliance image.
Barriers in the Administrative Violation Handling Process
Differences in language, legal culture, and working practices with authorities may make the administrative violation handling process more stressful, time-consuming, and disruptive to business operations.
Administrative Violation Handling Process
Step 1: Preparation of the Administrative Violation Record
This step marks the official recording of the violation by the competent authority. The record is prepared by authorized persons such as inspectors, police officers, market surveillance officers, or customs officers while performing official duties and detecting violations within their assigned jurisdiction.
What you need to do:
Cooperate while remaining calm. Carefully review the record before signing. If you do not agree with the described content, clearly state your opinion in the record. For example: “I only agree with items A and B, and do not agree with item C due to the following reasons…”
You should not refuse to sign the record, but you may write: “I have read and have opinions as stated above.” At the same time, ensure that you receive a copy of the record with signatures and official stamps.
Step 2: Verification of Circumstances and Determination of Exhibit Value
After the record is made, the competent authority may conduct further verification if necessary to clarify relevant circumstances. This may take place before or after the record is made and must be documented in writing.
In cases involving goods or materials (e.g., customs, intellectual property, product quality), the penalty level may depend on the value of the violating exhibits. The competent authority is responsible for determining this value as a basis for sanctioning. Therefore, enterprises should closely monitor whether the valuation is accurate, as it directly affects the penalty range and sanctioning authority.
Step 3: Right of Explanation of the Enterprise
This is your opportunity and should be fully utilized. Under the law, enterprises have the right to provide written explanations or present directly in the following cases:
● When the expected penalty includes revocation of licenses or suspension of business activities for a limited period.
● When the expected monetary fine is VND 30 million or more (for organizations).
It is strongly recommended not to ignore this opportunity. Prepare a professional written explanation in Vietnamese (with a translated version for internal use by the parent company, e.g., English or Japanese). In addition, provide sufficient evidence and legal documents to clarify your position and present mitigating circumstances (if any). A persuasive explanation can significantly influence the authority’s assessment.
Step 4: Issuance of the Administrative Sanction Decision
Based on the case file, verification results, and explanation, the competent authority will issue an Administrative Sanction Decision. The law generally stipulates that this decision must be issued within 7 days from the date of the record. However, it may be extended up to 30 days in complex cases requiring further verification.
The decision must follow a standardized form and clearly state:
● The violating act and applicable legal provisions
● The main sanction (warning or monetary fine) and specific penalty amount
● Additional remedial measures (if any)
● Implementation deadline and rights to complaint or legal proceedings
Enterprises should carefully review the legality and validity of the decision upon receipt.
Step 5: Enforcement of the Decision and Complaint (if applicable)
Once the decision takes effect, the enterprise is obliged to comply: pay the fine on time via the State Treasury and fully implement remedial measures. All receipts and documents confirming payment and remediation must be retained and reported to the competent authority.
At the same time, the enterprise has the right to file a complaint within 90 days if it believes the decision is unlawful or infringes upon its legitimate rights and interests. However, to improve the chances of success, it is advisable to seek professional legal support, such as from experienced lawyers.
Understanding the administrative violation handling process helps FDI enterprises respond effectively when issues arise. However, the best approach is prevention—building a robust internal legal risk management system. This includes regular legal compliance reviews, checking internal procedures against updated regulations, and implementing continuous staff training. Professional advisory services such as KMC can assist in these tasks, allowing enterprises to focus on their core business activities.
