Register company in Vietnam and tap into its dynamic economy and evolving business landscape, ideal for investors aiming to establish a presence in the Asia-Pacific region. Understand the complexities and local regulations for successful business setup.
This comprehensive guide aims to demystify the process of company registration in Vietnam, offering a step-by-step approach tailored for both local and foreign investors. From drafting a detailed business plan to understanding the nuances of post-incorporation procedures, this guide covers all the essential steps to successfully open a business in Vietnam.
Investing in Vietnam? Find out InCorp Vietnam’s Company Formation Services
Step-by-Step Guide to Opening a Business for Investors
STEP 1: Prepare a Plan – Choose a Business Option
In this initial step, it is imperative to draft a comprehensive business plan, encompassing the following critical facets:
- A detailed breakdown of your primary business lines, production processes, and activities, including the ones subject to specific regulations, restrictions, or those that qualify for tax incentives.
- An outline of the capital structure, investment scale, and the resources to be allocated to your venture.
- For businesses with multiple co-founders, devising a robust mechanism for internal governance is pivotal, to avert potential conflicts.
- Identify the key figures in your organization, including the board of directors and founding members.
- Create an organizational chart that delineates the hierarchical structure of your company and also identifies key management personnel.
- Include the cost structure and revenue scale for the previous fiscal year.
- Ensure that your business plan encompasses essential details such as the business name, website, brand identity, and contact information. It is advisable to seek professional advice in this regard.
Read Related: Everything You Need To Know About Company Incorporation in Vietnam
STEP 2: Choose a Business Location
When establishing a business in Vietnam, the choice of your business location is a pivotal decision. Consider the following aspects while determining your business location:
- Determine the type of facility required for your business, whether a corporate headquarters, representative office, branch, factory, showroom, or retail shop.
- Opting for a well-known location can bolster your company’s image and reputation, projecting a positive and professional image.
- A visible and accessible business location attracts more attention, enabling you to tap into a broader customer base and increase your market presence.
- A recognized and convenient location can be a magnet for top-tier talent. Skilled professionals are more likely to be drawn to a location that is easily accessible and renowned.
- It’s important to be mindful of enterprise registration restrictions and steer clear of locations where certain business activities are prohibited. For example, non-commercial buildings or areas unsuitable for specific business lines.
- Strategic locations provide access to relevant resources and networks, making it easier for your company to thrive.
- It’s worth noting that you may be eligible for corporate tax incentives in particular locations. These incentives might include tax exemptions for a designated number of years and tax reductions spanning from 9 to 15 years.
Read More: Choosing the Ideal Business Location in Vietnam: The First Step of Success
STEP 3: Compile Required Documents for Business Registration
When preparing for business registration in Vietnam, you must ensure that you have the following mandatory documents in order:
- Enterprise Registration Certificate (ERC)
- Investment Registration Certificate (IRC)
- Office Lease signifying the registered office address in Vietnam
- Initial tax registration which is submitted to the Tax Department
- Relevant Power of Attorney designating representatives to carry out the business registration process on your behalf
- Articles of Association of your business
- Official application for enterprise registration
- Passports, identity cards, or any other officially recognized identification documents of foreign individuals, legal representatives/ authorized representatives
- Personal bank balance certificates to prove your funding ability
- List of founding shareholders and members
- Business plan, production strategies, and overarching business objectives
- Financial documents demonstrating the founder’s financial capability
- A comprehensive profile of the founder’s professional experience
- Documentation confirming the current residency of your legal representatives
STEP 4: Conduct Post-incorporation Procedures
After successfully incorporating your business, it’s vital to proceed with these essential post-incorporation procedures:
- Establishing a Company Bank Account: Companies should establish a bank account even before initiating the process of company incorporation. As a legal artificial entity, a company must have a dedicated bank account to conduct financial transactions, as transactions cannot be carried out in the name of an individual.
- Registering Tax Information and Settling Business License Tax: Ensure your business is registered with the tax authorities and promptly fulfill your business license tax obligations.
- Enabling E-Invoicing: Register for and implement e-invoicing, an electronic invoicing system widely used in Vietnam.
- Capital Injection: Inject the required investment capital into your business entity under your business plan and financial agreements.
- Installing Business Signage at Your Location: Display your company’s name and signage at your business location, adhering to local regulations and visibility requirements.
- Securing Additional Permits and Licenses: Depending on your specific business activities, acquire any supplementary permits and licenses necessary for your operations.
- Applying for Work Permits and Residence Cards: If you or your employees intend to reside and work in Vietnam, apply for work permits and residence cards as needed to ensure legal compliance.
Local Investors vs. Foreign Investors: Know the Differences
| Local Investors | Foreign Investors |
| The process of obtaining a business certificate for local investors typically takes around five working days. | Registering a business certificate for foreign investors can be a more time-consuming process, spanning from 30 to 60 working days. |
| Local investors typically need an ERC as their primary license. | Foreign investors may need multiple licenses, including ERC, IRC, and Business Registration Certificate (BRC). |
| Local investors face minimal restrictions in terms of industries, with exceptions like education, healthcare, and conservation. | Foreign investors are typically obligated to provide documents like rental contracts for business locations and financial statements. |
| Certain documents, such as rental contracts for business locations and financial statements, may not be obligatory for local investors. | Foreign investors are required to open accounts for foreign direct investment in Vietnam to facilitate financial transactions. |
| Overseas documents used in the registration process may need to undergo a legalization procedure. | |
| Foreign investors often face restrictions in certain business sectors. |
Find out more differences between Local Companies and Foreign Companies in Vietnam here!
Why is a Local Company a Better Choice than a Foreign Company in Vietnam?
Reasons to Establish a Local Company
Selecting a local company in Vietnam can offer several advantages, particularly when foreign ownership remains below 51%. Here are some reasons to consider establishing a local company:
- The laws and regulations governing foreign ownership in Vietnam are often influenced by international agreements, such as those with the World Trade Organization (WTO). When foreign ownership remains below 51%, many businesses fall under local legislation, resulting in fewer restrictions.
- In some business sectors that are not fully open to foreign ownership, there may be a lack of specific local or international regulations. This can create ambiguity and uncertainty for foreign-owned companies. Opting for a local company may provide a clearer legal framework for operations.
- Certain industries like spas, gyms, and online teaching businesses do not have well-defined regulatory frameworks. For businesses in these sectors, approvals from the relevant Ministry are often required, which can extend the process of opening a company in Vietnam.
- The entire local company incorporation process in Vietnam is notably expedited, typically taking approximately seven working days to complete.
- Local companies, characterized by having less than 51% foreign ownership, are not obligated to obtain an IRC. This exemption streamlines the registration process.
- Local companies can immediately apply for an ERC or a BRC, without the IRC prerequisite.
Requirements for Local Company Setup in Vietnam
When considering the setup of a local company in Vietnam, it’s essential to be aware of the following requirements:
- Foreign Ownership Limitation: Foreigners are subject to a restriction in which they can own less than 51% of the shares in the company. To meet this requirement, a local partner is necessary.
- Sub Licenses for Specific Industries: Some industries, notably retail and education, necessitate the acquisition of sub-licenses in addition to the primary business registration. Conversely, sectors such as consulting, wholesale trading, and software development do not require sub-licenses.
- Minimum Capital Requirements: While many business sectors in Vietnam do not stipulate a minimum capital requirement, the capital invested must align with your business plan and operational needs.
- Registered Address Obligation: A registered business address is mandatory for registering your local company in Vietnam. It’s important to note that the use of a virtual office is typically allowed only for service-based companies. In the case of businesses involved in activities such as retail and manufacturing, you must provide the address of a physical location where your business operations will be conducted during the registration process.
FAQs on Company Registration in Vietnam
- How long does the entire company registration process take?
For incorporating a 100% foreign-owned company in Vietnam, the process typically spans 40-60 working days, excluding public holidays, from the time the necessary documents are submitted. In the case of incorporating a local (Vietnamese-owned) company, the process is notably quicker, typically taking just 7 working days.
- What’s the difference between a local company and a foreign-owned company?
A foreign-owned company, often referred to as a foreign direct investment company, necessitates meeting a minimum capital investment requirement, along with the application for an IRC. This process typically takes longer and is more costly compared to registering a local company. A local company, on the other hand, is established in the name of a Vietnamese representative and generally does not have minimum capital requirements for investment.
- How much does it cost to register a company in Vietnam?
The average cost of registering a company through a service provider like InCorp is approximately US$2,950, which includes government fees and associated expenses.
- What is the suggested minimum capital required for incorporating a foreign entity in Vietnam?
While there is no official minimum capital requirement, it is often recommended to consider a minimum capital of US$20,000 during the incorporation process.
- What kind of visa allows me to stay in Vietnam for an extended period? Can I sponsor my family’s visa?
Vietnam currently does not have retirement visas or digital nomad visas. To stay in Vietnam long-term, your options include:
– Marrying a local and obtaining an exemption visa.
– Establishing a company and acquiring a Temporary Residence Permit (TRC).
– Securing employment with a work permit and TRC.
- What is the first thing I should consider when setting up a foreign company in Vietnam?
When establishing a company in Vietnam, the initial factors to consider include:
– Entity Type: Determine the type of business entity that aligns with your intended business activities.
– Location: Choose the most suitable location for your business, particularly if you are entering the manufacturing or services industry, as location can impact your success.
– Legal Compliance: Ensure that you are well-versed in and prepared to meet all legal compliance requirements, including labor laws, taxation, and other essential certificates, to operate your business smoothly and within the bounds of the law.
- What is the duration to set up a company in Vietnam?
For straightforward businesses with minimum capital and no special conditions, the setup process typically takes around 30 business days. In cases where your business falls within conditional investment areas, the duration can be longer, extending to as many as 60 working days.
- What are the various types of tax liabilities in Vietnam?
In Vietnam, there is personal income tax (applicable for income greater than VND 9,000,000), value-added tax (zero and 5% for special cases and 10% otherwise), corporate income tax (20%), and import (variable) and export tax (zero except special cases).
We made the most detailed step-by-step guide for Company Incorporation in Vietnam for investors, now available as an interactive checklist:
How InCorp Vietnam Can Help with Company Formation?
InCorp Vietnam can be a valuable partner in facilitating the company formation process in Vietnam. Here’s how they can help:
- Begin by submitting your inquiry.
- Respond to your inquiry within 24 hours.
- You’ll receive a complimentary one-hour consultation via call or video.
- After the consultation, you can proceed with submitting all the necessary documents for company registration.
- Make the required fee payments for the procedure of company formation.
- Process your application and assist you through the company formation process.
Conclusion
Registering a company in Vietnam offers promising opportunities for both local and foreign investors. In navigating the intricate landscape of company registration, partnering with professionals such as InCorp Vietnam can greatly facilitate the process. Their expertise can simplify the steps involved, making your entry into the Vietnamese business landscape a smoother and more efficient endeavor.
With the right knowledge, a strategic approach, and professional assistance, establishing a business in Vietnam can be a rewarding venture with numerous opportunities for growth and success.
About Us
InCorp Vietnam is a leading market entry and corporate services firm in Vietnam. We are part of InCorp Group, a regional leader in corporate solutions that encompasses 9 countries in Asia-Pacific, headquartered in Singapore. With over 1,500 legal experts serving over 20,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business fit into the market perfectly with healthy growth.
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