How to Open a Company in Vietnam for Foreigners

How to Open a Company in Vietnam for Foreigners

How to open a company in Vietnam as a foreigner? Understanding the actual step-by-step procedure will help your business launch with ease. Here are the details on requirements, procedures, and costs in order to set up a Vietnam company for foreign investors.

Requirements to Open a Company in Vietnam

Before starting your company in Vietnam, you need to check the list of requirements below:

  1. Business Conditions
  2. Investment Capital
  3. Business Address
  4. Company Structure
  5. Legal Representative
  6. Required Documents

#1. Business Conditions

Vietnam is not a fully open market for foreign investors. So in the beginning, you need to consult with your lawyers to understand all investment conditions and business conditions to kickstart and run your business in Vietnam.

Here are some of the business activities that foreign investors are allowed to register a company in Vietnam with 100% foreign ownership:

  • Trading, including import, export, wholesale distribution, and retail distribution of goods
  • Business consulting
  • IT services (might enjoy tax incentives)
  • Manufacturing

#2. Investment Capital

Investment capital is the sum of:

  • Contributed capital, which must be fully contributed within 90 days from the company establishment date
  • Loan capital (optional)

Each company in Vietnam needs to declare an amount of investment capital. The investors also need to prove their financial ability at the stage of investment project registration with supporting documents, such as: bank balance certificates, or financial statements.

Technically, there are no regulations on a minimum capital requirement, except in some specific industries. In practice, the local licensing authority will closely examine and assess your proposed investment capital, based on the nature of your business activities and project scale. The minimum capital will be determined on a case-by-case basis.

[New update]: Recently, many licensing authorities, especially in the north, have been applying a high minimum investment capital requirement. Thus, investors should prepare to put more money into your new investment project as per the instruction of your legal team.

In addition, the more capital contribution, the longer-term visa will be granted to investors. 

Learn more: Vietnam Investor Visa and Capital Requirements 

#3. Business Address

A company must have a business address in Vietnam as the registered office and principal place of business (in accordance with Article 48 of Enterprise Law and Article 38.2(b) of Vietnam Investment Law).

In general, the best place to locate your company is the one you will be conducting most of your business. It is highly advisable that you come for an on-site visit to make sure a location is the best fit for your business.

#4. Company Structures

In Vietnam, there are main 3 types of company structures that foreign investors can choose from: Single Member LLC, Multiple Member LLC, and Joint Stock Company.

Company Structures in Vietnam

Choosing which company structure to establish in Vietnam is very simple. It depends on the number of investors and the management structure you require. For example, LLC is the best fit for small and medium businesses because of its simple management structure and lower corporate compliance costs.

In addition, the regulations here in Vietnam do not differentiate the tax treatment based on the structure of companies.

Learn more: Company’s Structure in Vietnam.

#5. Legal Representative

A legal representative is an individual who represents the company to perform the rights and obligations arising from the company’s transactions.

A Vietnam company may have more than one legal representative, who may take the title of Director, General Director, President, CEO, CFO, etc.

Vietnam-resident and foreign-resident persons can be legal representatives of a Vietnam company as long as there is at least one stay in Vietnam. Hiring a local legal representative is certainly not required by law, it is up to your business demand. 

Learn more: Regulations for a Legal Representative in Vietnam

#6. Required Documents

The foreign investors will be required to provide the below documents. In addition, documents of the corporate investors (i.e. company registration certificate) are subject to the legalization process.

Individual InvestorCorporate Investor
Passports of all investors- Company Registration Certificate
- Passport/ID Card of authorized representative(s) of the Investor
Bank Account Balance Certificate
(Note: The account's balance must be equal to or more than the value of the declared capital)
- Financial Statement of the 02 latest fiscal years.
- Bank Account Balance Certificate
Lease Contract and its legal documentation related to the business addressLease Contract and its legal documentation related to the business address

How to Open a Company in Vietnam

In order to set up a company in Vietnam, it is necessary to follow 6 steps:

  • Step 1. Rent a business location
  • Step 2. Prepare required documents
  • Step 3. Register a company
  • Step 4. Open company bank accounts
  • Step 5. Comply with post-incorporation requirements
  • Step 6. Apply for additional licenses/permits (if required)

Let’s take a closer look at each of these steps.

Step 1. Rent a business location

You will need to find a suitable business address for your company, then sign a lease contract with landlord. You also need to request the landlord to provide related legal documents, such as a certificate of land right use.

Step 2. Prepare required documents

Per your legal team’s instruction, you will then begin to compile all necessary documentation, notarize it, and translate it into Vietnamese. The legal team will prepare full application forms which need your signature and stamp (if any).

Step 3. Register a company

Including 2 sub-steps:

At this point, your hired legal team will take over and handle all of the administrative, legal, and communication with local authorities. Make sure your legal team provides accurate communication and detailed updates on your company registration progress.

Step 4. Open company bank accounts

Once your company is established, the company will need to have at least 2 company bank accounts:

  • A Direct Investment Capital Account, or DICA, is used to make transactions related to your investments in Vietnam, such as receiving the contributed capital and transferring the profit to your home country. (Please note that the contributed capital needs to be transferred to this account within 90 days of company establishment).
  • A Current Account in VND currency is used for the company’s daily activities, such as contract, salary, and tax payments.

Learn more: Rules on how to use Vietnam company bank accounts

Step 5. Comply with post-registration requirements

After your Vietnam company is incorporated, there are some tasks needed to be performed within the deadlines, such as: fully contributing the investment capital and declaring taxes.

Learn more: 11 tasks to complete post registration of a company in Vietnam

Step 6. Apply for additional Licenses/Permits (if required)

Before performing any conditional businesses, your Vietnam company must apply and obtain the required licenses or permits (see requirement #1 mentioned above).

How Much to Open a Company in Vietnam?

The minimum actual cost to set up and operate a Vietnam company starts from USD 4.080 for the first year of operation. Most of which is allocated to rent the business location, related incorporation services, and post-incorporation compliance fees.

ItemsDescriptionsMinimum Costs
Rent a business address
  • Yearly rent for a Virtual Office/Office Space/Industrial Property
$970
Company formation service
  • Legal service fee for advising and registering a Vietnam company
$1.200
Initial set-up works
  • Buy a USB token device 
  • Buy a company signboard
  • Buy and register to use VAT e-invoices 
  • etc.
$270
Accounting and Audit
  • Bookkeeping and Filling Tax Reports
  • Annual audit
$1,600

TOTAL (minimum cost for the first year of operation)

$4.080

 

 

Learn more: Estimating Realistic Startup Cost in Vietnam.

How much does it cost to start a business in Vietnam

Navigating through all the requirements to open a company in Vietnam can be quite complicated and time-consuming. Nova Law Vietnam is here to help!

We have been assisting foreign investors in setting up businesses in Vietnam for years. Nova Law offers a wide range of business legal services: Legal Consulting, Company Registration, Licensing, Visas, and more. Contact Nova Law to register your Vietnam company today!

Ready to incorporate?

If you are interested in starting a business in Vietnam, Nova Law can help. Request a proposal now to take the next step towards your dream business.

Author: Lawyer Nguyen Minh Phuong

Q&A

The answer is “depended”.

First, let get to know what is a local nominee. A Local Nominee is a Vietnamese partner that acts as a shareholder/owner of your company on behalf of You – the actual foreign shareholder/owner.

Technically, using a local nominee to start a foreign business in Vietnam is not an official legal way for a foreign investor to enter the market. In practice, this option has been chosen because it has some advantages:

  • It’s slightly easier, faster, and cheaper to set up and operate a locally-owned company than a foreign-owned company
  • A local company is allowed to conduct some business activities which are restricted foreign investment, without having to apply for additional licenses or permits

However, this option is also extremely risky:

  • By law, the Vietnamese partner is the real company’s owner/shareholder and has the power to decide all corporate matters of the local company, such as access to the company bank account, enjoy profits, and sale the company’s assets. If the Vietnamese partner has inappropriate against benefits to the actual foreign owner, local company business activities can be delayed, and the foreign owner may suffer major damages
  • In case conflicts between the Vietnamese partner and the foreign actual owner arise, the foreign actual owners will be not protected by law, regardless there is the existence of an agreement between parties

Please keep this in mind: An enormous amount of trust is placed in this Vietnamese Nominee, meaning extreme trust built from years of business collaboration in the past. When profits are bad, what is stopping this “nominee director” from closing the accounts and withdrawing the remaining funds? If profits are great, what is stopping this nominee director from withdrawing funds for their own personal benefit?

The entire company registration process will take at least 20 working days to obtain the IRC and the ERC.

The answer is No. Without a Vietnam visa and without even coming to Vietnam, you can be the owner or manager of a Vietnam company, but you cannot legally work here. If you plan to travel back and forth to VN, or live in Vietnam and work for your company, you are entitled to apply for a long-term visa sponsored by your Vietnamese company. 

Learn more: Vietnam Work Visa and Vietnam Investor Visa.

Here is an overview of taxation in Vietnam.

Overview to Taxation in Vietnam

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Mike
Mike
2 years ago

What do I need to establish an IT company?

kampus jatim
1 year ago

Very informative blog article. Really Cool.

Sa Tel
1 month ago

Gracias! Thanks for the information.

Last edited 1 month ago by Sa Tel
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