EnglishHow to set up 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.
Choosing the right business structure
When a foreign investor decides to establish a physical presence in Vietnam, the first crucial decision is selecting the appropriate type of legal entity. There are 3 common types of legal entities available to foreign investors in Vietnam: representative office, branch, and company
1. Representative Office
A Vietnam Representative Office (RO) is a dependent unit of a foreign company, established under Vietnamese law to research the local market and perform other permitted business promotion activities.
Pros: A RO is a good temporary option for foreign companies to gain initial insights into the Vietnamese market before committing to a long-term investment. It can also help strengthen business connections with local partners on a small budget. It is easy to set up and avoids the complexities of establishing a company in Vietnam and complying with ongoing filing requirements.
Cons: The foreign company must have been established and engaged in trade-related activities for at least 1 year to set up a RO in Vietnam. Additionally, the Vietnam RO is not allowed to conduct direct profit-making activities, cannot collect payments or issue invoices, and is limited in its hiring capacity.
Learn more: How to establish a Representative Office
2. Branch
A Vietnam Branch is a dependent unit of a foreign company, established under Vietnamese law, and is permitted to engage in profit-making business activities in only a few sectors (such as banking, insurance, and law). One of the conditions for establishing a branch in Vietnam is that the foreign company must have been operating for at least 5 years.
Cons: In practice, establishing a branch in Vietnam is not a common choice for foreign investors
3. Company
A Vietnam company is an independent entity with its own name, assets, and registered business address, established under Vietnamese law for business purposes. It can be structured as a company limited, or a joint-stock company.
Foreign investors have several options for having a Vietnam company:
- Establishing a 100% foreign-owned company: Vietnam allows full foreign ownership in most business sectors. This option gives the foreign investor complete control and authority over the company.
- Establishing a joint venture with Vietnamese partners: In most cases, foreign investors have the choice to partner with a Vietnamese entity/person. However, for certain sectors (such as advertising, gaming, agriculture, and forestry), Vietnam requires foreign investors to form joint ventures with local partners.
- Establishing a nominee local company owned by a local person: This is a quicker, easier, and more cost-effective way for foreign investors to establish a company in Vietnam. However, this option is not legal and involves significant trust between the parties and poses high legal risks for both the foreign investor and the local nominee.
- Acquiring an existing Vietnamese company: Foreign investors can leverage the commercial advantages of an existing company. However, it is strongly recommended that thorough due diligence be conducted on the target company before acquisition.
Pros: Setting up a company in Vietnam allows foreign investors to operate legally, capitalize on business opportunities, protect personal assets from business liabilities, apply for tax deductions, access Vietnam’s young labor market, benefit from tax incentives under Free Trade Agreements, and potentially qualify for long-term visas.
Cons: Setting up a company in Vietnam can be more complex and time-consuming. Additionally, maintaining a company requires ongoing compliance with corporate obligations and the payment of taxes on profits generated in Vietnam.
If you decide that establishing a company in Vietnam is the right choice, continue reading to learn how to set up a new foreign-owned company in the following sections.
Requirements to set up a company in Vietnam
Before setting up a company in Vietnam, you need to check the list of requirements below:
- Investment and Business Conditions
- Investment Capital
- Business Address
- Company Type
- Legal Representative
- Required Documents
#1. Investment and Business Conditions
Generally speaking, foreign investors can open a company in Vietnam with 100% foreign ownership in most popular business sectors, such as:
- Import, export, and wholesale distribution of goods
- Manufacturing
- Management consulting services
- IT services (which may enjoy tax incentives)
- Technical services
In some business sectors, although 100% foreign ownership may still be allowed, investment and business conditions apply to foreign investors during the investment registration process and/or company operation, for example:
- Retail
- F&B
- Education
- Study abroad consulting
- Healthcare and medical sector
- Real estate
- Logistics
- Large-scale investment projects
These conditions vary depending on the nature and scale of the business and may affect the feasibility of operating in Vietnam.
Some business sectors are closed to foreign investment, including:
- Press activities
- Temporary import and re-export business
- Labor export services
- Domestic travel service business
- And so on
Therefore, it is important to consult with your lawyers from the outset to understand all conditions required to start and run your business in Vietnam.
#2. Investment Capital
The investors will need to declare an amount of investment capital, which is the sum of:
- Contributed capital: must be fully contributed by the investors within 90 days from the company establishment date
- Loan capital: optional
At the stage of investment project registration, the investors also need to prove their financial ability to fund the company, with supporting documents, such as: bank balance certificates, financial statements.
Technically, there are no regulations on a minimum capital requirement, except in some specific industries. In practice, the local licensing authorities 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 might need to prepare to put more money into your new investment project.
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 foreign-owned company in Vietnam must have a registered business address in Vietnam as its principal place of business. Generally, the best place to locate your company’s headquarters is where you will be conducting most of your business. If you register a service-based company in major cities like Ho Chi Minh City or Hanoi, a virtual address might be accepted.
Once the company is established, it can conduct business throughout Vietnam. In addition, the company may also register representative offices, branches, or business locations in other places as independent units of the company.
#4. Company Types
In Vietnam, there are main 3 types of company structures that foreign investors can choose from: Single Member Company Limited (Co., Ltd), Multiple Member Co., Ltd, and Joint Stock Company.
| Single Member Co., Ltd |
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| Multiple Member Co., Ltd |
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| Joint Stock Company |
|
Choosing which Vietnam company type to set up is very simple. It just depends on the number of investors and the management structure you require. In addition, the regulations here in Vietnam do not differentiate the tax treatment based on the structure of companies. In practice, company limited model is the best fit for small and medium businesses because of its simple management structure and lower corporate compliance costs.
Learn more: Types of company in Vietnam
#5. Legal Representative
A legal representative is an individual, either a Vietnamese citizen or a foreigner, who represents a company in Vietnam. The information of the legal representative(s) will be registered on the Enterprise Registration Certificate
A company must have at least one legal representative residing in Vietnam. If the sole legal representative residing in Vietnam travels abroad, they must delegate their responsibilities to another Vietnamese resident through an authorization letter. Using a local nominee legal representative is certainly not required by law, it is up to your business demand.
Learn more: Regulations for a Legal Representative
#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 Investor | Corporate 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 address | Lease Contract and its legal documentation related to the business address |
Process 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 agreement or a MOU with landlord, and request the landlord to provide related legal documents, such as a certificate of land right use.
Step 2. Prepare required documents
As instructed by your legal team, you will then begin compiling all necessary documentation and signing and stamping the investment and company registration forms prepared by your legal team.
Step 3. Register a company
Including 2 sub-steps:
- Apply for an Investment Registration Certificate: takes from 15 business days
- Apply for an Enterprise Registration Certificate: takes from 4 business days
In some special cases (usually for large-scale or land-related investment projects), an additional step may be required: applying for an In-Principle Approval from the National Congress, the Prime Minister, or the Provincial People’s Committee
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.
- A Current Account in VND currency is used for the company’s daily activities, such as contract, salary, and tax payments.
Learn more: Open 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
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?
Government Fee: The official government fee to register a company in Vietnam is VND 100,000 (around USD 4.3). This fee is payable to the local business registration office during online registration process.
Additional Fees: Keep in mind that other expenses are involved in setting up a company, such as: rent, lawyer service fees, required document preparation fees.
Post-Registration Fees: Once your company is established, there will be ongoing compliance costs, including: initial tax setup fee, accounting fees, annual audit fees.
Navigating through all the requirements to open a company in Vietnam can be quite complicated. Nova Law Vietnam is here to help!
For years, Nova Law has guided foreign investors through successful company setups in Vietnam. Our incorporation package is efficient and transparent, with no hidden costs.
Nova Law deeply understands that registering a company in Vietnam for foreign investors is not easy, and not all foreign-owned businesses are eligible to operate in Vietnam. Before collecting any incorporation service fees or committing to any registration work, our legal team will verify your legal qualifications to ensure you can set up a company in Vietnam.
Ready to open your Vietnam company? Let Nova Law handle the company registration work. Submit your business plan through this FORM for a free legal feasibility assessment and service proposal.
Author: Lawyer Nguyen Minh Phuong – Hanoi Bar Association
Q&A
The entire company registration process will take at least 1 month to obtain the IRC and the ERC.
The answer is No. The company registration process can be done REMOTELY when you work with Nova Law. 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 Vietnam, 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.
A bank balance certificate is an official document issued by a bank that verifies an investor’s account balance at a specific date. It’s one of the required documents for registering a company in Vietnam.
Investors can submit a bank certificate from any bank globally, provided they have an account there. There are some key points to consider:
- Format: The preferred certificate is a physical document with the bank’s letterhead, a wet-ink signature from a bank manager, and a wet-ink stamp from the bank. Electronic copies are generally not accepted.
- Balance Requirement: The balance showed in the certificate must be equal to or higher than the investor’s registered capital in the Vietnamese company.
- Convenience: Using a bank certificate from a Vietnamese bank is often more convenient. The format typically matches to the licensing authority’s requirements, eliminating the need for translation and legalization processes required for foreign bank balance certificates.
A business address is a compulsory requirement for setting up a company in Vietnam, whether it is foreign-owned or local. If you don’t have a qualified business address yet, you can simply use a virtual address service in Vietnam. Ensure that the address has all the proper legal documents, such as a land use rights certificate and a lease contract with the landlord. Additionally, the virtual address service provider must be responsible and professional in handling all mail sent to the company and in cooperating with authorities when they visit for inspections, such as tax officers or police officers.
A residential apartment (căn hộ chung cư) cannot be used as a business address.
When searching for virtual address services online, be cautious of providers offering very cheap service fees and require upfront payment. The actual cost might be significantly higher due to hidden fees.
Here is an overview of taxation and stardard tax rates in Vietnam.
- Corporate Income Tax (CIT): 20% per annual profit
- Value Added Tax (VAT): 8%
- Personal Income Tax (PIT): Progressive rates range from 5% to 35%, depending on income levels.
- Import duties vary by product and can range from 0% to 150%.
- Export duties are imposed on a few items, with rates ranging from 0% to 45%.
In Vietnam, companies with profits are subject to Vietnam corporate income tax at the standard rate of 20%. This tax is payable by the end of each fiscal year.
However, companies that do not generate a profit or incur losses during a fiscal year are not required to pay corporate income tax.
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.
What do I need to establish an IT company?
Very informative blog article. Really Cool.
Gracias! Thanks for the information.