Thursday, July 25, 2024

Complete Guide to Company Registration in Vietnam for Foreign Investors: A Step-by-Step Handbook for Foreign Investors

A Complete Guide to Company Registration in Vietnam for Foreign Investors

Are you an aspiring entrepreneur looking to start a business in Vietnam? Familiarizing yourself with the process of company registration is crucial for foreign investors. In this comprehensive guide, we will walk you through the steps and requirements for setting up a company in Vietnam, ensuring that you have all the necessary information to embark on your business journey. 

First thing first, let’s get to know what makes Vietnam the next destination for investment in Southeast Asia.

The favorable business environment for foreign investors in Vietnam

Vietnam is rapidly becoming a preferred investment destination in Southeast Asia, driven by an array of policies and initiatives aimed at enhancing the business environment and attracting foreign capital. With more than 16 Free Trade Agreements inked with various nations, new avenues for trade, manufacturing, and investment across sectors have opened up. Some of the key factors that make Vietnam an attractive destination for setting up a company or business expansion include:

Tax benefits for foreign investment in Vietnam

FDI enterprises in various sectors can avail of tax incentives, especially on Corporate Income Tax (CIT). The standard CIT rate in Vietnam is 20%, but FDI enterprises can enjoy lower rates depending on their eligibility.

  • Preferential tax rates of 10%, 15%, and 17% for qualified FDI enterprises.
  • Special preferential tax rates of 5%, 7%, and 9% for FDI enterprises in priority sectors.
  • 50% tax exemption or reduction for a certain period.
  • First 4 years CIT exemption for IT investment.

Ease of access to Vietnam with new visa policies

Vietnam is streamlining its visa rules easier to encourage more travelers to their country. This presents an opportunity for international travelers and foreign investors to visit and expand their business. With the extension of e-visa validity up to 90 days, and increasing the visa-free stay from 15 days to 45 days for the visa exempt countries, accessing Vietnam has never been easier. For business-related visits, including meetings, contract signings, or collaborations with Vietnamese companies, a Business Visa (DN visa) allows a stay of up to 12 months..

Overview of Legal Entities in Vietnam

Before diving into the registration process, it’s essential to understand the different legal entities available for foreign investors in Vietnam. The two most common types are Limited Liability Companies (LLC) and Joint-Stock Companies (JSC). An LLC can have 1 to 50 members, while a JSC requires a minimum of 3 shareholders, with no limit on the maximum number.

Foreign Ownership Regulations in Vietnam

Vietnam allows 100% foreign ownership in most industries, including trading, IT, manufacturing, and education. However, certain sectors, such as advertising, logistics, and tourism, real estate impose restrictions on foreign ownership from 1 to 49%, necessitating a Vietnamese joint venture partner. Compliance with World Trade Organization (WTO) agreements and local laws is crucial. Having a local expert consultant partner is needed to help you connect with a local entity for your dream business in Vietnam

No minimum capital requirement for a foreign-owned business in Vietnam

One of the significant advantages of investing in Vietnam is that there is no minimum capital requirement for foreign-owned businesses. This flexibility allows investors to start small and expand according to market dynamics and business performance. We suggest to put a sufficient amount to cover the company’s expenses until it become self-sustained.

Registered Address

To register a company in Vietnam, you must have a business address. Service-based businesses, like consulting firms, trading companies, tech firms, can use a virtual office address. However, certain industries, including manufacturing, restaurants, and retail trading, require a physical location or office. The Department of Planning and Investment may verify the address during the registration process, so it’s important to provide supporting documents indicating your intended use of the location. And a trusted local consultant agent will help you simplify all these process easily while you just need to focus on your core business. Contact your local support here

Resident Director

All companies in Vietnam must have at least one resident director. While the director does not need residency status at the time of company setup, they should have a residential address in Vietnam. If the director is also a founder, they are exempt from requiring a work permit. However, foreign directors who are not founders of the company must obtain a work permit. Hire a Resident Director or apply for a work permit for your employee in Vietnam, contact us now.

The Step-by-Step Process of Company Registration in Vietnam

Step 1: Investment Registration Certificate: Begin by obtaining an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI). In case you register a manufacturing business in an Industrial Park Zone (IP), IRC will be issued by the Management of the IP.

Step 2: Business Registration Certificate: Once you have the Investment Registration Certificate (IRC), you can proceed to obtain a Business Registration Certificate (BRC), also known as the Enterprise Registration Certificate (ERC). This certificate is issued by the Department of Planning and Investment. The total timeframe for receiving IRC and BRC certificates are typically 4 – 6 weeks.

Step 3: Tax Registration, Payment, and Bank Account Opening: The BRC number serves as your company’s tax number. All companies in Vietnam must pay taxes through an online system and submit tax declarations and reports accordingly. To access the system, businesses need a tax electronic token and bank account opening for business also.

Capital Contribution: After receiving the BRC, you have 90 days to make the capital contribution. Failure to do so may result in fines or penalties.

Apply for Sub Licenses or Permits: Depending on your business line, you may need to apply for sub-licenses or permits, Industries such as manufacturing, logistics, recruitment, lodging, and special product or service trading often require additional permits. Depends on license type and department you apply, the timeframe is different. Contact us for free consultant

Corporate Compliance in Vietnam

Maintaining corporate compliance is essential for businesses operating in Vietnam. Key areas of compliance include accounting and tax reporting, payment of the annual business license tax (free of charge for the first year, audited annual reports, and foreign investment reports. Compliance with employment laws, including social insurance registration for employees, is also crucial. Consulting with experts, such as Emerhub’s consultants, can help you navigate these compliance requirements effectively.

Setting up a Special-Purpose Vehicle

In cases where foreign ownership restrictions hinder direct company setup, setting up a special-purpose vehicle (SPV) can be a viable solution. An SPV allows you to protect and maintain control over your investment without establishing a company in Vietnam. As regulations surrounding nominee companies become stricter, utilizing an SPV provides a safer alternative. Reach out to Emerhub’s consultants to learn more about this structure and how it can benefit your business.

Alternatives to Company Registration in Vietnam

Setting up a company may not always be necessary to enter the Vietnamese market. Representative offices can act on behalf of foreign parent companies and engage in tasks such as market research, finding investment partners, promoting the parent company, and supervising contract-signing processes with Vietnamese partners. This alternative allows businesses to establish a presence without generating local income.

Frequently Asked Questions

  • Is the company registration process different if I have a local partner? 

The company registration procedure in Vietnam is settled. And depending on the legal entity you choose, the business sector you invest in there will be different required documents and licenses. How long does it take to register a company in Vietnam? 

For businesses just need IRC and BRC, the process typically takes around one month from the submission date. However, additional sub-licenses may be necessary and the timeframe extension is different for specific industries such as trading, manufacturing,  retails, education or tourism. Contact Emerhub for a quick and easy process for your access.

  • What documents do company founders need to prepare? 

The required documents differ for individual founders and companies. Individual founders must submit a notarized copy of their passport and a bank statement bearing their name. Companies, on the other hand, must provide an incorporation certificate, articles of association, a director’s list, and financial statements from the last two years or a bank statement for newly established companies. Documents issued abroad require legalization by Vietnamese Embassy/ General Consular in the issuing country. Business address is also required which is lease agreement of an office space (company address) in Vietnam. Or you can contact us for our virtual office service.

With this complete guide to company registration in Vietnam, you now have a comprehensive understanding of the process, requirements, and alternatives available. Embark on your entrepreneurial journey with confidence and consult with experts to ensure a smooth and successful registration process. Looking for International Health insurance? Click here to see Asia Lifestyle Magazines preferred option.

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Asa Marsh
Asa Marshhttps://www.asialifestylemagazine.com/
Serial Entrepreneur and Founder of Asia Lifestyle Magazine.Originally from the UK, Asa Marsh has been based in Asia for many years. Well known for guiding his Real Estate and Lifestyle company Easy Living Phuket to win the title of “Top 10 Real Estate Agency - Southeast Asia” in 2018.

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