How to Invest, Do Business and Reside in Vietnam in 2022?

With economic opening policies, especially after the Covid-19 pandemic, Vietnam is an attractive destination for foreign investors. Accordingly, the number of foreign investors in Vietnam is constantly increasing. In order to create favorable conditions for individual investors with direct capital investment or representatives of foreign organizations investing in Vietnam to live, work, Vietnam has policies, suitable for each type of investor in being granted temporary residence cards in Vietnam.

 

How to Invest, Do Business and Reside in Vietnam

Investors using visas, temporary residence cards under the investment category sponsored  by foreign investment companies and with the temporary residence card symbol DT, are divided into three types of temporary residence cards as follows: (i) DT1 – Issued to foreign investors in Vietnam and representatives of foreign organizations investing in Vietnam with a contributed capital of VND 100 billion (USD 4.5 mil) or more or investing in industries, professions eligible for investment incentives, geographical areas with investment incentives decided by the Government; (ii) DT2 – Issued to foreign investors in Vietnam and representatives of foreign organizations investing in Vietnam with a contributed capital of between VND 50 billion (USD 2.3 mil) and under VND 100 billion or investing in industries, trades to encourage development investment decided by the Government; (iii) DT3 – Issued to foreign investors in Vietnam and representatives of foreign organizations investing in Vietnam with capital contribution from VND 03 billion (USD 136k) to less than VND 50 billion. Temporary residence cards with a specific term for investors and representatives of foreign organizations investing in Vietnam are as follows: Temporary residence cards with symbol DT1 have a term of not more than 10 years; Temporary residence card with symbol DT2 is valid for no more than 05 years; Temporary residence card with symbol DT3 is valid for no more than 03 years. In case foreign investors and representatives of foreign organizations investing in Vietnam with a contributed capital of less than VND 03 billion, they will not be granted a temporary residence card, instead they will apply for a signed visa DT4 which is valid for no more than 12 months.

The application file for applying for a temporary residence card to a foreign investor must be documents proving the status of the sponsoring agency, organization, individual; documents proving the relationship between the investor and the sponsoring agency, organization or individual; information of the sponsored investor; relevant document information to determine the type of temporary residence card issued to investors; and declarations in accordance with the law.

If foreign investors and representatives of foreign organizations investing in Vietnam wishing to stay in Vietnam, they need to apply for a temporary residence card according to the conditions, documents, procedures of Vietnamese law. It is important to consult with immigration lawyers at ANT Lawyers – Law firm in Vietnam for effective solutions.

 

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10 Questions to Ask Before Set-up Company in Vietnam

Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.

 

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas.  Establishing company in the non-conditional investment areas are more simple than in conditional investment areas.  Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding…which are more complicated with investment conditions.  Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name.  The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses.  For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?

Not every address could be used to register a company.  The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two or more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally.  The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e.  trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

ANT Lawyers is a law firm in Vietnam, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 jurisdictions. The firm provides a range of legal services to multinational and domestic clients. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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What are common investment methods in Vietnam?

In Vietnam laws, there are a number of investment methods such as establishing economic organizations; investment in the form of capital contribution, purchase of shares or capital contributions in business organizations; Business Cooperation Contract or Public Private Partnership. Investment in establishing economic organizations, capital contribution, purchase of share or capital contributions are most common in our opinion.

Investment in establishing economic organizations

For investment in the establishment of economic organization, an investor invests capital to carry out the establishment of an enterprise, cooperative, cooperative union or other organization to carry out business investment activities. This is a way of direct investment in which investors directly invest capital and directly participate in management activities.

Forms of establishment of economic organizations include two types: Establishing company with 100% foreign capital; or establishing joint ventures between domestic investors or the Government of Vietnam with foreign investors.

Before establishing an economic organization, the foreign investor must have an investment project and carry out the procedures for the grant of an investment registration certificate. Besides, the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member need to be met. Regarding charter capital, foreign investors are allowed to hold unlimited ownership in economic organizations, except for cases where the investors operate in fields related to listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities; State owned enterprises equitized or transformed under other forms. In addition, investors must check international treaties to which Vietnam is a signatory.

Set-up branch office in Vietnam

Set-up representative office in Vietnam

It should be noted that depending on the amount of investment capital of a foreign investor, the legal status of an economic organization after its establishment will be determined differently. If the foreign investor holds 51% or more of charter capital, the economic organization after its establishment will have to carry out the procedures applicable to foreign investors. Conversely, if foreign investors hold less than 51% of the charter capital, the regulations applicable to economic organizations after their establishment are applied as domestic investors.

Investment in the form of capital contribution, purchase of shares or capital contributions in business organizations

Foreign investors who wish to access the Vietnamese market but do not want to establish an economic organization can contribute capital, buy shares or buy capital contributions to business organizations operating in Vietnam.

With this form, the investor will become a member or shareholder of that economic organization. It requires investors to meet a conditions similar to the form of establishment of economic organizations. Having said that, it must meet the conditions for the charter capital ownership and the conditions prescribed by international treaties to which Vietnam is a member. Depending on each specific case, the investor must follow the procedures for registration of capital contribution, purchase of shares or capital contribution in an economic organization and send to the competent agency for recognition of legal investment.

Understanding the regulations are important for investors to enter the Vietnam market and consulting with Vietnam lawyers would help investors make informed decision for their business plan in Vietnam.

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10 Questions to Ask Before Set-up Company in Vietnam

Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding…which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?

Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e. trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

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Hanoi calls on IT firms to set up shop

HANOI – The government of Hanoi City gives priority to the information technology (IT) sector, thereby facilitating companies to set up shop there, according to Nguyen Duc Chung, chairman of the capital city, at a dialogue with the startup community on August 25.

He said Hanoi is about to launch Vietnam’s startup opportunity finder startupcity.vn on October 10, with an aim to connect technology ecosystem players with new business opportunities.

Phan Lan Tu, director of the municipal Department of Information and Communications, said the city has 16,700 startups, with 800 of them active in the IT sector.

Many incubators like the IT Firms Incubator and the CMC Creativity Center have been set up in Hanoi so far this year. To date, the city is home to 15 incubators.

The director noted the number of incubators and startup-supporting centers in Hanoi has been rising, but they still lack the connection with each other, as well as the absence of policies to establish a single network of these centers to help them share experiences, facilities, mentors and investors.

She said the city will establish a startup ecosystem portal and a startup database. In particular, the portal in both Vietnamese and English languages will provide necessary information for startups and investors.

Besides, municipal authorities will find ways to build a shared service area to support startups. The facility will include co-working space, meeting and training rooms, incubators, and other facilities.

Notably, Hanoi will come up with mechanisms and policies which encourage private investors to set up venture capital funds.

Nguyen Trung Chinh, chairman of CMC Corporation, said at the dialogue that Hanoi should offer incentive policies on land rent and corporate income tax to hi-tech companies, including personal income tax incentives for experts in the sector.

Especially, Chinh said, the administrative procedures should be streamlined so as to create the most optimal conditions for local firms, especially startups, to grow.

He also proposed the municipal government give creative and private companies the green light to implement solutions on urban management, e-governments and smart cities. Besides, Hanoi should let them develop public services under the public-private partnerships.

Hanoi should have sufficient land to build centers for creative technology research. CMC is willing to develop the creative technology research zone that has research centers, incubators and labs, he said.

Hanoi City Chairman Chung pledged to create utmost favorable conditions for startups. The municipal government will team up with central management agencies to formulate policies.

Chung also said the city will kick off work on a software park on Vo Nguyen Giap Street in October.  Hanoi will hand over the land to enterprises responsible for building the zone.

Source: The Saigon Times

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Propose to Remove Nearly 2,000 Business Conditions

The Ministry of Planning and Investment has proposed to remove nearly 2,000 business conditions from ministries and sectors that are thought to cause difficulties and obstacles for businesses.

According to the report of the Ministry of Planning and Investment submitted to the Government, this agency proposed to remove 1,930 requirements and conditions on business that are considered as sublicenses hinder business for a long time. Of these, the Ministry proposed removing all or part of 302 financial conditions. In addition, 85 business conditions on location and 1,336 conditions on production capacity, 127 conditions on business methods, 80 conditions on planning… are proposed to be abandoned entirely.

In addition, other business conditions related to human resources issues (except for some professions that require professional qualifications and experiences such as doctor and auditor) and some conditions with inappropriate contents, the Ministry also recommends the abolition of all or part.

According to the report of the Central Institute for Economic Management (CIEM), there are about 4,284 business conditions, corresponding with 243 conditional investment businesses. Of these, the Ministry of Industry and Trade has the highest number of business conditions with 1,152 conditions; next is the Ministry of Agriculture and Rural Development, Ministry of Health…

Most of these business conditions are creating unreasonable barriers to investment, entry into the market, limiting the number of newly registered businesses, increasing production costs, discouraging businesses.

Moreover, business conditions also reduce market competition, productivity and competitiveness of the economy. Businesses also face with many risks in the process of operation when many business conditions are unclear, creating opportunities for the arbitrariness of state management agencies and the harassment of officials… These effects are going backwards and hinder the Government’s resolve to improve the business environment and cut costs for businesses.

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Conditions for Business in Accounting Services of an Enterprise

Legal Based:

• Law on Accounting 2015;
• Circular 297/2016/TT-BTC on granting, management and usage of certificates of eligible for providing accounting services.

1. Form of business

a. An accounting firm may be established in the form as follows:

• A multi-member limited liability company;
• A partnership;
• A private enterprise.

The accounting firm must not contribute capital to establishment of another accounting firm, except for contribution of capital together with a foreign accounting firm to establishment of an accounting firm in Vietnam.

b. A foreign accounting firm is allowed to provide accounting services in Vietnam as follow manners:

• Contributing capital together with an existing accounting firm in Vietnam to establish an accounting firm;
• Establishing branches of the foreign accounting firm;
• Provide accounting services across the border as prescribed by the Goverment.

2. Conditions for granting Certificate of eligibility to provide accounting services

a. For a multi-member limited liability company

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;
• Having at least two capital contributors (members) are accounting practitioners;
• The legal representative, director or general director of the company is an accounting practitioner;
• Ensuring the proportion of capital contribution by accounting practitioners over 50%; Ensuring the maximum proportion of captital contribution of organization members equal to 35% of charter of an accounting firm.

b. For a partnership

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;
• Having at least two general partners are accounting practitioners;
• The legal representative, Director or General Director of the partnership is an accounting practitioner.

c. For a private enterprise

• Having an Enterprise Registration Certificate, Investment Registration Certificate or an equivalent document as prescribed by law;
• Having at least two accounting practitioners in the enterprise;
• The owner of the private company, who holds the position of Director, is an accounting practitioner.

d. A branch in Vietnam of a foreign accounting firm

• The foreign accounting firm is permitted to provide accounting services according to regulations of law of its home country;
• Having at least two accounting practitioners, including the Director or General Director of the branch;
• The Director or General Director of the branch does not concurrently hold the position of manager or executive officer of another enterprise in Vietnam;
• The foreign accounting firm has submitted a document to the Ministry of Finance that it is responsible for every obligations and commitments of the branch in Vietnam.

3. Granting Certificate of eligibility for business in accounting services

a. Preparation of Dossier

• An application form for the Certificate of eligibility to provide accounting services;
• Copies of the Certificate of Enterprise Registration, Investment Registration Certificate, or an equivalent document;
• Copies of Certificates of Accounting Practice Registration of accounting practitioners;
• Employment contracts between the accounting firm and accounting practitioners;
• Documents proving capital contribution (for limited liability companies);
• The company’s charter (for partnerships and limited liability companies);
• A written commitment to take responsibility by the foreign firm; documents proving the foreign firm is permitted to provide accounting services (for branches in Vietnam of foreign accounting firms).

b. Order and procedure

• Enterprises submit dossier to Ministry of Finance;
• Within 15 days form the day of receiving valid dossier. Ministry of Finance shall issue the Certificate of eligibility to provide accounting services to enterprises;
• In case need to clarify the matters related to the dossier. Ministry of Finance shall request enterprises to explain and then granting Certificate to enterprise within 15 days form the day of receiving the valid additional document.

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How To Set-up Trading Company in Vietnam

Investment in setting up trading company in Vietnam is considered as investment in conditional investment areas

Once an underdeveloped country, in the last two decades Vietnam has shown an incredible growth in the world economic scene, especially in the criteria of investment attraction. For a foreign company that is interested in expanding the business in a new country or region, Vietnam is a promising destination. In order to start a company or specifically a trading company in Vietnam, foreign investor should comprehensively understand the formality and function of the legal entity to be formed according to Vietnam Law. The consultancy and guidance of skilled and qualified lawyers in Vietnam law firm throughout the process shall mostly be needed.

The legal basis for a foreign company to set up a company in Vietnam is stated in the Enterprise Law of Vietnam: foreign organizations and individuals will be entitled to establish and manage enterprises in Vietnam in accordance with this law, with some exceptions.  Foreign investors may invest in the form of 100% foreign- owned capital to establish limited liability companies, joint-stock companies, partnerships or private enterprises under the provisions of the Enterprise Law and relevant laws.

The foreign investor shall mostly needs to fulfill the investment registration procedures at provincial-level state agencies in charge of investment in order to be granted the investment certificates, in accordance with Vietnam law in investment. The dossier required for the investment registration shall comprise of an examination dossier, papers showing the capability to satisfy the conditions which the project is required by law to satisfy, for investment projects in conditional investment domains i.e. specific goods to be traded at HS code level, experience in trading area, how the trading procedures would be carried out, potential business in Vietnam.

In particular, for investment capital, it should be noted that, trading company needs to commit larger investment in terms of capital, since its function is to identify competitive suppliers, negotiate and purchase their products and sell them through a distribution network in Vietnam. In the meantime, the investor needs to have experience in trading to run the business smoothly and efficiently. The investor should explain why the company would contribute to the development in Vietnam when applying for investment license at Department of Planning and Investment, and Ministry of Trade and Commerce.

Our lawyers of foreign investment practice at ANT Lawyers are available to advise and provide client with service and representation in Vietnam.

Source: ANTLawyers.vn

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How Foreign Entity Could Set-up a Branch Office in Vietnam

A foreign business entity or a foreign trader is allowed to set-up a branch in Vietnam to conduct business activities.

Having the right to conduct business activities and make profit are how a branch differs from a representative office in Vietnam.  A branch depends on the foreign business entity that set-up the branch while a foreign owned company set-up in Vietnam exists by itself.  The Vietnam Department of Industry and Trade will be approving the establishment of a branch in Vietnam while Vietnam Ministry of Planning and Investment will be the State agency that coordinate the setting up a company in Vietnam.

In particular, the branch of a foreign business entity in Vietnam (referred to as the “Branch”) means a subsidiary unit of the foreign business entity, established in accordance with the law of Vietnam in order to enter into contracts in Vietnam and conduct activities being the purchase and sale of goods and other commercial activities consistent with its licence for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

The Branch will need to apply and obtain the establishment license; and have a seal bearing the name of the Branch.

1. Rights of the Branch

• To rent offices and to lease or purchase the equipment and facilities necessary for the operation of the branch.
• To recruit Vietnamese and foreign employees to work for the branch in accordance with the law of Vietnam.
• To enter into contracts in Vietnam in accordance with the activities stated in the license for establishment of such branch and in accordance with the Vietnam Law.
• To open Vietnamese dong and foreign currency accounts at banks which are licensed to operate in Vietnam.
• To remit profits abroad in accordance with the law of Vietnam.
• To have a seal bearing the name of the branch in accordance with the law of Vietnam.
• To conduct activities being the purchase and sale of goods and other commercial activities consistent with its license for establishment in accordance with the law of Vietnam and any international treaty to which the Socialist Republic of Vietnam is a member.

2. Requested conditions for establishment the Branch in Vietnam

A foreign company which has effectiveness business activities will be allowed to open the Branch in Vietnam if this company has real demand to open the market in Vietnam and meet some conditions as below:

• Being a trader recognized by the law of the country where it has been lawfully established or made its business registration;
• Having been operating for at least five years after its lawful establishment or business registration.

3. Issuance the Certificate of Branch:

The issuance of the Certificate of Branch will be implemented by the Department of Industry and Trade Department  after the foreign company meets all of conditions as Vietnam legal requirements.

The issuing period will be within 20 working-days after the date of submitting the full valid documents as requested.

At ANT Lawyers, a law firm in Vietnam with offices in law office Hanoiand Ho Chi Minh City, we are available to assist clients in licensing and post-licensing matters to help clients with all questions and services in setting up and maintaining the company or other form of business entities in Vietnam. We could be reached at email: ant@antlawyers.vnor office tel: +848 35202779.

Source: ANTLawyers.vn

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10 Questions to Ask Before Setting-up Company in Vietnam

Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas.  Establishing company in the non-conditional investement areas are more simple than in conditional investment areas.  Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas.  Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding…which are more complicated with investment conditions.  Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?
The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name.  The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses.  For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?
Not every address could be used to register a company.  The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?
Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?
The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?
The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally.  The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?
It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e.  trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?
For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?
Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?
Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

Source: ANTLawyers.vn

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