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Southeast Asia Company

Vietnam Company Registration

Hanoi City / Ho Chi Minh City

Vietnam Company Registration

Hanoi City / Ho Chi Minh City

After Vietnam's accession to the WTO, its market gradually opened up. Now, foreign investors can generally invest 100% in various projects of Vietnamese companies. The economy is steadily growing, fueled by abundant labor resources.

With the expansion of the middle class and a population of nearly 100 million, Vietnam's purchasing power is increasing, creating a huge domestic demand market. This has made Vietnam a rapidly growing consumer goods market.

There are also business opportunities in infrastructure, healthcare, and agriculture, attracting foreign investors to set up companies and invest directly in Vietnam.

As China's economy slows down and labor costs continue to rise, Vietnam is gradually becoming a "must-visit" destination for various industries.

I.Vietnam's Investment Environment Introduction and Advantages

Vietnam is one of the most promising and dynamic economies in Southeast Asia. Its stable political environment, open market economy, and abundant natural resources have attracted numerous global investors. The Vietnamese government has implemented a series of laws, regulations, and policies to encourage foreign investment, ensuring the rights of investors and providing tax incentives.

Companies should adapt to trends emphasizing a stable production environment and a flexible supply chain, driving the demand for increased investment in the Asia-Pacific region, especially in ASEAN countries. Vietnam has emerged as a regional manufacturing hub for many multinational corporations (such as Samsung and Foxconn), attracting a steady flow of foreign investment.

Vietnam is experiencing stable economic growth, strong exports, industrial production, and a continuous increase in foreign investment. This year, the GDP growth target is set at 6.0% to 6.5%, with inflation controlled below 4.5%. As of September, data shows exports have grown by 10.7% year-on-year, and industrial production has increased by 10.8%. Foreign investment inflows for the first nine months of the year reached $17.3 billion, an 8.9% increase over the same period last year.

Location

Located in Southeast Asia, is a vital hub for regional trade and investment due to its proximity to China, Cambodia, the Philippines, and major shipping routes.

Economic Growth

Strong economic GDP growth, including sustained annual GDP growth consistently outperforming the average.

FTA Network

Signed over 18 free trade agreements, providing trade advantages to countries in the Asia-Pacific region, ASEAN, Europe, and other parts of the world.

International law

Member of the World Trade Organization and signatory to most major global intellectual property protection conventions, protocols, and agreements.

Brief Introduction of Major Cities in Vietnam

Hanoi:
Hanoi is the capital of Vietnam and the country’s second-largest city. It is also the largest economic entity in the Key Economic Region (KER) of the northern part of Vietnam. Hanoi continues to experience comprehensive and in-depth development in various sectors. Its economy is growing rapidly, while its spatial planning, infrastructure systems, and urban architecture are progressing towards a civilized and modern direction.

Ho Chi Minh City:
Ho Chi Minh City, formerly known as Saigon, is the largest city in Vietnam and one of the country’s five centrally governed cities. It serves as Vietnam’s economic, trade, transportation, and cultural center. When multinational and technology companies enter Vietnam, they often choose Ho Chi Minh City. The city boasts the country’s top research institutions and the largest international airport. As the most developed city in the country, Ho Chi Minh City has always been the economic hub of Vietnam.

II.Main Types of Foreign Investment Companies in Vietnam

During the investment process in Vietnam, one of the key considerations for investors is choosing the appropriate business entity. According to the regulations of the 2020 Investment Law, there is no distinction between domestic and foreign investors in the choice of company types. Foreign investors can choose from the following company types:

Limited Liability Company (LLC)
A limited liability company (LLC) is the most common legal entity in Vietnam, highly suitable for small and medium enterprises (SMEs). Its simple structure allows a single investor to establish a company with as few as one founder, and the number of members is capped at 50. LLCs permit members to set varying capital contributions and grant rights and responsibilities similar to those of shareholders.
Unlike joint-stock companies in Vietnam, both single-member and multi-member LLCs are not allowed to issue shares. Shareholders’ liability is limited to the capital contributions recorded in the company’s charter. Below are key operational practices and considerations for LLCs:
Branch Selection:If an LLC needs to operate in different provinces or cities, it can establish a branch office or business location. A branch office is permitted to conduct business activities at additional locations and must be legally registered.
Exit Mechanism for Foreign Investors:Foreign investors intending to divest can do so through share transfers or liquidation, provided they comply with relevant laws and declare with the Vietnamese tax authorities. Key considerations include:
1.Tax Clearance Procedures:Share transfers or company liquidation require completing all tax declarations, including capital gains tax and potential value-added tax (VAT).
2.Foreign Exchange Control: Vietnam imposes certain restrictions on foreign exchange, and fund repatriation processes may require approval from the State Bank of Vietnam.
3.Legal and Procedural Timelines: Share transfers typically take several months. Foreign investors are advised to plan well in advance.
Employee Hiring Regulations:LLCs in Vietnam can employ both local and foreign workers. However, the ratio of foreign employees must comply with Vietnam’s labor laws, and work permits are mandatory for foreign workers.

Representative Office
For foreign investors looking to observe the local market and build market presence before expanding operations, establishing a representative office (RO) in Vietnam is an ideal option.
Representative offices are prohibited from conducting income-generating business activities but can engage in activities such as business development, marketing, and market research on behalf of the parent company.The advantages and features of establishing a representative office in Vietnam include:
Market Research:ROs can legally conduct market studies to understand local consumer preferences, competition, and policy environments, providing data for future business decisions.
Exploring Investment Opportunities:ROs allow for participation in local business events and trade fairs at a lower cost, uncovering potential investment prospects.
Enhancing Brand Influence:ROs represent the parent company in Vietnam, conducting promotional activities to build brand awareness.
Contract Supervision and Coordination: ROs can oversee and facilitate the execution of contracts between the parent company and local partners to ensure smooth cooperation.
Hiring Local Employees:Although ROs cannot directly engage in profit-generating activities, they can hire local employees to support operations. Specific requirements include:
1.Legal Employment: ROs may employ local staff for administrative, marketing, and market research roles, ensuring compliance with Vietnam’s labor laws by signing formal labor contracts.
2.Mandatory Insurance and Taxes: ROs must contribute to employees’ social insurance, health insurance, and unemployment insurance, as well as withhold and remit individual income tax to ensure tax compliance.
3.Labor Registration and Management: ROs must register employee details with the local labor department and submit annual labor reports.
The license for a representative office is valid for five years unless otherwise specified by the expiry date of the parent company’s business license or certificate of incorporation. Renewal applications must be submitted at least one month before expiration.

III.Basic requirements for registration of foreign companies in Vietnam

1.Foreign Shareholding Regulations in Vietnam
Vietnam allows 100% foreign investment in most industries. These include trade, IT, manufacturing, and education. However, there are limited equity ratios for certain activities/services, such as:
．Fully restricted: military, related printing, etc.
．Partial restrictions: need to have joint ventures with Vietnamese partners, such as tourism, advertising, logistics, etc.
．Special requirements and restrictions: Additional personnel certification conditions such as licenses: real estate brokerage, accounting services, etc.
World Trade Organization (WTO) agreements govern foreign ownership of most businesses. However, some projects are not regulated by WTO agreements or local laws. In this case, approval from the relevant authorities of the industry is still required.

2.Minimum Capital Requirements
Most projects in Vietnam have no minimum capital requirements. However, the amount of capital must be sufficient to cover the initial expenses of the company. The Department of Planning and Investment will assess whether your contribution is in line with your business. Generally speaking, it is recommended to register the capital of foreign service or trading companies at least 80,000 US dollars, and if it is a production factory, it is recommended to register at least 100,000 to 150,000 US dollars. Also, some franchises have minimum capital requirements. For example language centers, real estate companies, finance, fintech, etc.

3.Registered Address
You must have a business address to set up a company in Vietnam. Service-based businesses such as consulting or trading companies can use the Business Center anchor address. However, certain businesses must have physical offices, such as manufacturing, restaurants, and retail trade.

4.Legal Representative
All companies in Vietnam must have at least one legal representative (director). It can be held by foreigners and does not need to have resident status.

IV.Documents required for company registration in Vietnam

For foreign investors to register a company in Vietnam, the required registration documents, procedures, conditions, and regulations for business projects are mainly handled in accordance with the provisions of the Vietnam Investment Law. The documents to be prepared for the Vietnam company registration application are as follows:

Legal documents of foreign investors. (subject to local verification).
Bank letter from the foreign investor.(the balance must be equal to or greater than the charter capital value of the new company).
The English name of the company registered in Vietnam.
The address, telephone number, fax number, and e-mail address of the company’s head office.
Register the specific business items of the Vietnamese company.
The legal capital of an enterprise operating an industry that requires legal capital design.
The share capital and shareholding ratio of each shareholder member of the company.
Name, signature, household registration address, nationality, national ID number or passport number, or other legal personal documents of the person in charge of the company.
Contents of Articles of Association.
Office lease agreement.

V.Basic process of setting up a company in Vietnam

Confirm the investment information
Including company name, registered capital of Vietnam company, business items, shareholder certification documents….
Apply for Investment Registration Certificate (IRC)
To register a foreign company in Vietnam, you need to apply for an investment license from the Department of Planning and Investment (DPI). It takes about 25 working days to get it.
Apply for Enterprise Registration Certificate (ERC)
Vietnamese companies must also apply for a Business Registration Certificate (BRC) from the Investment Planning Department. BRC is also known as Enterprise Registration Certificate (ERC). It takes about 7 working days to apply for a business license.
Tax registration
After receiving your license, you can apply for tax registration. Remember, you must submit this application within 30 days or penalties will apply.
Bank account opening
Choose a suitable bank to open VND and foreign currency capital accounts.
Capital investment
The registered capital must be remitted within 90 days of obtaining the license. If the remittance cannot be made in time, a separate application for extension is required, and the capital injection must be completed within one year at the latest.

Vietnamese laws and regulations change from time to time, and the gap between words and languages often results in unnecessary waste of time and information gaps. It is recommended to find a professional agency for the details of practical establishment.

VI.Taxes and tax rates in Vietnam

Foreign investors doing business in Vietnam, regardless of the business structure they choose, must bear the relevant tax obligations. After obtaining a Vietnam company business license, monthly, quarterly, and annual returns will be required, such as Value Added Tax (VAT), Personal Income Tax (PIT), and annual corporate income tax returns, as well as foreign contractor withholding tax returns.

Corporate income tax CIT 20% (Corporate income tax)
The taxable object is any organization that conducts business in Vietnam and obtains taxable income, and a 20% tax rate is levied on the net profit; exemptions are provided, and some expenses can be deducted from the taxable income.

VAT 10% (Value-added tax)
VAT is levied on value-added at all stages of the production and distribution supply chain.The amount levied depends on the type of goods, 10% for general goods and services, 0% for export goods and services related to agriculture, water, food, etc., and the tax is deductible.
※ The Vietnamese government passed a resolution at the end of 2024 to extend the VAT reduction for specific product categories until June 30, 2025. (Details: Vietnam’s VAT Reduction Measures Extended Until the End of June 2025)

Personal income tax 5% to 35%
Tax residents levied personal income tax according to their global income, and personal income tax rates range from 5% to 35%; non-residents tax 20% according to their income from Vietnam.

級別	應稅收入/月	稅率	計算方法
			第一方法	第二方法
1	≤5,000,000 VND	5%	0+5%應收收入	5% 應收收入
2	>5,000,000 ≤10,000,000 VND	10%	250,000 VND+多餘 5,000,000 VND的10%	10% 應收收入 –250,000 VND
3	>10,000,000 ≤18,000,000 VND	15%	750,000VND+多餘 10,000,000VND的15%	15% 應收收入 –750,000 VND
4	>18,000,000 ≤32,000,000 VND	20%	1,950,000VND+多餘 18,000,000VND的20%	20% 應收收入 –1,650,000VND
5	>32,000,000 ≤52,000,000 VND	25%	4,750,000VND+多餘 32,000,000VND的25%	25% 應收收入 –3,250,000VND
6	>52,000,000 ≤80,000,000 VND	30%	9,750,000VND+多餘 52,000,000VND的30%	30% 應收收入 –5,850,000VND
7	>80,000,000 VND	35%	18,150,000 VND+多餘 80,000,000 VND的35%	35% 應收收入 –9,850,000VND

Foreign contractor tax FCT (Foreign Contractor TAX) 2%-15%
What is Foreign Contractor Tax (FCT) in Vietnam?
Foreign Contractor Tax (FCT) in Vietnam refers to the requirement under Vietnamese tax law for foreign enterprises conducting engineering or business activities in Vietnam to withhold a certain percentage of tax from their income payments. This tax measure aims to ensure that foreign contractors comply with Vietnamese legal provisions and pay the corresponding taxes.
When is Foreign Contractor Tax (FCT) applicable in Vietnam?
Foreign Contractor Tax (FCT) applies to foreign contractors engaged in engineering or business activities in Vietnam and transactions with Vietnamese companies or individuals. It is also applicable when Vietnamese entities purchase goods and services from foreign suppliers. Based on the relevant service or procurement contracts, the buyer is obligated to declare, withhold, and remit the foreign contractor tax on behalf of the seller to the local tax authorities.
Foreign enterprises conducting engineering or business activities in Vietnam are required to withhold a certain percentage of tax from their income payments. The specific tax rates and applicable regulations are determined by Vietnamese tax laws. The Foreign Contractor Tax includes value-added tax (VAT) and corporate income tax (CIT) and can range from 2% to 15% of taxable income. This tax measure aims to ensure that foreign contractors comply with Vietnamese legal provisions and pay the corresponding taxes.

VII.Introduction to Vietnam’s Social Insurance System

According to the Vietnam Social Security (VSS) regulations, all employers must contribute to Social Insurance (SI), Health Insurance (HI), and Unemployment Insurance (UI) for their formally employed workers. This ensures that employees receive essential benefits and protection, fostering a positive and stable work environment.

Social Insurance (SI)
1. Coverage: Includes benefits for sickness, maternity, work-related accidents, retirement, and death.
2. Applicable Individuals: Mandatory for local Vietnamese employees. Since January 1, 2022, foreign workers holding a work permit and having a labor contract of at least one year are also required to participate.

Health Insurance (HI)
1. Coverage: Provides medical expense support, including hospitalization, outpatient treatment, major illnesses, and medication.
2. Applicable Individuals: Mandatory for all employees, including foreign workers.

Unemployment Insurance (UI)
1. Coverage: Includes unemployment benefits, vocational training, and reemployment services (free employment consultation).
2. Applicable Individuals: Mandatory for local Vietnamese employees; foreign workers are exempt.

Vietnam’s social insurance system provides protection for employees in terms of pensions, medical coverage, and unemployment benefits. Participation is mandatory for local workers, while foreign workers are partially included in social and health insurance.

Regarding contributions, employers must pay 17.5% of an employee’s monthly salary towards social insurance, while employees contribute 8%. For health insurance, employers pay 3%, and employees pay 1.5%. As for unemployment insurance, both employers and employees contribute 1% each. Notably, unemployment insurance applies only to Vietnamese employees and does not cover foreign workers.

VIII.Annual Audit in Vietnam

Vietnam has relatively strict accounting and auditing requirements, especially for foreign-invested enterprises and certain industries. Companies must ensure compliance with relevant regulations and complete the preparation and auditing of financial statements on time to avoid potential legal and financial risks.

According to Vietnamese Accounting Standards (VAS), financial statements must generally include:

Balance sheet.
Income statement.
Cash flow statemen.
Notes and attachments, including disclosure of changes in shareholders’ equity.

Additionally, the following types of enterprises are required to have their annual financial statements audited by an independent auditing firm in Vietnam:

Foreign-invested enterprises.
Credit institutions, financial institutions, and insurance companies.
Companies issuing and trading securities, as well as companies in which a listed company holds more than 20% of shares.
State-owned enterprises, enterprises implementing national major projects, and A-class projects utilizing state funds.

The annual financial statement audit must be completed within 90 days after the end of the fiscal year. Additionally, the financial statement audit must be completed within 45 days after the end of the first six months of the financial year.

The Company also needs to submit annual audit financial statements to relevant national institutions, including:

Tax authority.
Planning Department.
Market management agency.
Finance department.

Tax application forms and audited financial statements need to be submitted in time to avoid any penalties. Therefore, before the audit, you will need an accountant to prepare account books and financial statements for the company.

IX.Notes for Vietnam company establishment

The investment document certification acceptable to the Vietnamese government is valid for half a year.

The registered capital in Vietnam must be transferred from the overseas shareholder’s account to the special capital account. In addition, investors must pay the registered charter capital within 90 days from the date of issuance of the business license.

After obtaining the business license, you need to start tax registration and declaration.

After opening a bank account, it needs to be filed with the Planning and Investment Department within 10 days.

Vietnam Company Registration FAQ

Q1.After establishing a Vietnamese company, how long does it take for the capital to be in place?

Foreign capital should remit funds within 90 days of registration and establishment, and can pay in one lump sum or in installments.

Q2. If a foreign-funded enterprise establishes a limited liability company, can its general manager and chairman be the same person?

Yes, according to Vietnam Enterprise Law, the general manager of a limited liability company can be the chairman of the board of directors (if the company adopts a member board system) or the company chairman (if the company adopts a sole company chairman system).

Q3. When does a company in Vietnam need to prepay corporate income tax?

Vietnamese companies must calculate and prepay corporate income tax based on actual revenue and expenses for the quarter within 30 days after the end of each quarter. The total prepaid tax for the first four quarters must not be less than 80% of the annual corporate income tax.

Vietnam Company Registration FAQ

Q1.After establishing a Vietnamese company, how long does it take for the capital to be in place?

A:Foreign capital should remit funds within 90 days of registration and establishment, and can pay in one lump sum or in installments.

Q2. If a foreign-funded enterprise establishes a limited liability company, can its general manager and chairman be the same person?

A:Yes, according to Vietnam Enterprise Law, the general manager of a limited liability company can be the chairman of the board of directors (if the company adopts a member board system) or the company chairman (if the company adopts a sole company chairman system).

Q3. When does a company in Vietnam need to prepay corporate income tax?

A:Vietnamese companies must calculate and prepay corporate income tax based on actual revenue and expenses for the quarter within 30 days after the end of each quarter. The total prepaid tax for the first four quarters must not be less than 80% of the annual corporate income tax.

Content

Vietnam Company Registration

Vietnam Company Registration