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Vietnam has one of the fastest-growing economies in the world. Company registration in Vietnam is a straightforward process, but there are specific guidelines for foreign-owned businesses. It’s important to understand the requirements and process of establishing a foreign-owned company in Vietnam.
Overview of legal entities in Vietnam
The two most common types of legal entities in Vietnam are:
- Limited liability company (LLC)
- Joint-stock company (JSC).
An LLC can have 1 to 50 members, also known as founders or owners. Note that LLCs in Vietnam do not have shareholders. On the other hand, a JSC must have a minimum of 3 shareholders. There is no limit to the number of shareholders a JSC can have.
Watch this video to learn more about legal entities in Vietnam available to foreign investors:
Below, you will find steps detailing the process to register an LLC in Vietnam. Learn more about setting up a joint-stock company in Vietnam by reading our other articles. You can also get in touch with Emerhub’s consultants by filling out the form below.
Requirements for setting up a company in Vietnam
#1 Foreign ownership regulations in Vietnam
Vietnam allows 100% foreign ownership of a business in most industries. These include trading, IT, manufacturing, and education. However, some industries restrict foreign ownership. Examples of these include advertising, logistics, and tourism. In such cases, foreign investors will need a Vietnamese joint venture partner.
World Trade Organization (WTO) agreements regulate foreign ownership for most business lines. However, there are some business lines not regulated by WTO agreements nor local laws. In such cases, you will need approval from the ministry involved in that industry.
#2 Minimum capital requirement
There are no minimum capital requirements in Vietnam for most business lines. However, it must be enough to cover expenses until the business becomes self-sustaining.
The Department of Planning and Investment will assess if your capital contribution is in line with your business. A lot of businesses set capital of USD 10,000. However, from our experience, it is possible to open a business service company with USD 3,000.
Note that there are some business lines with minimum capital requirements. These include:
- Language centers
- Vocational schools
- Real estate companies
- Finance and Fin-tech
Note that your capital should exceed setup and equipment expenses. Note that your Business Certificate will state the amount of your capital. Changing this will require amending your company’s documents.
#3 Registered address
You must have a business address to incorporate a company in Vietnam. Service-based businesses, like consulting companies, can use a virtual office address. However, some business lines must have a physical location or office. These include manufacturing, restaurants, and retail trading, among others.
The Department of Planning and Investment may check the address during the incorporation process. You can submit documents to serve as proof of your address. It must say that you will use the location for your business after incorporation.
#4 Resident director
All companies in Vietnam must have at least one resident director. He or she doesn’t need to have residency status at the time of incorporation. However, they will need a residential address in Vietnam.
Note that if the director is also a founder, he or she will not need a work permit. Instead, he or she will have to apply for a work permit exemption. A director who is a foreign national and not a founder of the company will need a work permit in Vietnam.
Company registration in Vietnam.
Set up a company in Vietnam through Emerhub.
The step-by-step process of company registration in Vietnam
The procedure below details the process of registering a foreign LLC in Vietnam.
#1 Investment registration certificate
When registering a foreign-owned company in Vietnam, you need an investment registration certificate. The Department of Planning and Investment issues this certificate. It usually takes about a month to receive the certificate.
However, if no WTO agreements or local laws regulate foreign ownership in that business line, it will take longer to get the certificate. Your business will need Ministry-level approval from one or more ministries.
#2 Business registration certificate
Companies in Vietnam must also get a business registration certificate (BRC). The Department of Planning and Investment also issues this certificate. The BRC is also known as the Enterprise Registration Certificate (ERC).
#3 Tax registration and payment of the business license tax
The business license certificate number is also the company’s tax number. All companies must pay taxes through an online system. Companies also submit tax declarations and reports through this system. To gain access to this system, businesses must get an electronic signature.
Emerhub can assist in the process to gain access to this system and maintain compliance with tax regulations.
#4 Capital contribution
After receiving the BRC, you have 90 days to make the capital contribution. Failure to do so will result in fines.
#5 Apply for sublicenses or permits, if applicable
Company registration in Vietnam typically takes about one month. However, depending on the business line, some companies need to apply for sublicenses. In such cases, the registration process will be longer.
Such examples of business lines that need sublicenses include:
- Trading of special products or services
Certain businesses need to process additional permits. For example, companies that will engage in the sale or distribution of cosmetics must register their products. This can take anywhere from a couple of weeks to several months.
Aside from company registration, Emerhub will also take care of sublicenses or permits you need. We will also assist in completing any procedures necessary.
Corporate compliance in Vietnam
Corporate compliance in Vietnam involves the following:
- Accounting and tax reporting. This includes corporate income tax, value-added tax, and personal income tax.
- Payment of the annual business license tax. Companies must pay this starting on their second year of business.
- Audited annual report. An independent Vietnamese auditing company must review your financial statements at the end of each fiscal year.
- Foreign investment reports. The report must include profits, losses, and expenses throughout the year.
- Compliance with employment laws. These include registering employees with social insurance. You also need to make sure that all foreign employees have the necessary permits to work in Vietnam.
Emerhub’s consultants will advise and assist in maintaining compliance in Vietnam. Get in touch with us by filling out the form below.
Setting up a special purpose vehicle in Vietnam
In some cases, foreign investors cannot set up a business due to foreign ownership restrictions. Some partner up with a local nominee in order to proceed with their intended business plans.
Some foreign investors use nominee companies to dodge restrictions in certain industries. However, the Vietnamese government is cracking down on nominee companies. The government will impose heavier sanctions on nominee companies with the new Investment Law. It will come into effect in January 2021.
A safer alternative is to conduct business through a special purpose vehicle. It will allow you to protect and maintain control over your investment without setting up a company in Vietnam. Get in touch with us by filling out the form below. Our consultants will tell you more about this structure.
Alternatives to Company Registration in Vietnam
In some cases, it is not necessary to set up a company in Vietnam. There are alternative ways to enter the Vietnamese market.
Representative Office in Vietnam
Representative offices in Vietnam can act on behalf of a foreign parent company. A representative office cannot generate income locally, but it can perform tasks in support of the parent company. It’s a way to enter the Vietnamese market without incorporating a company.
Read Opening a Representative Office in Vietnam to learn more about this business structure.
Employer of Record in Vietnam
With an employer of record in Vietnam, you can hire employees without establishing a company or representative office. As your employer of record, we will put your employees on our payroll. We will also take care of maintaining compliance with local employment laws. Emerhub can also assist you in sourcing and recruiting candidates in Vietnam.
Importer of Record in Vietnam
Before you can import goods into Vietnam, you will need certain certificates and licenses. Waiting to get these documents before importing your goods will delay business operations. You can start importing goods into Vietnam immediately through an importer of record.
FAQs about company registration in Vietnam
Is the company registration process different if I have a local partner?
No, the company registration procedure in Vietnam is the same for companies with any amount of foreign ownership.
How long does it take to register a company in Vietnam?
If your business does not need to get ministry-level approval, it takes about one month. Note that this time frame does not take into tài khoản any sublicenses necessary to operate your business.
If your company needs additional licenses the process can take up three or four months. Some examples of businesses that need additional licenses are trading or tourism.
What does the company founder need to prepare?
A company founder can be an individual or a company. The documents needed by an individual founder are not the same as the documents needed by a company.
An individual founder must submit a notarized copy of his or her passport. He or she must also provide a bank statement bearing his or her name. On the other hand, a company must submit an incorporation certificate, articles of association, and a list of its directors. It must also submit financial statements from the last two years or a bank statement if the company is less than two years old.
Note that if the above documents were issued abroad, you will have to legalize and notarize them in the issuing country.
Ready to register a company in Vietnam? Fill out the form below and our consultants will get in touch with you.