Setup company in Vietnam

Vietnam has emerged as a prime destination for foreign investors due to its robust economic growth, favorable investment climate, and strategic location in Southeast Asia. For entrepreneurs looking to establish a business in Vietnam, understanding the legal, financial, and tax landscape is crucial for a successful venture.

1. Selecting the Appropriate Business Structure​

Before registering a company in Vietnam, choosing the right business entity is essential. Common structures include:

• Limited Liability Company (LLC): Suitable for small to medium-sized businesses with a maximum of 50 shareholders.
• Joint Stock Company (JSC): Ideal for larger enterprises that require multiple shareholders and the ability to issue shares.
• Representative Office (RO): Allows foreign businesses to conduct research and promotional activities but not direct business operations.
• Branch Office: A direct extension of the parent company, subject to specific conditions for conducting business in Vietnam.

2. Foreign Ownership and Investment Restrictions​

While Vietnam permits 100% foreign ownership in numerous industries, certain sectors require local partnerships. It is advisable to review the Vietnamese Negative List to determine if any ownership restrictions apply.

3. Business Registration Process​

Setting up a company in Vietnam involves several key steps:

• Step 1: Obtain an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI) for foreign-owned enterprises.
• Step 2: Acquire an Enterprise Registration Certificate (ERC) to officially incorporate the business.
• Step 3: Register the Company Seal and Tax Code with local authorities.
• Step 4: Open a Corporate Bank Account and deposit the required charter capital.
• Step 5: Register for Tax Compliance, including VAT, Corporate Income Tax (CIT), and Personal Income Tax (PIT).

4. Capital Requirements​

There is no universal minimum capital requirement in Vietnam, but businesses should ensure their declared capital aligns with industry norms. Specific sectors, such as banking and real estate, have predefined capital requirements.

5. Taxation and Accounting Compliance​

Businesses operating in Vietnam must adhere to local tax regulations and financial reporting requirements. Key tax obligations include:

• Value-Added Tax (VAT): Generally 10%, with exceptions for certain goods and services.
• Corporate Income Tax (CIT): Standard rate of 20%, with potential incentives for priority sectors.
• Personal Income Tax (PIT): Progressive rates ranging from 5% to 35%.
• Financial Reporting: Companies must follow Vietnamese Accounting Standards (VAS) and submit periodic tax filings.

6. Hiring Employees and Social Insurance​

Vietnamese labor laws mandate businesses to provide labor contracts and contribute to social insurance. Employers and employees must contribute a combined 32% to social, health, and unemployment insurance funds.

7. Additional Licenses and Permits​

Depending on the business activities, additional permits may be required, such as:

• Retail and trading licenses
• Food safety and hygiene certificates
• Construction permits for real estate businesses

Set up company in Vietnam presents significant opportunities but requires thorough planning and compliance with local regulations. Seeking guidance from professional legal and accounting advisors can streamline the setup process and ensure long-term success.

If you are considering expanding your business into Vietnam, consulting with experts can help you navigate legal complexities and optimize your operations in this dynamic market.