Procedure for setting up foreign company in Vietnam?

Vietnam’s economy is growing fast with a large consumer market. The policy of opening from 1986 with multilateral diplomatic relations made Vietnam a safe destination for foreign investors. So what is the process for setting up foreign company in Vietnam?

Read more: Legal guide for company formation in Vietnam

1. Requirements when setting up foreign company in Vietnam

1.1. Type of company in Vietnam

Two common types of company in Vietnam are limited liability and joint stock company. A limited liability company has from 1 to 50 organizations or individuals who are members. The joint stock company has no membership limit but it need at least 03 founding shareholders when establishment.

Each type of company is different on asset liability, membership, capital mobilization capabilities, management and organizational structure, etc. Foreign investors base on their needs to choose the appropriate type.

1.2. Allowed foreign ownership

Vietnam allows foreign organizations and individuals to establish and own company in Vietnam. Encourage foreign investment in the sectors like technology, software, manufacturing, etc.

The majority of sectors allow foreign investors own 100% capital when setting up foreign company. However, some businesses such as advertising and tourism require a Vietnam joint venture partner.

Investment conditions and percentage of foreign capital are specified in Vietnam’s WTO Commitments Schedule. But if the WTO commitments do not have agreements, foreign investors will need a ministerial-level approval to setting up foreign company.

1.3. Minimum capital when investing in Vietnam

Overall there is no minimum capital requirement when invest in Vietnam. To ensure the procedure, the project should have a minimum capital of 9000 USD. The amount of investment capital is registered with the Department of Planning and Investment and will show in Investment Registration Certificate (IRC).

Note that some businesses require a minimum capital. For example, a real estate company need 860.000 USD minimum capital; insurance service company need 13 million minimum capital, etc.

1.4. Address in Vietnam

To setting up foreign company, investors need an address in Vietnam. This is the site of the investment project as well as the company’s headquarters. Service companies can use virtual offices while manufacturing or retail companies need physical locations due to space requirements.

Department of Planning and Investment or tax authorities will check this address before and after the company goes into operation. Investors can rent offices but need a contract or agreement to prove the legality.

2. Procedure of setting up foreign company in Vietnam

All foreign company must follow the procedure below

2.1. Investment Registration Certificate (IRC)

The first step when establishing a foreign company is to grant an Investment Registration Certificate at the Department of Planning and Investment. It usually takes one month to get results.

For business not included in the WTO schedule of commitments, the time may be longer than one month due to the need for ministerial-level approval

2.2. Business registration certificate

The second step is to apply for Enterprise Registration Certificate (ERC) at the Business Registration Office. Issuing time is from 3 to 7 working days.

2.3. Tax procedures of foreign company

After being granted Enterprise Registration Certificates (ERC), foreign company have 30 days to complete tax procedures at the local tax department. All company in Vietnam need pay license fees from 90 to 130 USD per year. Foregin company also need complete tax declaraton.

2.4. Capital contribution

Within 90 days from the date of issuance of the business registration certificate, foreign investors need to contribute capital to the company. Note that all activities of transferring money into or out of Vietnam for investment are carried out through a capital account opened at the bank in accordance with foreign exchange control.

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