Set up company in vietnam

Vietnam has become one of the most attractive destinations for foreign investors due to its rapidly growing economy, strategic location, and favorable business environment. Setting up a company in Vietnam can be a lucrative opportunity, but it requires an understanding of the country’s legal, financial, and administrative framework. This guide provides an overview of the key steps and considerations when establishing a business in Vietnam.

1. Choose the Right Business Structure

Vietnam offers several types of business entities for foreign investors, including:

• Limited Liability Company (LLC): The most common structure for small to medium-sized businesses.
• Joint Stock Company (JSC): Suitable for larger businesses requiring multiple shareholders.
• Representative Office (RO): Ideal for market research and business liaison but cannot conduct commercial activities.
• Branch Office: A branch of a foreign company that can engage in business activities in Vietnam.

2. Meet Foreign Ownership Requirements

Vietnam allows 100% foreign ownership in many industries, but some sectors require a local partner. It is essential to check the investment regulations applicable to your business sector.

3. Register the Company

The company registration process involves the following steps:

1. Obtain an Investment Registration Certificate (IRC): Required for foreign investors, issued by the Department of Planning and Investment (DPI).
2. Obtain an Enterprise Registration Certificate (ERC): This certificate establishes the legal entity.
3. Register the company’s seal and tax codes: This includes obtaining a tax identification number (TIN) and value-added tax (VAT) registration.
4. Open a corporate bank account: A local bank account is necessary for business transactions.
5. Contribute charter capital: This must be completed within 90 days of company registration.

4. Compliance with Tax and Accounting Regulations

Vietnam has a structured tax system that businesses must comply with:

• Corporate Income Tax (CIT): Standard rate of 20% (varies for specific industries and incentives).
• Value-Added Tax (VAT): Standard rate of 10% with exemptions for certain goods and services.
• Personal Income Tax (PIT): Applies to employees based on a progressive tax rate.
• Foreign Contractor Tax (FCT): Applies to payments made to foreign service providers.

Businesses are required to maintain proper accounting records and submit regular financial reports to the authorities. It is advisable to engage a professional accounting firm to ensure compliance.

5. Labor and Employment Regulations

Vietnam has strict labor laws that employers must adhere to, including:

• Signing labor contracts with employees.
• Registering employees with social insurance.
• Complying with minimum wage and working hour regulations.

Hiring foreign employees requires obtaining a work permit, which is subject to approval based on the employee’s qualifications and job position.

6. Licensing and Industry-Specific Requirements

Certain industries require additional licenses and approvals. Businesses in banking, telecommunications, healthcare, and education are subject to stricter regulations.

7. Business Operations and Market Entry Strategy

Once the company is set up, developing a strong market entry strategy is crucial. Consider factors such as local consumer behavior, competition, and potential business partnerships.

Set up company in Vietnam involves several legal and regulatory procedures. Foreign investors should conduct thorough research and seek professional advice to navigate the complexities of the business environment. With the right strategy and compliance measures, Vietnam offers significant opportunities for business growth and expansion.

If you need assistance with company registration, tax compliance, or accounting services in Vietnam, feel free to contact our expert team for support.