What 10 Questions to Ask Before Setting up Company in Vietnam?

Foreigners are encouraged to make investment in Vietnam through direct investment by setting up company in Vietnam.

Vietnam presents a compelling opportunity for investors looking to establish a company and tap into its burgeoning market. With a dynamic economy, strategic geographical location, and a favorable business climate, Vietnam offers a wealth of advantages that make it an attractive investment destination. As investors contemplate their next venture, the following questions provide essential insights into the process of setting up a company in Vietnam, ensuring a smooth and successful establishment within the country’s vibrant business landscape.

Before setting up company in Vietnam, ask yourself the following questions:

• Which business should I invest in Vietnam?
• What should I name the business in Vietnam?
• Where should I register the address of the business in Vietnam?
• What is the legal structure of the company?
• How much capital is required for setting up a company in Vietnam?
• Whom will be legal representative and work permit in Vietnam?
• How long does it take to set-up a company in Vietnam?
• Whom will be granting the investment license in Vietnam?
• What are the tax liability in Vietnam?
• What are mandatory reports submissions requirement in Vietnam?

1.Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding… which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2.What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3.Where should I register the address of the business in Vietnam?

Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4.What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5.How much capital is required for setting up company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6.Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7.How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in Vietnam in conditional investment areas i.e.  trading company, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in Vietnam in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8.Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9.What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10.What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

How a law firm in Vietnam could help setting up company in Vietnam?

As Vietnam continues to experience rapid economic growth and embraces market-oriented reforms, it emerges as a prime location for foreign investors setting up company in Vietnam. With a diverse range of investment areas, straightforward registration processes, and a supportive legal framework, Vietnam provides ample opportunities for success.

By carefully considering the crucial factors outlined in this essay, such as business selection, legal requirements, capital investment, and taxation, investors can navigate the intricacies of setting up company in Vietnam with confidence. Moreover, the country’s commitment to attracting foreign investment, coupled with its strategic regional position and favorable trade agreements, positions Vietnam as a gateway to the flourishing markets of Southeast Asia. Investing in Vietnam can unlock immense potential, enabling investors to thrive in a dynamic and promising business environment.

With professional staff and experience in foreign investment, ANT Lawyers, a law firm in Vietnam would support client to well prepare before setting up company in Vietnam

We help clients overcome cultural barriers and achieve their strategic and financial outcomes, while ensuring the best interest rate protection, risk mitigation and regulatory compliance. ANT lawyers law firm has law offices in in Hanoi, Ho Chi Minh City and Danang.

Why Italian investors want to invest in Vietnam?

Economic and trade cooperation between Vietnam and Italy has developed to an exciting period than ever. Recently, the Italian government continued to include Vietnam in the list of 20 countries that continue to prioritize in promoting trade and investment until 2030.

On July 5th, 2022, the Vietnam-Italy Economic Cooperation Seminar with the theme “Vietnam – A business and investment destination for Italian businesses” was organized by the Federation of Industry of Pisa province and Italian Chamber of Commerce in Vietnam (ICHAM), with the participation of Vietnamese Ambassador to Italy, the delegation of the Embassy, ​​leaders of Pontedera cities, Pisa, Cascina, Calcinaia, leaders of the Confederation of Industry of Pisa Province, and local businesses of the province of Pisa and the Tuscan region.

Vietnam is currently Italy’s largest trading partner in the Association of Southeast Asian Nations (ASEAN), while Italy is Vietnam’s fourth largest partner in the European Union (EU). Two-way trade turnover in 2021 will reach USD 5.6 billion, the highest level ever, an increase of 20% compared to 2020.  There are more than 110 Italian enterprises investing in 18 provinces and cities of Vietnam and operating successfully.  Recently, the Italian government continued to include Vietnam in the list of 20 countries that continue to prioritize promoting trade and investment until 2030.

Why Italian companies should invest and do business in Vietnam? 

One is the dynamism of Vietnam’s economy. Second is the deep integration of the Vietnam economy, which is currently a member of 16 Free Trade Agreements (FTAs), including new and large FTAs ​​such as EVFTA, RCEP and CPTPP. Third is Vietnam’s reforms and development priorities. Fourth is the measures to support from the Italian government for businesses, especially small and medium enterprises, in promoting “Made in Italy” products and internationalizing emerging markets. Fifth is the strengthening of exchanges and mutual understanding between the peoples of the two countries.

The Vietnam Ambassador believes that the conference is an opportunity to exchange information and the opening of new cooperation projects in the near future between Tuscany and Vietnam to enhance this highly potential bilateral cooperation. The Ambassador expressed his hope that more and more Italian businesses in general and Toscana in particular will continue the success of Italian companies investing in Vietnam, setting up companies in Vietnam taking advantage of Tuscany region, with strengths in cultural values, long history, tourism, cuisine, wine, fashion and handicraft products, and high technology.

A representative of Esanastri printing company, which has a factory set up in Vietnam, emphasized that, in addition to long experience in the field of manufacturing silk-printed decorations and 3D logos, as well as future planning when moving the production of helmet ornaments, adhesive graphics and 3D icons to Vietnam, it was the friendly business environment in Vietnam that became a decisive factor for the development of the company. To date, Esanastri Vietnam has 50 employees and has produced more than half a million decorations with a turnover of about 3 million euros in 2021.

A representative of Segis company, which also has a factory established in Vietnam, shared with the conference attendees about the successes of Segis Vietnam company when the company’s furniture products with own design has won many design awards from the Industrial Design Association in Italy (Compasso D’oro), exported to Italy, Europe and USA for the past 10 years.

Vietnam Ambassador has called for the support of the city authorities in informing and supporting businesses doing business and investing and establishing companies in Vietnam, creating favorable conditions for exchange activities, culture and trade between Vietnam and Italy within the framework of activities to celebrate the 50th anniversary of the establishment of diplomatic relations between the two countries.

 

Bloomberg said Vietnam is an attractive destination for startups in 2023

According to the international press last week, in 2023, Vietnam’s economy has been facing challenges both at home and abroad. However, there are still positive signs with the growth prospect of the economy. Meanwhile, Vietnam is also focusing on long-term economic growth to promote startups to choose Vietnam for setting up company, make investment and do business in Vietnam.

In 2023, the economy is returning to a long-term growth trajectory as the boom period of reopening after COVID-19 has ended. Vietnam aims to increase infrastructure spending to 7% of GDP this year to support economic growth, ensuring continued FDI inflows into the country for years to come.

Vietnam’s foreign direct investment is boosting the economy in the future. With the advantage of favorable business environment, stable political environment, sustainable macroeconomic development, abundant labor force, low cost, Vietnam is an ideal destination for tourists and foreign investors to establish company in Vietnam.

According to expert, the situation is very difficult globally, but so far Vietnam has been recovering and returning to the development trajectory. There will still be challenges from the risk of recession, global protectionism that reduces export demand, but there are still many positive aspects, and there are several drivers of growth from foreign investment, investment in human resources, and infrastructure. In addition, there is rapid growth in the recovery of consumer and business confidence. There has been a recovery in domestic demand.

According to Bloomberg, Vietnam is an attractive land for startups thanks to an abundance of qualified engineers but low labor costs, along with a fast-growing economy.  Vietnam aims to turn Ho Chi Minh City into a “magnet” by 2030 to attract technology investment capital and aim for a digital economy.

Vietnam is now a manufacturing hub and an important part of the global supply chain. Therefore, it is important for businesses and economies to step up automation.  Digitization of the value chain along with rapid improvement of labor productivity is one of the key drivers. Vietnam has great potential for rapid economic development and digital transformation across all sectors.

There are common understandings about the factors that help ensure Vietnam’s growth. These factors include accelerating structural and institutional reforms, deeply participating in new-generation trade agreements, enhancing foreign investment attraction, accelerating digital economic transformation, and deep integration into the global supply chain

Set up company in Vietnam and comply

Vietnam’s economy is increasingly diversified in terms of business activities and business regulations are also constantly being improved and enhanced. Accordingly, foreign investors can freely choose the right type of business to set up company in Vietnam.  After the investors set up company in Vietnam, the continuous procedures to comply is always a matter of great interest to foreign investors.

Why it is important to comply with the laws after the investors set up company in Vietnam?

Complying with the law after the investors set up company in Vietnam is of utmost importance for several key reasons.

Firstly, legal compliance ensures that your company operates within the boundaries of the law, avoiding any potential legal repercussions or penalties. Vietnam has specific regulations and requirements that businesses must adhere to, such as tax obligations, labour laws, environmental regulations, licensing requirements, and corporate governance standards. By following these regulations, you demonstrate your commitment to ethical business practices, maintain a positive reputation, and reduce the risk of legal disputes or regulatory actions.

Secondly, legal compliance fosters a stable and sustainable business environment. Adhering to the law helps create a level playing field for all market participants, promoting fair competition and ensuring that businesses operate on a fair and equitable basis. Compliance also enhances transparency and accountability, which can attract potential investors, partners, and customers who value companies with strong ethical practices. By establishing a reputation for legal compliance, your company is more likely to build long-term trust and maintain fruitful relationships with stakeholders.

Furthermore, compliance with the law safeguards the rights and interests of your employees. Labour laws in Vietnam provide essential protections for workers, such as fair wages, working hours, occupational safety, and social insurance. By complying with these regulations, you create a safe and equitable working environment, fostering employee satisfaction, loyalty, and productivity. Prioritizing legal compliance in Vietnam also minimizes the risk of labour disputes, ensuring harmonious and productive relationships with your workforce.

Lastly, legal compliance contributes to the overall economic development and stability of Vietnam. When businesses operate in accordance with the law, they contribute to a robust and sustainable economy. Compliance supports government initiatives, such as tax revenue generation, social welfare programs, and infrastructure development, which benefit the country as a whole. By fulfilling your legal obligations, you actively participate in the growth and progress of Vietnam’s business ecosystem.

What are steps to follow to set up company in Vietnam and comply with the laws?

With the promulgation of the enterprise law, the business setting up process has been adjusted with many favorable regulations for investors.  However, in order for a business to start up and comply in operation, the following basic steps should be noted:

The first step is to set up company in Vietnam. To take this step, the investor first needs to determine the type of business to choose to establish and provide the business name and expected information. Accordingly, the composition of the enterprise establishment dossier will be prepared according to regulations and submitted at the Business Registration Office, the Department of Planning and Investment of the place where it is expected to be headquartered. After submitting a valid application, the enterprise will be granted an enterprise registration certificate and announced the registration contents on the National Business Registration Portal.

The second step is to publish the contents of business registration. After being granted an enterprise registration certificate, an enterprise must make a public announcement on the National Business Registration Portal.

In the third step, the enterprise conducts stamp engraving. Enterprises can request to make a seal from the seal making agent. Accordingly, the enterprise actively decides on the type, quantity, form and content of the seal and is solely responsible for the use of its legal entity seal.

Fourth step is that to open a bank account in Vietnam. Currently, businesses can choose a bank to open an account for their business, to open an account, the bank requires an application form issued by the bank, a seal sample, the company’s charter, and a certificate. Business registration and related documents are required by different bank.

The fifth step is to register the tax declaration form in Vietnam. Accordingly, enterprises register for the use of e-invoices and notify the use of e-invoices to their tax authorities. Enterprises need to contact the invoice supplier to order the printing of value-added invoice books and must register self-printed invoices with tax authorities.

In the sixth step, the enterprise needs to conduct labor registration in Vietnam. Enterprises register with the Department of Labor, War Invalids and Social Affairs to declare the use of labor. Within 30 days from the date of commencement of operation, the employer must register the employer to the Labor Department (according to the prescribed form). In addition, enterprises should note that the relationship between the employer and the employee is regulated by the Labor Code and specified in the labor contract.

Seventh step is to register for social insurance in Vietnam. Enterprises register with the Social Insurance Agency to pay health insurance and social insurance for employees. Employers must fill in all information according to the form provided by social insurance, including: full name, date of birth, salary (recorded in labor contract), number of social insurance book (for employees who have been issued with a book), a certified copy of the company’s business registration certificate and a copy of each labor contract.

How a consulting firm in Vietnam could help set up company in Vietnam and stay complied?

It can be seen that in order for the investors to set up company in Vietnam, it requires investors to carry out a number of procedures and comply with many different regulations of tax, banking, labour, insurance… Therefore, besides learning about legal regulations and businesses can seek the support of professional consulting firm to set up company in Vietnam with expertise and experience in the field of business establishment to implement the process quickly and effectively.

Compliance with the law after the investors set up company in Vietnam is essential for maintaining a strong legal standing, fostering a fair and transparent business environment, protecting the rights of employees, and contributing to the sustainable development of the country’s economy. By upholding legal compliance, your company can thrive and build a solid foundation for long-term success in Vietnam while doing business in Vietnam.

 

Why Investors Should Set up Business in Phu Quoc?

The improvement in infrastructure system along with the preferential policies have stimulated investors to come to  set up business in Phu Quoc and do company.

Phu Quoc, an island in Kien Giang of Vietnam is in the top of three islands having tourism potential in Southeast Asia comparable to Phuket in Thailand and Bali in Indonesia.  Phu Quoc has become a magnet for attracting huge investment flows from foreign investors in the area of real estate, entertainment, casinos, restaurant or food and beverage service business.

Phu Quoc has temperate weather throughout the year. There are also fresh and friendly forest – sea ecology and the modern transport system on the island with international airport and international hospital. Moreover, many infrastructure projects and international schools are under construction, which are necessary and favorable conditions to invite and attract investors to the Pearl Island for doing business.

Capital inflows to Phu Quoc have really exploded after the “knots” in investment were removed. The new airport went into operation that can welcome larger aircraft and serve more flights, in which there are more international direct flights from China, Singapore, Russia and Cambodia. The 51km long radial route on the island has been basically completed; the road around the island and the branch roads are also being deployed. The power grid was pulled from the mainland to the island, replacing the very high cost gasoline power in the past.

The real estate and tourism consultants all agree that Phu Quoc fully convergent elements of an attractive beach for tourist with year-round sunshine, many beautiful beaches such as Long Beach, Truong Beach, Khem Beach and immense virgin forest. Moreover, Phu Quoc has a strategic location with just 1-2 hours flight to the key tourism markets in Southeast Asia.

Both investment and tourism in Phu Quoc have entered the acceleration phase. By the end of July 2015, Phu Quoc has attracted nearly 200 investment projects, including 136 projects that are being implemented in the area of over 5,100 ha with total registered capitals of 6.5 billion USD. Just one part of those projects become reality then it will make Phu Quoc to become a leading tourist destination in Vietnam, ahead of Da Nang and Nha Trang, competing with the top destinations in the area as Phuket and Bali.

Some of the largest Vietnam corporations such as Vingroup, Sun Group, CEO Group, BIM Group are implementing the huge projects that could alter the appearance of the island. In which the giant in real estate sector – Vingroup has invested projects as: Vinpearl Resort on an area of 300 ha in Long Beach, the combining of golf course and safari zoo on an area of more than 2,000 ha, and the 80 ha commercial complex.

The improvement in infrastructure system along with the preferential business and legal environments i.e. favourable land rental rates, corporate income tax, exemption of visa for foreign tourists make Phu Quoc island of Kien Giang, Vietnam a new attractive place for investment.

The actual time for processing paper at the State authority would also last longer in practice when the State authority evaluate the project plan of the investor to ensure that its investment purpose is achievable economically and in accordance to the regulations of Vietnam.  It is advised that the client engage professional law firms in Vietnam to assist with advisory and to apply investment certificate in Vietnam for doing business in Vietnam.

Six benefits for investors to set up company in Hanoi

Along with the trend of integration in the world, Vietnam is considered a country with rapid and strong growth, in which, industrialization and modernization are focused on developing a uniform set and achieve high performance. Hanoi and Ho Chi Minh City are considered the two cities and dynamic development in Vietnam.  The investors would choose to invest and set up company in Hanoi because of the benefits the city could offer.

First, the skilled labor force for hiring

Hanoi is considered a capital with a longstanding historical developed tradition. The population is heavily crowded, reaching about 7 million after 4 times of adjusting the administrative boundaries in 2014. Ha Noi has become one of the 17 largest cities in the world. In addition, with favorable conditions, Hanoi is considered an attractive city for labor, especially qualified and highly skilled workforce. A large workforce will provide adequate resources for industries requiring a large amount of labor force.

Second, the pace of economic development

Over the years, the economy of Hanoi has continued to grow and controlled inflation. In addition, GDP in the province is estimated at 8.8% and revenue is estimated at 130.000 billion, with 103% of the mathematics. Besides, administrative reform, improvement on the investment environment, business environment, policies to remove difficulties for enterprises often deploy, which made PAR index of cities rise 2 levels compared with 2012 and No. 5 of the 63 provinces and cities nationwide. Thus, with the stable and strong economic development, Hanoi is a city that brings stability for businesses to invest and develop.

Third, infrastructure to encourage investors to set up company in Hanoi

With the aim of developing Hanoi based on criteria of synchronous and modern infrastructure, leadership of Hanoi has attempted to offer policies to promote infrastructure construction of the city in order that Hanoi will become more modern, in which, the traffic system in Hanoi must be built and upgraded. This is considered particularly advantage, because the synchronous development of infrastructure will bring to the development of economy of the city.

Fourth, administrative and tax policies

With attractive policies for investment, Hanoi has implemented policies solving administrative procedures with one door policy. This policy is seen as a new step forward the people of Hanoi in general and businesses having demand to invest in Hanoi in particular. With this open policy, the procedures for establishing businesses, dissolution, business transformation become quickly and easily than ever before, creat favorable conditions for the development of business and resolve administrative procedures. In addition, in order to facilitate business development for businesses, Hanoi has many policies to reduce taxes in order to create favorable conditions for development of new business with low capital.

Fifth, geographic location

Hanoi offers convenient location, with synchronous traffic system, a northern – southern railway, highway 1A, along with the expanded domestic and international routes, it is considered a city with the most convenient trade location in Southeast Asia and the gateway to the East Sea of Laos and other countries.

Sixth, broad market

With the population of 7 million, belonging to one of the 17 cities with the largest population in the world, Hanoi is considered a city which has the largest consumer goods market in the country. Abundant work force, along with the large number of people from suburbs, strong demand for consumer products, services lead to favorable conditions for businesses in production and consumption of consumer products and services. 

It can be said that Hanoi is considered to be an attractive destination for investment. It is important that the client also consider other matters including regulatory, political environment before making decision.