Essential Steps After Your Company is Formed in Vietnam: A Comprehensive Post-Incorporation Checklist
The issuance of an Enterprise Registration Certificate (ERC) marks a pivotal moment, legally establishing your business entity in Vietnam. However, this is merely the commencement of your operational journey. The critical phase of post-incorporation compliance is where your company truly begins its life as a legitimate and operational business.
- ✅Avoid substantial penalties & operational disruptions.
- ✅Ensure a smooth & sustainable business launch.
- ✅Navigate Vietnamese regulatory landscape with diligence.
Navigating this period with diligence is paramount to avoid substantial penalties, operational disruptions, and potential legal repercussions, ensuring a smooth and sustainable launch.
Why the "Post-Formation" Phase is Crucial
Many foreign investors, even experienced ones, sometimes underestimate the complexity and immediate demands of the Vietnamese regulatory landscape following company establishment. Having an ERC signifies legal existence, but it does not automatically confer the right to operate or conduct business seamlessly. Failing to meticulously complete the subsequent mandatory steps can lead to:
Financial Penalties
Late filings, incorrect declarations, and missed payments incur significant fines from tax, labor, and other relevant authorities.
Operational Stoppage
Without proper licenses, registrations, or tax compliances, authorities can halt your business operations.
Loss of Credibility
Non-compliance can damage your reputation with partners, clients, and regulatory bodies, impacting future business dealings.
Legal Disputes
Particularly with labor regulations, non-compliance can lead to employee grievances and legal challenges.
This guide serves as a comprehensive checklist, detailing the essential actions required immediately after your company is formed in Vietnam.
I. Immediate Foundational & Administrative Compliance
These are the foundational steps that must be completed promptly to ensure your company is legally recognized and can begin basic operations.
1️⃣Company Seal Registration
While the mandatory physical engraving and notification of a company seal has seen regulatory shifts, it's crucial to confirm the current requirements with legal counsel. Historically, a company seal served as a formal authentication tool for documents and transactions. If required, ensuring its design complies with regulations and timely registration is vital.
Key Point: Confirm current regulations on company seal requirements with legal counsel.
2️⃣Bank Account Opening
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Direct Investment Capital Account (DICA): For foreign-invested enterprises (FIEs), opening a DICA is mandatory for the initial injection of charter capital from abroad. This account ensures the proper tracking and legal transfer of foreign investment capital.
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Operating Accounts (VND and/or Foreign Currency): Alongside the DICA, you must open at least one VND operating account for domestic transactions. Depending on your business activities and foreign exchange regulations, a foreign currency operating account may also be necessary. These accounts are essential for all day-to-day financial activities, including receiving payments and making disbursements.
Critical: DICA is mandatory for foreign capital injection; operating accounts for daily transactions.
A comprehensive checklist for post-incorporation compliance in Vietnam.
Tax Code Confirmation & Digital Signature Registration
While a tax code is typically issued automatically with the ERC, it’s imperative to verify its activation and linkage to your company.
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E-Token Registration: You must register for a digital signature (e-token) with a licensed provider. This e-token is essential for all online tax transactions, including filing tax returns, making payments, and interacting with the General Department of Taxation (GDT).
Important: E-token is crucial for all online tax interactions.
4️⃣Business License Tax (BLT) Payment
Within 30 days of obtaining your ERC, your company must declare and pay the Business License Tax (also known as "Lệ phí môn bài"). This is an annual fixed tax, with the amount determined by your company's charter capital. Timely payment is crucial to avoid late penalties.
Deadline: Pay BLT within 30 days of ERC issuance to avoid penalties.
5️⃣E-Invoicing System Registration
Vietnam mandates the use of electronic invoices (e-invoices) for all businesses. You must register with the GDT for the e-invoicing system, typically by selecting an authorized e-invoice service provider. This step is critical for issuing compliant invoices for all your sales and services.
🧾 Mandate: Register for e-invoicing to issue compliant invoices.
6️⃣Capital Contribution Compliance
Foreign investors are typically required to contribute their committed charter capital within 90 days from the date of their ERC issuance. Ensure timely capital injection into the DICA to avoid potential penalties or even revocation of your investment license.
Important: Contribute charter capital to DICA within 90 days of ERC.
7️⃣Company Signboard Display
A signboard displaying your company's official name, address, and registration number must be prominently displayed at your registered office. This is a regulatory requirement and crucial for official correspondence and site inspections.
Requirement: Display company signboard prominently at the registered office.
II. Human Resources & Labor Compliance
Once you begin hiring, a new set of legal obligations arises concerning your workforce.
1️⃣Labor Registration
Within 30 days of hiring your first employee, you must notify the local Department of Labor, Invalids and Social Affairs (DOLISA) about your labor usage. This notification is a formal acknowledgment of your employer status.
Action: Notify DOLISA within 30 days of first hire.
2️⃣Social Insurance, Health Insurance, and Unemployment Insurance
As an employer, you are legally obligated to register your employees for compulsory social insurance, health insurance, and unemployment insurance contributions. Both the employer and the employee contribute to these funds, which provide essential benefits. Failure to comply can result in significant back payments, fines, and penalties.
Mandate: Register employees for compulsory insurances to avoid fines.
3️⃣Internal Labor Rules Registration
For companies employing 10 or more employees, it is mandatory to draft and register Internal Labor Rules (ILR) with the DOLISA. The ILR outlines disciplinary procedures, working hours, leave policies, and other employment terms, ensuring clear guidelines for employee conduct and management.
Rule: If ≥10 employees, ILR must be drafted and registered with DOLISA.
4️⃣Work Permits and Temporary Residence Cards for Foreign Employees
If you are hiring foreign nationals, they will likely require work permits and, subsequently, temporary residence cards to legally work and reside in Vietnam. The application process is complex and requires substantial documentation from both the employee and the employer.
Complex Process: Foreign employees require work permits and temporary residence cards.
III. Initial Financial & Accounting Obligations
Setting up robust accounting and financial reporting mechanisms from the outset is vital for compliance and strategic decision-making.
1️⃣Appointing a Chief Accountant or Outsourcing Accounting Services
Vietnamese accounting law requires companies to have a designated Chief Accountant, who must meet specific qualifications. Alternatively, you can outsource your accounting functions to a reputable accounting service firm. This ensures your financial records are managed compliantly.
Choice: In-house Chief Accountant or outsourced accounting.
2️⃣Accounting Records and Tax Declaration Setup
You must establish a proper accounting system compliant with Vietnamese Accounting Standards (VAS). This includes setting up books and ledgers for recording all financial transactions.
Determine your VAT declaration cycle (monthly or quarterly, depending on revenue) and your chosen accounting methods. Early engagement with your accountant will ensure correct setup from day one.
Foundation: Establish VAS-compliant accounting system and VAT cycle.
IV. Risks and Consequences of Non-Compliance
Ignoring or mishandling these post-incorporation steps can have severe repercussions:
❗Potential Consequences:
- Tax Audits and Fines: Inaccurate or late tax filings can trigger tax audits, leading to substantial fines, interest on late payments, and potential back taxes.
- Business Interruption: Failure to obtain necessary operating licenses or permits can lead to the suspension or complete halt of your business operations.
- Loss of Investment: In extreme cases, severe non-compliance can result in the revocation of business licenses and forfeiture of investment capital.
- Reputational Damage: A history of non-compliance can make it difficult to secure future partnerships, loans, or regulatory approvals.
V. Expert Advice for a Smooth Launch
Navigating the complexities of Vietnamese corporate law and regulations can be challenging, especially for foreign investors. Engaging with trusted legal counsel and experienced accounting professionals from the outset is not merely advisable; it is often indispensable. They can:
- ✔️Ensure Accurate Compliance: Provide up-to-date guidance on all legal and regulatory requirements.
- ✔️Streamline Processes: Assist in preparing and filing all necessary documentation accurately and efficiently.
- ✔️Mitigate Risks: Identify potential pitfalls and help you avoid costly mistakes.
- ✔️Offer Strategic Insights: Advise on best practices for financial management, HR, and operational setup.
By meticulously following this checklist and leveraging expert advice, your company can lay a strong foundation for legal compliance and sustainable growth in Vietnam, transforming your initial establishment into a thriving business.