SET UP COMPANY IN VIETNAM 1

Guide to Company Incorporation in Vietnam

Vietnam’s participation in international and bilateral free trade agreements has been recognized as a primary driver in the creation of a favorable environment for foreign investment and company establishment.

Vietnam's growing integration into the global economy.

Through the adoption of such agreements, the economy has been progressively opened, trade barriers have been reduced, and foreign capital inflows have been facilitated. As a result, conditions to set up a company in Vietnam have become more advantageous for both domestic and international investors. The execution of these agreements is widely regarded as having contributed to increased trade volumes, investment flows, job creation, and overall economic growth.

In addition, broader market access has been secured for Vietnamese enterprises, supporting business expansion and enhancing competitiveness in the global marketplace. Accordingly, the development and signing of free trade agreements are considered key factors in the continued integration of Vietnam’s economy with the global economic system and in the improvement of the investment climate for those seeking to set up a company in Vietnam.

Favorable conditions support business expansion.

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🔑 Key Requirements for Vietnam Incorporation

The process of Vietnam incorporation requires careful attention to several statutory and regulatory conditions, as stipulated under Vietnamese law. A foreign investor seeking Vietnam incorporation must ensure compliance with the following key requirements:

• Investment Registration Certificate (IRC): Issuance of an Investment Registration Certificate is a prerequisite for foreign investors wishing to establish a business presence in Vietnam. The IRC records the details of the investment project, including the registered capital, investment objectives, location, and duration of the project.
• Enterprise Registration Certificate (ERC): After obtaining the IRC, an Enterprise Registration Certificate must be secured. The ERC serves as the business license, formalizing the legal existence of the company in Vietnam and recording essential corporate information such as the company name, structure, and charter capital.
• Legal Address: A registered office address is mandatory for Vietnam incorporation. The address must comply with local regulations and may require evidence of a lease or ownership agreement.
• Charter Capital: Vietnam incorporation generally requires an initial capital contribution, the amount of which varies depending on the business line and specific regulatory requirements. The charter capital must be contributed within a prescribed statutory timeframe.
• Business Lines: Only business activities specifically registered in the company’s charter are permitted. Foreign investors must ensure that the intended business lines are not restricted or conditional under Vietnamese law.
• Legal Representative: Appointment of at least one Legal Representative who resides in Vietnam is required. The Legal Representative bears statutory responsibility for compliance with corporate, tax, and reporting obligations.
• Other Statutory Registrations: Upon completion of Vietnam incorporation, additional registrations may be required, such as tax registration, opening a corporate bank account, application for business licenses (if applicable), and compliance with sector-specific regulations.

Note: Failure to comply with any of the above requirements may result in delays, administrative penalties, or refusal of the incorporation application.

Accordingly, foreign investors are advised to conduct due diligence and ensure all conditions for Vietnam incorporation are satisfied prior to commencing business operations.

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📝 Essential Steps for Setting Up a Company in Vietnam

• Step 1: Investment Registration Certificate Application The company formation process in Vietnam begins with applying for an Investment Registration Certificate (IRC) through the Department of Planning and Investment. This approval typically requires 3 to 4 weeks. All required documents for IRC submission must be prepared in advance to ensure a smooth company registration experience.
• Step 2: Enterprise Registration Certificate Application Once the IRC is granted, the next step in company registration is to obtain the Enterprise Registration Certificate (ERC) from the government’s business registration authority. This certificate legally confirms the company’s establishment in Vietnam. The application package will vary based on the company type, and all required documents must be submitted for agency review and approval.
• Step 3: Post-Incorporation Compliance and Banking After successful company formation, additional business licenses or sub-licenses may be required, depending on the specific business activities. The company can then open a corporate bank account in Vietnam. Ongoing annual compliance obligations, including accounting and audit requirements, should be reviewed to maintain full legal compliance after company registration.

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⏱️ Timeline for Company Incorporation in Vietnam

Key phases of the incorporation process.

The timeline for company incorporation in Vietnam typically consists of two main phases:

• Incorporation of a Vietnam company, which generally requires approximately four weeks to complete, including the issuance of the Investment Registration Certificate and Enterprise Registration Certificate.
• Corporate bank account opening, which usually takes an additional two weeks upon completion of incorporation procedures.

Tip: Investors should account for both statutory processing times and potential administrative delays when planning the establishment of a company in Vietnam. Early preparation of documents and close coordination with local authorities may help ensure a smooth and efficient process.

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🏢 Business Entities in Vietnam: Overview and Key Considerations

When considering business entities in Vietnam, foreign investors can choose from several legal structures, each offering distinct advantages, requirements, and limitations. The most common business entities in Vietnam include Limited Liability Companies (LLCs), Joint Stock Companies (JSCs), Representative Offices (ROs), and Branch Offices.

Limited Liability Company (LLC)

• The limited liability company is a popular business entity in Vietnam for foreign investors seeking 100% ownership. This structure features a straightforward organizational framework, allowing for formation with just one founder—making it an ideal choice for small and medium-sized enterprises (SMEs). Each member’s liability is limited to their capital contribution, ensuring protection of personal assets.
• Establishing an LLC in Vietnam requires a registered business address, appointment of a legal representative, legalized financial documentation, notarized copies, and an appropriate level of charter capital (commonly from US$10,000, subject to business sector requirements).

Joint Stock Company (JSC)

• A joint stock company is another common business entity in Vietnam, suitable for larger enterprises and those considering public listing. In a JSC, shareholders contribute capital and receive shares in return, with profits distributed according to shareholding. JSCs permit an unlimited number of shareholders (minimum of three) and may offer 100% foreign ownership, depending on the sector.
• JSC establishment involves compliance with minimum registered capital, completion of statutory legal procedures, and fulfillment of ongoing requirements such as annual reporting, auditing, and tax obligations.

Joint ventures between foreign and local investors may also be structured as JSCs.

Representative Office (RO)

• For companies seeking to explore the Vietnamese market with lower risk and investment, the representative office is a flexible business entity in Vietnam. ROs are limited to non-commercial activities, including market research, liaison functions, and promotional work. They cannot engage in revenue-generating business operations or issue invoices, but serve as a strategic entry point for building local market insight and business connections.

Branch Office

• A branch office represents an extension of a foreign parent company and is authorized to conduct commercial activities and generate profit in Vietnam. This business entity can enter into contracts, issue VAT invoices, and maintain its own accounting records or integrate them with the parent company’s system.

Branch offices must comply with industry-specific regulations and registration requirements.

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📊 Comparison of Company Incorporation Options in Vietnam

TYPE	COMMON PURPOSE	ADVANTAGES	DISADVANTAGES
Representative Office	Non-legal entity; used for market research and liaison with parent company.	Easy to register.	Cannot engage in profitable activities. The parent company is accountable for the liabilities
Limited Liability Company	Separate legal entity	Liability is limited to the capital contribution. No restriction on the scope of business	Maximum 50 shareholders allowed. Cannot issue shares
Joint Stock Company	Intention to list the company on a public exchange. Separate legal entity	Liability is limited to the capital contribution here are no limitations on the type of business able to sell shares and IPO	Required three or more shareholders. Most joint stock businesses are required to have a supervisory board.
Branch office	Not a separate legal entity. Commercial ventures permitted by the parent firm	Able to send revenues abroad	Limited to certain industry sectors. Parent company responsible for the liability

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📄 Necessary Documentation for Company Formation in Vietnam

For successful company formation in Vietnam, foreign investors must prepare a set of specific legal documents, which vary based on whether the investor is a corporate entity or an individual.

For Corporate Investors:

• Certificate of Incorporation
• Company Extract listing directors and registered address
• Company Constitution or Charter (with all amendments)

For Individual Investors:

• Valid passport of the individual investor
• Passports or ID cards of the legal representative(s)
• Passports or ID cards of any authorized representatives of the corporate investor
• Bank letter confirming a balance equal to or greater than the proposed charter capital
• Lease contract or Memorandum of Understanding for the company’s head office, along with supporting landlord documents

🚫 Foreign Ownership Restrictions in Vietnam

Foreign investors should be aware that company formation in Vietnam is subject to sector-specific ownership restrictions.

Under Vietnamese law and relevant international treaties, foreign ownership may be limited or prohibited in certain sectors to protect national interests and maintain a balance with domestic investors. Key restricted or prohibited sectors include:

• Defense industries: Foreign ownership strictly prohibited
• Media & publishing: Ownership restricted, subject to government approval
• Banking & finance: Foreign ownership generally capped at 30%
• Retail & wholesale: Foreign investment limited, requires approval
• Agriculture & forestry: Foreign participation restricted, requires approval
• Fishing: Ownership restricted, subject to approval

These restrictions and requirements may evolve; therefore, it is advisable for investors to consult local legal or business consultants to ensure compliance with the latest regulations and assess any relaxations available through international agreements.

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📜 Company Incorporation Certificates in Vietnam

Foreign and domestic investors must obtain the appropriate company registration certificate to legally operate in Vietnam. The main types of company registration certificates include:

• Investment Registration Certificate (IRC): Issued by the Ministry of Planning and Investment, the IRC is mandatory for all investment projects—including those with foreign capital and joint ventures. This certificate records the project’s investment capital, objectives, and duration.
• Enterprise Registration Certificate (ERC): Granted by the Department of Planning and Investment, the ERC confirms the legal establishment of a business entity in Vietnam. The ERC details the company’s legal structure, authorized business activities, and registered capital.
• Business Registration Certificate (BRC): The BRC is also issued by the Department of Planning and Investment and is required for companies operating in Vietnam’s domestic market. This certificate validates the company’s compliance with local business regulations.
• Certificate of Business Registration for Foreign Investment Enterprises (BRFIE): The BRFIE is specifically required for foreign-invested enterprises in Vietnam. It includes information on the company’s legal structure, business activities, registered capital, and details about foreign investment participation.

Each company registration certificate serves a unique function and is issued based on the nature of the business and investment structure. Understanding which certificates are required is critical for full compliance with Vietnamese law.

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🌍 Free Trade Zones in Vietnam

Free Zone Vietnam is a special economic zone in Vietnam that provides tax incentives, streamlined regulations, and other benefits to companies operating within its boundaries. The goal of these zones is to attract foreign investment and encourage economic growth in Vietnam.

There are currently 8 Free Zones in Vietnam: Hanoi IZ, Haiphong IZ, Quang Ninh IZ, Ba Ria-Vung Tau IZ, Ho Chi Minh IZ, Binh Duong IZ, Dong Nai IZ, and Long An IZ. You can refer to Free Zones in Vietnam for additional information.

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✅ Corporate Compliance Requirements in Vietnam

Meeting compliance obligations is crucial.

Maintaining full compliance with Vietnamese regulations is essential for all businesses. Below are the main compliance requirements applicable to foreign companies operating in Vietnam:

• Accounting and Tax Compliance Vietnamese accounting standards require that all businesses maintain accurate records and fulfill tax compliance requirements. Companies must file annual and quarterly tax returns, including corporate income tax, value-added tax, and personal income tax. Additional compliance filings may arise for import/export taxes and business license tax.
• Annual Audit Compliance Companies—including limited liability companies (LLCs) and representative offices—must submit audited financial statements in accordance with Vietnam’s annual finalization schedule. The annual audit must be conducted by a qualified Vietnamese auditing firm. Audit requirements for representative offices are typically less stringent than for LLCs.
• Employment Compliance Hiring employees in Vietnam requires compliance with local labor regulations, including the observance of public holidays and adherence to restrictions on employee types and numbers. Companies must secure proper work permits and visas for foreign staff and ensure timely registration and payment of social insurance as part of payroll compliance requirements.
• Business License Tax and Special License Compliance After company formation, businesses must pay the annual business license tax from their second year onward. Certain sectors may require special business licenses, which need to be obtained, maintained, and renewed in accordance with sector-specific compliance requirements.
• Foreign Investment Report Compliance Foreign-invested companies are subject to periodic reporting obligations, including the Investment Implementation Report (filed quarterly and annually) and the Investment Supervision and Assessment Report (filed semi-annually and annually). Timely submission of these reports is a critical compliance requirement for maintaining investment approvals.

Understanding and fulfilling all corporate compliance requirements in Vietnam is vital to avoid penalties, maintain business operations, and ensure continued legal standing for foreign investors.

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⚖️ Pros and Cons of Business Registration in Vietnam

PROS

CONS

✔️ Favorable Business Environment: Fast-growing economy, regulatory framework supports foreign investment. ✔️ Competitive Labor Costs: Low labor costs help manage and reduce operational expenses. ✔️ Regional Market Access: Access to over 680 million ASEAN consumers. ✔️ Government Incentives: Tax holidays, tariff reductions, and subsidies attract foreign investors. ✔️ Skilled Workforce: Large pool of well-educated, skilled workers.

❌ Bureaucratic Challenges: Lengthy procedures and complex permits, especially for foreigners. ❌ Infrastructure Constraints: Limitations in logistics and transport can increase operational costs.

Foreign investors should carefully weigh these pros and cons when considering business registration in Vietnam, and consult professional advisors to ensure smooth market entry and long-term success.

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❓ Frequently Asked Questions for Foreign Investors

1. What is the minimum capital required to set up a company in Vietnam as a foreign investor?

In most sectors, there is no statutory minimum capital. However, the Department of Planning and Investment will assess whether your declared capital is suitable for your proposed business activities. Service companies may start with as little as US$3,000, while manufacturing or regulated sectors often require more.

2. Can a foreign company have 100% ownership in a Vietnamese company?

Yes, 100% foreign ownership is permitted in most industries such as manufacturing, IT, trade, and education. However, some sectors—like tourism, logistics, and advertising—impose ownership restrictions and may require a Vietnamese joint venture partner.

3. What is the typical timeline for company incorporation in Vietnam?

The process usually takes 4 to 6 weeks, including time for the Investment Registration Certificate, Enterprise Registration Certificate, post-licensing steps, and opening a corporate bank account. Delays may occur due to document preparation or sector-specific approvals.

4. Do I need to appoint a local director or legal representative?

Yes, at least one legal representative must have a registered address in Vietnam. This person may be a foreign national, but must reside locally. If the director is not a shareholder, a work permit is typically required.

5. What are the main compliance requirements after company formation in Vietnam?

Foreign-owned companies must comply with ongoing obligations including tax registration, annual audit, corporate income tax and VAT filings, social insurance for employees, maintenance of statutory records, and timely submission of investment and business reports to authorities.

6. What types of business entities are available to foreign investors in Vietnam?

Foreign investors can choose from several business structures, including Limited Liability Company (LLC), Joint Stock Company (JSC), Representative Office, and Branch Office. Each entity has specific requirements, advantages, and limitations depending on business goals and sector.

7. Are there any foreign ownership restrictions in Vietnam for certain business sectors?

Yes, some sectors such as defense, media, banking, agriculture, and retail have foreign ownership limits or require government approval. The applicable rules depend on both Vietnamese law and commitments under international treaties or free trade agreements.

8. What supporting documents are required to register a company in Vietnam as a foreign investor?

Typical documents include a legalized Certificate of Incorporation (for corporate investors), notarized passports or IDs (for individuals), proof of capital (bank letter), office lease agreement, and, where applicable, company charter and supporting documents for the legal representative. The exact requirements may vary depending on the business type and investment structure.