SET UP COMPANY IN VIETNAM

🇻🇳 Vietnam Company Incorporation Guide

Vietnam's participation in free trade agreements creates a favorable environment for company establishment.

Overview: The Role of Free Trade Agreements

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.

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.

Broader market access has been secured for Vietnamese enterprises, supporting business expansion and enhancing competitiveness in the global marketplace.

Trade agreements make Vietnam more attractive for company incorporation.

Key Requirements for Vietnam Incorporation

• Investment Registration Certificate (IRC): Issuance of an IRC is a prerequisite for foreign investors wishing to establish a business presence in Vietnam.
• Enterprise Registration Certificate (ERC): The ERC serves as the business license, formalizing the legal existence of the company in Vietnam.
• Legal Address: A registered office address is mandatory for Vietnam incorporation.
• Charter Capital: Initial capital contribution as required by business line and regulatory requirements.
• Business Lines: Only activities specifically registered in the company’s charter are permitted.
• Legal Representative: At least one Legal Representative residing in Vietnam is required.
• Other Statutory Registrations: Including tax registration, opening a bank account, special licenses, 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.

Essential Steps for Setting Up a Company in Vietnam

1. Investment Registration Certificate Application: Apply for the IRC through the Department of Planning and Investment (3–4 weeks).
2. Enterprise Registration Certificate Application: After the IRC, obtain the ERC from the business registration authority.
3. Post-Incorporation Compliance & Banking: Additional licenses, open a corporate bank account, and fulfill annual compliance requirements.

Timeline for company incorporation in Vietnam: IRC + ERC + bank account.

Business Entities in Vietnam: Overview

Limited Liability Company (LLC)

• Popular for 100% foreign ownership.
• Straightforward framework, only one founder required.
• Liability limited to capital contribution.

Joint Stock Company (JSC)

• Suitable for larger enterprises and public listing.
• Minimum three shareholders; can offer 100% foreign ownership in most sectors.
• Profits distributed by shareholding.

Representative Office (RO)

• For market research and non-commercial activities.
• Cannot generate revenue or issue invoices.

Branch Office

• Extension of foreign parent, can conduct commercial activities.
• Subject to industry-specific regulations.

Comparison of Company Incorporation Options in Vietnam

Type	Common Purpose	Advantages	Disadvantages
Representative Office	Market research, liaison with parent company	Easy to register	Cannot engage in profit-generating activities
Limited Liability Company	Separate legal entity	Limited liability, no restriction on scope of business	Max 50 shareholders; cannot issue shares
Joint Stock Company	Public listing, large enterprises	No limit on shareholders, can issue shares/IPO	Requires three or more shareholders, more complex compliance
Branch Office	Commercial activities by foreign parent	Can generate revenue, repatriate profits	Limited to certain sectors, parent company liable

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 reduce operational expenses. ✔️ Regional Market Access: Access to over 680 million ASEAN consumers. ✔️ Government Incentives: Tax holidays, tariff reductions, subsidies. ✔️ Skilled Workforce: Large pool of well-educated, skilled workers.	❌ Bureaucratic Challenges: Lengthy procedures and complex permits. ❌ Infrastructure Constraints: Limitations in logistics and transport.

Foreign investors should carefully weigh these pros and cons when considering business registration in Vietnam.

Frequently Asked Questions for Foreign Investors in Vietnam

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. The Department of Planning and Investment will assess whether your declared capital is suitable. Some service companies may start with as little as US$3,000, while manufacturing 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. Some sectors require a Vietnamese partner.

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

The process usually takes 4 to 6 weeks, including the time for IRC, ERC, post-licensing steps, and opening a corporate bank account.

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.