Are you looking to tap into the Vietnamese market or start a new venture? This is a great decision indeed! Vietnam is a place of limitless growth opportunities. However, you must have an apt grasp of compliance and relevant regulatory affairs. Let’s explore the legal settings for businesses willing to operate in Vietnam. We will also take a closer look at the compliance concerning Company Registration in Vietnam.

What Makes Vietnam Shines in Business Settings?

Vietnam has limitless potential for businesses with global ambition- thanks to its ever-strengthening financial sector and regulated framework. It ranks amongst the top nations for conducting business and investing funds. 

What makes Vietnam really stand out is its liberalized framework that provides for seamless business entry and expansion. The recent amendments to investment regulations seek to advocate the ease of business. Vietnam fosters minimal labor charges, a robust distribution network, and stable democratic conditions, ensuring ideal settings for overseas entrepreneurs.

Vietnam’s success in the business realm is marked by its formidable social-economic stability, controlled yet powerful governance, and tax-friendly structure.

Pointers Highlighting Vietnam’s Prowess in Global Trade

• Vietnam’s economy has become more liberalized and open to foreign trade after becoming a WTO member.
• Vietnam fosters high-skilled labor and world-class infrastructure that ensure great scope for R&D.
• The liberal tax structure and bleeding-edge production facilities provide quality and low-cost production.
• The availability of open economic zones fuels the growth prospects for all entrants.
• 100% ownership in a company is accessible to overseas investors.
• The ever-thriving clothing sector is becoming a new growth hotspot for investors.
• Vietnam’s advanced infrastructure comprises 17 coastal economic zones, 325 industrial parks, three high-tech parks, and four economic zones.

Business Models Available for Company Registration in Vietnam

Outlined below are the legal business structures available for Company Registration in Vietnam:

Representative Office

A Representative Office (RO) is a low-cost model suitable for capital-conscious businesses. It could suit businesses needing more funding. Novices can use this model as a launch pad to execute their business affairs or study the market.

Technically, ROs can only act as;

• Entity for market research;
• Subordinate firm to its parent entity;
• Connected entity to carry out promotional endeavors for meeting business goals;

Limited Liability Company

Any investor seeking to operate as an LLC in Vietnam would be treated as a ‘100% Foreign-Owned Enterprise’.An LLC is a legal setting that mitigates the risk of asset attenuation for founding members, allowing for limited liability.

For most sectors, Vietnam imposes no restriction on what should be the minimal capital requirements. However, the Department of Planning and Investment can assess the registered capital to confirm whether it can cover the business expenses until it reaps revenue to address its costs.

The following entities must comply with the minimal capital requirements.

• Finance, Banking, Insurance, and Fin-tech;
• Real estate companies;
• Language centers or Vocational schools;

Ownership

LLCs in Vietnam are categorized into two types: Single member and multiple-member LLCs. The former has only one member, while the latter can have more than one stakeholder. These owners can be an entity or a person, based on the investor’s requirements.

Branch Office (BO)

Branch offices are the type of business model suitable for entities from the finance and banking domains. BOs may have separate recruitment policies and hence can hire manpower directly.

As of now, this business model can only engage in chores like:

• Renting offices;
• Leasing or purchasing of the equipment for operations;
• Recruiting employees
• Remitting cross-border profits;
• Transacting goods and commercial chores per licensing;
• Establishing different departments, including marketing and accounting, to assist the parent entity.

Joint Venture

A Joint Venture, popularized as JV, ranks amongst the most widely recognized business models. It is majorly suitable for entities with ample capital and specific business goals. The JV can entail two foreign entities or at least one local and overseas entity.

The minimum contribution should not be at least 30% for investors seeking foreign ownership. The investor can opt for a majority or minority stake by contributing above or less than 50%. However, there is a limit on what should be the minimum contribution in some sectors.

The following sectors required an overseas investor to join hands with a local partner in the JV setting.

• Advertising services;
• Telecommunication services;
• Agriculture services;
• Travel agencies;
• Entertainment services;
• E-gaming businesses;
• Customs-related services;
• Road transport services;
• Internal waterways transport,

Note: JV formation is vital for investors securing stakes in state-controlled entities listed on the recognized stock exchange.

An Overview of Tax Structure in Vietnam

The corporate tax structure in Vietnam looks like the following:

Corporate Income Tax

The corporate income tax (aka CIT) has been capped @ 20%. However, the entities serving the oil and gas sectors have been subjected to tax rates ranging from 32-50%.

Value-added tax (VAT)

Vietnam’s VAT ranges from zero to 10%, depending on the nature of the business. The VAT requirement for product or service-based companies can vary significantly.

Social insurance contributions

Social insurance (SI) contributions refer to a mandatory payment payable to the government for the exchange of receiving contingent future benefits. The rate for SI is 17% in the status quo.

Stamp Duty

Stamp duty is a mandatory expense payable to the respective department. It applies to transactions concerning automobiles, real estate, and other notified items that can be legally owned.

Eligibility criteria for Securing company registration in Vietnam

Eligibility criteria concerning company registration in Vietnam are as follows:

Shareholders

Company registration seeks the presence of at least one stakeholder. Coming to JVs, this requirement increases to 3 shareholders. The requirement for appointing local residents as a shareholder does not exist as of now.

Director

In Vietnam, every legalized company must entail at least one director. However, the number of directors to be appointed varies as per the business model.

Minimum capital requirement

The required minimal capital can vary as per the chosen business structure. For example, to incorporate an LLC, at least $10,000 of minimal capital is vital.

Registered office address

The presence of a physical business address is mandatory to legalize and secure a company registration in Vietnam.

Local Representative

The presence of a local representative in the form of a registered entity is mandatory to apply for company registration.

Paperwork for company registration in Vietnam

The required paperwork for company registration in Vietnam is listed below:

• Memorandum of Association (MoA)
• Notarized passport of the firm representing the overseas applicant
• Articles of Association (AoA)
• Registered address 
• Registered address 
• Details concerning company minutes
• Founders details
• Property paperwork such as Lease Agreement
• Account Statement

Guide to Secure Company Registration in Vietnam

Step 1: Select the business name

Head to the  Department of Planning and Investment to perform for available business names. Make sure that the name you select is not trademarked, nor is it offensive in any way. A similar or offensive name can lead to legal disputes in the future.

Step 2: Opt for an apt business structure

Upon name selection, determine which company structure best fits your business goals. Make your analysis based on risk appetite, compliance threshold, and applicable taxes.

Step 3: Register the local office

The presence of a legalized local office is vital for registering an entity in Vietnam. The paperwork and compliance for this can vary based on your business type and sector.

Step 4: Gather the documents

The next step in this process is document arrangement. Ensure the accuracy of the paperwork that serves as an annexure to the registration application to avoid unnecessary quandaries.

Step 5: Secure the investment approval, followed by a business certificate

Head to the Department of Planning and Investment to secure the investment approval. The cost of acquiring this certification varies as per the business type and compliance. Once secured, proceed with the registration process concerning your business. The said authority shall grant this approval against the prescribed application, dossiers, and fees.

Note: 1. Post registration, the firm must reveal its legal status to the general public as a part of compliance. 

2. The registered firm must have a company seal entailing the legal name and ID number.

Step 5: Get industry-specific permits

Certain business type falls under different legislations; hence, they must register against each of them to stay compliant. For example- If a firm is production-based, it must have approval from local bodies, the pollution board, etc.

Rules for entities having Company Registration in Vietnam

• Public limited companies or JSCs are bound to arrange stockholder meetings every year.
• Public limited entities are liable to hold board meetings every quarter.
• Your financial accounts must undergo due diligence by the end of FY. The auditing should be performed by the certified agency.
• The firm’s listed office should regularly conduct yearly stockholder meetings and stay compliant with norms concerning minutes of board meetings.
• Foreign investment statements must entail entire financial details comprising profit, losses, and expenses for a given FY.
• Every registered firm must abide by the company licensing tax rules.

Start dominating business obstacles with Adviso

Adviso has been at the forefront of the business advisory realm for years. We ensure the seamless establishment of a new or established entity abroad with a definite approach. When it comes to success rate, we have yet to encounter failure in our global incorporation endeavors. Don’t be late in putting your trust in us! Our association can give you a dream start to your business endeavors. It’s time to unlock the realm of possibilities!

Why us?

• Unprecedented ability to simplify business legalities
• Unmatched command over regulations for going global
• Ensure swift delivery of industry-specific approvals and other licenses
• Delve into limitless growth opportunities with our astounding expertise
• Ensure prompt application processing- thanks to robust liaison with authorities concerned
• Have the upper hand in dispute settlement no matter the scenarios