How to Set up Company in Vietnam as a Foreigner in 2023?

A Vietnam company is the one which should have at least one shareholder if it is a limited liability company and at least three if it is a joint stock company. Vietnam is known for its strong electronics and smartphone manufacturing, textiles, and garments industry. The country is a powerful exporter of coffee. Not only this, you have a lot of business opportunities in Vietnam

Are you also starting a business in Vietnam as a foreigner? If yes, but you don’t know how to do this and are confused about it, you don’t need to worry because you can start your business in Vietnam. For this, you have fulfill some important requirements like registered address, resident directors, IRC, and ERC.

Can A Foreigner Work In Vietnam?

Suppose you want to start a business in Vietnam but are confused about whether a foreigner like you can do this or not, you are confused. Let us tell you that you can do business in Vietnam as a foreigner. You can do this in two possible ways, i.e., direct foreign investment or indirect investment.

· Direct Foreign Investment:

Direct foreign investment is a cross-border investment when a resident in one economy creates long-lasting interest in another economy or country. It means you will work directly with a Vietnam partner in a hundred percent foreign-owned companies.

· Indirect Foreign Investment:

Indirect foreign investment means you purchase shares of the company in Vietnam. It will provide you with a position that depends upon your agreement with the Vietnam company.

How To Start A Business In Vietnam as A Foreigner:

Now the question is how to start a company in a country like Vietnam, considered one of the top business destinations for foreigners. And what the procedure looks like. If you are also thinking the same, here is a proper guide for you, making it easier and simpler.

Starting a company in Vietnam is not easy; it has some issues, but we can resolve them and start a company in Vietnam. Here is how you can run your own business in Vietnam as a foreigner:

· Restrictions for foreigners:

The law restricts foreigners from carrying out some business activities in Vietnam. You can run a business there that includes:

• Narcotic substances
• Toxic chemicals, minerals, and precursor
• Debt
• Firecaclers business
• Specimens of endangered flora and fauna species.

Moreover, you need to know that there are no restrictions for conditional business activities. Still, you would have to satisfy the criteria to access the Vietnam market. Now you might think that what are conditional business activities? Don’t worry, and we will make it simpler for you.

· Conditional Business Activities:

These include:

• Accounting services
• Auditing services
• Tax agency
• Price evaluation
• Security business
• Other financial businesses; include prize-winning, lottery, debt collection, games, casino business, etc.

Foreign Ownership Limitations:

There are certain limitations on the foreign ownership percentage that is allowed, and Normally, there is a chance that a foreign Vietnam partner gets a hundred percent of the ownership. But there is an exception if the investment is made in a Vietnam bank, then the foreign ownership by the investor will exceed up to 30% of the total ownership.

However, some restrictions and limitations can be seen in the following documents:

• Vietnam bilateral international agreements.
• Vietnam WTO accession package
• Local laws and agreements related to the Vietnam company.

· Tax matters:

You will have to pay your taxes for whichever business you start in Vietnam. Now the question is, what forms of taxes will you pay them? Value Added Tax, Corporate Income Tax, Personal Income Tax, and Foreign Contractor Tax are the common types of taxes. But you don’t need to be worried because you can still get some tax relief:

• CIT: Preferential tax rate and tax holidays
• PIT: Deductions for compulsory insurance, charity purpose, family relief, etc
• VAT: VAT exemptions for some specific businesses
• FCT: No withholding taxes for overseas corporate shareholders.

How To Start A Business In Vietnam as A Foreigner:

Do you want to set up your own company in Vietnam as a foreigner? But you do not know what the entire procedure is? Are you confused regarding the requirements for setting up a company in Vietnam? Do not worry because we have done all the research for you. So you don’t need to go through this tie consuming process of research and focus on your business plans. Here is the procedure for setting up a company in Vietnam. You have to go through these steps:

• Getting the investment license
• Getting the Enterprise license

These are the business registration certificate Vietnam.

· Applying for the investment registration certificate:

Here we will talk about Vietnam company registration. You first need to apply for the investment registration certificate, which will be assessed and reviewed by the Department of Planning and Investment. If you think about how much time it will take, it usually takes almost 15 days to get this certificate approved by the respective department.

· Applying for enterprise registration certificate:

The next important step is applying for the provincial department’s enterprise registration certificate. However, it usually takes less time than the IRC, i.e., just three days to be approved.

You should know that conditional business investment requires further licensing as well. By conditional business investment, we mean:

• Making seals
• Securities trading
• Accounting and auditing services
• Consultancy services
• Insurance/ reinsurance.

· Having a registered address:

Another important thing you need is a registered address for your Vietnam business. It is because, during the incorporation and registration process, the department of planning and investment may check your address. And after incorporation, you will be using the location of your business.

· A Resident Director:

All Vietnam companies should have at least one resident director. The director does not need a residency address or status at the time of registration, but it is needed in Vietnam after that. Keep in mind that if the company’s resident director is also the owner, they will need a work permit to run the company smoothly.

Cost of Setting Up Business In Vietnam:

Before starting a new business, the biggest concern of a person can be the money or investment he needs. And when you do it in another country with a different currency from yours, you need to research it well beforehand.

If you think about how much it will cost to grow your business in Vietnam, your concern is right because you need a lot of money. So here we will talk about how much money you need for the business and what it will be the cost to set up a company in Vietnam.

Ø What will be the minimum capital requirement?

Generally, there is no minimum requirement for this business, but here we will estimate the amount of money you will need. The minimum amount can range from 150 Billion VND and 3000 Billion VND.

Moreover, if we talk about the higher educational institutions in the Vitamin, you will probably need 500 Billion VND, approximately equal to 21.5 million USD. Some 0ther business sectors need an investment of 10,000 USD.

Ø Tax registrations and other payments:

Foreign investors must register for the taxes and other payments we will discuss here. You will be imposed the business license tax BLT yearly. The BLT varies from time to time according to the prevailing economic conditions in the country.

Moreover, the amount of BLT depends on the amount of registered capital of the company:

• With a registered capital of more than 10 billion VND, the BLT charge will be 3 million VND yearly.
• If the registered capital is less than 10 billion VND, the BLT will be 2 million VND annually.
• Some other business entities include branches, ROs, or business premises that are taxed 1 million VND annually.

These all were the estimated charges. However, the total cost depends on the business structure you are running. It would be best if you also considered some additional charges:

• Registration cost
• Rents
• Salaries
• Facilities
• Management fee
• Maintenance charges
• Vietnam accounting service charges (if any)

Ø Setting up a Purpose Vehicle in Vietnam:

Sometimes foreigners are not allowed to run a business in Vietnam due to certain restrictions. However, some people use the nominees to doge these limitations and restrictions. The Vietnam government is cracking down on these nominee companies to cope with this.

Now you have to set up your business via a purpose vehicle because it is safer and better. It will help you in the future to protect and maintain the business and its selling if needed.

Ø Opening a Business Bank Account in Vietnam:

To open a business bank account in Vietnam, you need some documents that include the following:

• Passport
• ID card of the chief accountant
• Company charter
• Company seal
• Forms filled as per bank requirements
• IRC
• ERC
• Appointment letter of chief accountant

Moreover, keep in your mind that:

• An invoice of 20 million VND must be paid via bank transfer
• The investors must contribute registered capital within 90 days.
• Once your business bank account is opened, you must register it with the department of planning and investment within 90 days.

Ø Other Requirements:

That is not it; you must also keep other important requirements in mind. Whether you want to incorporate a joint venture or LLC, having a registered business place or location is compulsory to start your business in Vietnam.

Moreover, if you want to set up a Vietnam company, you should have at least one legal representative living in Vietnam at the registration time. Your representative must be involved in all the company transactions and participate in the legal proceedings.

The company must register with a corporate bank account to prove the business is running smoothly. Also, the minimum capital requirements should be sent to the company bank account after getting approved by the department of planning and investment.

Ø Start your business with Vietnam:

After all this, you are ready to set up a successful company in Vietnam. To make it clearer and simpler, let us highlight some important points:

• The foreigners can register a company in Vietnam in legal forms; limited liability company, joint stock company, partnership, or business cooperation contract.
• Foreign companies can also open a branch or representative office.
• Two steps for the company’s registration are needed: to obtain IRC and ERC.
• It would be best not to forget the post-registration-related concerns to run a smooth business in Vietnam.

Pros of Opening a Company In Vietnam As A Foreigner:

If you are still confused about opening a company in Vietnam and starting your business there, let us tell you about some benefits of it:

• Unlike many other countries, you don’t need capital to start your business in Vietnam. You can start your business there without having a large amount of money in your wallet. You need to have the money that covers the expected cost of your company, and you’re good to go.
• There is an elevated population in Vietnam and the social structure. It has increased to 97 million in 2018 and is expected to increase to 120 million by 2050. And most of its population is under 35.
• Another good thing about setting up a business in Vietnam as a foreigner is paying lower taxes. You also get an exemption from import duty taxes etc.
• The rental price for offices and lands is cheaper depending on the facilities, infrastructure, and location. It is because the growing economy is becoming a developing country. So if you open a business there, you can open many opportunities and save a lot of money side by side.
• Vietnam has a lot of trade agreements like the AFTA, Word Trade Organization WTO, Bilateral Trade Agreement BTA, EU FTA agreements, etc. These agreements prove that Vietnam is eager for economic growth and will continue working on it in the future.
• It would help if you started your business in Vietnam because of the new market. Vietnam experienced a boom in business and economy in the last 30 years. Investors do not face much competition in this country regarding business, and it becomes relatively easy than the other countries.
• Another reason to set up business in Vietnam is the development of infrastructure. The expansion of regional airports, urban rail networks, etc., is the major part of modern infrastructure development there.

Cons of Opening A Company In Vietnam:

Of Course, there are some cons of opening a company in Vietnam as a foreigner, which are not the ones but the requirements of the procedure that you need to fulfill, which are:

• Before registration, you need to have an office lease contract.
• You should carefully prepare your plans because establishing an enterprise usually takes 25-30 days.
• There are restrictions on the number of business lines in Vietnam, especially those not included in the international commitments, so you will have to consult the relative ministries in this regard.

Frequently Asked Questions

Is it easy to open a company in Vietnam?

The process of opening a company in Vietnam is relatively easy and smooth. All you need is to fulfill some important requirements like IRC, ERC, having a business bank account, purpose vehicle, etc., and you are all set to go.

What are the risks of doing business in Vietnam?

The main challenges that you can face by doing business in Vietnam can be:

• Corruption
• Bearucarcy
• Lack of skills
• Grey areas of Vietnam Laws
• You may need translators because

Is Vietnam a good place to establish your new business?

Vietnam is one of the top destinations to do business with global aspirations. The country is working continuously for its fast economic growth. The country provides you with an increasingly regulated business environment.

What is the best investment in Vietnam?

The best and easiest way to invest in Vietnam is using the exchange-traded funds ETF. It is because it will provide you an instant diversification in a single US-traded security. The Vietnam ETF is the most reliable source for foreigners who want exposure in this country.

Why do the companies choose Vietnam as their business destination?

There are many good reasons why many companies choose to set up their business in Vietnam. These are lower wages, geographical proximity, skilled labor, various trade agreements of the country, regional connectivity, etc.

What is Vietnam’s main source of income?

The main sources of income in Vietnam are crude petroleum, garments, electronic products, footwear, seafood, coffee export business, etc.

Conclusion:

We all know that starting a business in another country as a foreigner is time-consuming and requires much research. Also, the whole process can be frustrating if you are new to this. We have gathered all the details so you can focus on your business.

So if you are the one who is planning to set up your company or business in a business destination country like Vietnam, we are here to help you out. You must have essential documents like ERC, passports, etc., and get your registrations done. Once you are done with the legal procedures, you can start your business after 30 days.