Can a foreigner own a business in Vietnam? is a question that many foreign investors are interested in today. This is because, with the speed and policies of attracting foreign investors from the Vietnamese government, the Vietnamese market is a lucrative gift for investors. To answer the question, can foreign investors establish a company in Vietnam? Let’s read this article with AZTAX.
1. Can a foreigner own a business in Vietnam?
YES, foreigners can completely start a business and fully own 100% foreign owned companies in Vietnam.
With the exception of certain industries such as tourism and advertising, where Vietnamese Joint Venture Companies are required.
The corporate framework in Vietnam adheres to the overarching guidelines set by the World Trade Organization (WTO), facilitating a smoother process for foreigners. However, in instances where there is ambiguity in business matters under both WTO regulations and local laws, approval from the relevant industry’s governing ministry is required.
2. Requirements for Setting up a company in Vietnam
Embarking on business endeavors in Vietnam requires a nuanced understanding of regulatory nuances. This brief explores vital aspects such as capital requirements, legal obligations, and compliance essentials, offering foreign investors key insights for a successful entry into the Vietnamese market.
Below are 8 basic conditions that foreign investors need to comply with:
- Capital Requirements: Vietnam typically does not stipulate minimum capital requirements, but the Department of Planning and Investment evaluates registered capital to ensure coverage of initial business expenses. Specific sectors may have distinct requirements.
- Charter Capital and Total Investment Capital: Registration is necessary for both Charter Capital, representing owner contributions, and Total Investment Capital, encompassing charter capital and loans. Adjustments can be made with approval from local authorities.
- Capital Contribution Schedules: Investors are required to contribute capital within 90 days of establishing a Foreign Invested Enterprise (FIE), unless otherwise approved.
- Transferring Capital to FIE: Foreign investors must open a capital bank account in Vietnam for fund transfers, facilitating in-country transactions.
- Company Registered Address: A valid legal address in Vietnam is essential. Physical locations are standard, while service-based businesses may opt for a virtual office. The Department of Planning and Investment may verify chosen business addresses during incorporation.
- Company Legal Representative: At least one Legal Representative (LR), such as the Company President or Director, is mandatory. The LR must have a Vietnamese residential address, with residency preferred but not mandatory during incorporation.
- Accounting and Tax Compliance: Adherence to accounting and tax regulations involves regular reporting, encompassing corporate income tax, value-added tax, and personal income tax in accordance with Vietnam’s standards. Ad-hoc or periodic filings may be necessary.
3. How to start a business in Vietnam as a foreigner
Starting a business in Vietnam as a foreigner is quite a complicated process that includes many different steps. However, you should not worry too much. AZTAX will guide you step by step to complete the procedures for establishing a business in Vietnam for foreigners.
Opening a business in Vietnam involves a structured process comprising six essential steps:
- Step 1: Secure a Business Location. Identify and secure a suitable business location for your operations.
- Step 2: Document Preparation. Compile all necessary documents required for the company registration process.
- Step 3: Company Registration. Complete the formalities involved in registering your company.
- Step 4: Bank Account Setup. Open the requisite company bank accounts for financial transactions.
- Step 5: Post-Incorporation Compliance. Ensure compliance with post-incorporation requirements to meet legal obligations.
- Step 6: Obtain Additional Licenses/Permits (if necessary). If applicable, apply for any additional licenses or permits required for specific business activities.
4. What does it cost for a foreigner to start a business in Vietnam?
Starting a business in Vietnam involves several steps and associated costs. For company registration, there are three common types: Limited Liability Company (LLC), Joint Stock Company (JSC), and Representative Office. Establishment costs for each type will be different, specifically as follows:
Limited Liability Company (LLC):
- Timeline: 4 to 6 weeks
- Registration Cost with AZTAX: Approximately USD 2,500
- Fixed Costs: Covering Investment Registration Certificate (IRC) and Business Registration Certificate (BRC)
- Add-On Services: Virtual Office (USD 600), Work Permit & TRC Processing (USD 1,500 per person), Business Visa (USD 1,000 per person)
Joint Stock Company (JSC):
- Timeline: 2 to 3 months
- Registration Cost with AZTAX: Starts from USD 2,500
- Fixed Costs: Covering IRC and BRC
- Add-On Services: Virtual Office (USD 600), Work Permit & TRC Processing (USD 1,500 per person), Business Visa (USD 1,000 per person)
Representative Office (RO):
- Timeline: 2 to 4 weeks
- Registration Cost with AZTAX: Approximately USD 2,500
- Fixed Costs: Covering RO license, RO chop/seal registration, and opening a bank account for RO
- Add-On Services: Business Address (USD 100 per month), Tax & Accounting Services (USD 1,500), Payroll Service (USD 150 per month)
Post-Establishment Costs in Vietnam:
- Office Rental: Starts from 5,275,000 VND (USD 230) per month
- Employee Salaries: Average around 6,800,000 VND (USD 295) per month
- Communication and Internet Expenses: Monthly cost for high-speed internet (300 Mbps) is 1,119,000 VND (USD 48.65)
These costs ensure legal compliance and operational smoothness, with AZTAX offering comprehensive support in the registration process and add-on services for a seamless experience.
5. How long does opening a company in Vietnam take?
Registering and establishing a 100% Foreign-Owned Enterprise (FIE) in Vietnam typically takes around 3 to 4 months. Alternatively, setting up a Representative Office can be accomplished in half that time, though it comes with limitations on the range of activities it can undertake.
6. Restrictions on foreign business setup in Vietnam
Initiating a business in Vietnam involves navigating various considerations and determining factors. Detailed information on these aspects is outlined below.
Article 6 of the Law on Investment (2020) imposes restrictions on foreigners engaging in specific business activities in Vietnam. Prohibited business categories include:
- Narcotic Substances: As outlined in Appendix 1 of the Law on Investment.
- Toxic Chemicals, Precursors, and Minerals: As stipulated in Appendix 2 of the Law on Investment.
- Endangered Wild Fauna and Flora: Natural specimens protected under Appendix I of CITES and Appendix 3 of the Law on Investment.
- Illegal Activities: Business related to prostitution, human trafficking, or human cloning.
- Firecracker-related Business: Prohibited.
- Debt Collection: Not allowed.
The Law on Investment 2021 has introduced new categories under ‘conditional business investment,’ while eliminating sectors like commercial arbitration and logistics. Although not restricted, engaging in these activities requires meeting specific criteria to enter the Vietnamese market.
Thus, AZTAX has answered the question of can a foreigner own a business in Vietnam. Hopefully the above content helps you better understand policies related to the Vietnamese market. If you have any questions, you can contact us using the information below to receive the most detailed guidance from our team.
