Foreign Company Registration process Vietnam
Dynamism and positive growth of the Vietnamese economy has attracted many foreign direct investment companies to setup respective companies in Vietnam. However, entrepreneurs should pay adequate attention to the challenging bureaucratic, regulation inconsistency and licensing delays that might occur during registration process. There are several procedures that should be taken into consideration before registering foreign businesses in Vietnam; the most common is the setup of Limited Liability Company.
Private Limited Company registration process
- Basics of set-up and information of foreign company registration process Vietnam
- The company must have at least 1 shareholder (from any nationality and does not restrict on Vietnam residents only)
- The shareholder should be supported by a director (local or foreigner) who have managing experience of at least 12months (must be shown proof of employment). If a foreigner is appointed then will be required to travel to Vietnam for work permit issuance.
- Any foreign-owned company (LLC) will have to open a corporate bank account with a local bank, and share capital amount should be deposited into the account in order to obtain Foreign Investment Certificate(FIC). The deposit amount varies according to types of industries.
|Service oriented LLC||Trading oriented LLC||Manufacturing oriented LLC|
|Min (US$10000)||Min (US$100,000)||Min(US$250,000)|
- LLC area allowed rent office premises instead of purchasing one.
- LLC are also allowed to sign any form of contract related to company requirements with local clients.
- LLC are allowed to import and export raw material to support local business in Vietnam.
Private limited company registration time frame
- The time frame that will be needed to set up LLC varies to types of business. For a service oriented LLC will be approximately 17 weeks, trading oriented LLC will be 30 weeks and manufacturing oriented LLC will be minimum 30 weeks. These time frame are inclusive of engagement planning, company incorporation period, bank account approval, internet banking approval, and engagement completion.
- Corporate bank account should be obtained before registration (under Citibank Vietnam or Vietcombank) and this process approximately takes 4 weeks.
Private limited company registration fees
- Costs that are often bared by Foreign investors in Vietnam are as follows: Foreign investors set up a foreign company in Vietnam often bear some of the costs as follows:
|Incurred photocopy cost and authentication of legal forms (passport and incorporation related certificates)||US$ 5|
|Vietnam company registration fees||US$ 10|
|Cost of content posting to notify on Set-up of Foreign company in Vietnam||US$ 15|
|Solicitors fees||US$ 353|
|Seal making cost(stamp)||US$ 20|
|Project management fees||US$ 30885|
- The average setup cost will be US$31,290. These costs are non-inclusive of previously stated shareholder capital amount. These costs are only for professional services LLC.
Forms and formalities to register private ltd company
- Business registration should contain following documents:-
- Standard application form distributed by the business registrar of Vietnam
- Company charter draft
- Company members listing, attached with following documents :-
- Identification card
- Passport copy and relevant personal accreditation documents of the member
- Establishment decision copy and business registration certification of members.
- Legalization of all relevant members’ documents must be done three months prior to submission of file to registrar.
- Legal capital certification issued through stipulation of law in regard to business activities.
- As regulated in the art. 18 of the Enterprise Law, general directors or other individual’s professional certificate are required for submission.
- Satisfaction statement of explanatory on business conditions regarding legal entity, operational scope, investment form and business services.
- Registration documents for all sorts of trading related activities.
branch office or representative office or parent company
- According to Vietnam Law of Commerce, foreign companies are allowed to open branches in Vietnam, provided they must at least been doing business abroad for minimum of 5 years. A resident representative should be appointed in the branch office. All audited financial statements should be submitted to the company registrar office. In addition, they are also required to report on annual return with the Industry and Trade Department office.
- Since, incorporating a branch office involves complex procedures, it is mostly recommended to set-up a private limited company compared to branching out. Except in regulated industries such as insurance, banking and finance.
- According to Vietnam Law of Commerce, foreign companies are allowed to open representative office in Vietnam, provided they must at least been doing business abroad for minimum of 1 year. The representative company can be 100% foreign entity owned, but it is not allowed to run any production- related or commercial activities in Vietnam.
- The only activities that can be done by these offices are limited to market research and promotional activities for respective parent company.
- A resident representative should be appointed in the office. All audited financial statements should be submitted to the company registrar office. In addition, they are also required to report on annual return with the Industry and Trade Department office.
Corporate tax rate in Vietnam
- Through selected commercial banks, the business license tax is paid to tax authority where the enterprise registers their tax reports.
- These business license taxes should be paid annually within the first month of a year (regardless of enterprise operation) and also in the month where tax registration certificate and tax code are obtain by the newly established enterprise.
- New company established in the first 6 months, shall pay entire annual business license tax, whereby, if entities are incorporated during the last 6 months, and then need only pay 50%.
- Corporate taxes that are charged on sales income will be 25%.