How to Open a Company in Vietnam for Foreigners

How to open a company in Vietnam? Understanding the actual step-by-step will help your business launch easier. Here are the details on requirements, procedures, and costs in order to open a Vietnam company as a foreign investor.

Requirements to Open a Company in Vietnam

Before starting your company in Vietnam, you need to check the list of conditions below:

Business Conditions
Investment Capital
Business Address
Company Structure
Legal Representative
Required Documents

#1. Business Conditions

Vietnam is not a fully open market for foreign investors. So in the beginning, you need to consult with your lawyers to understand all local conditions to kickstart and run your business in Vietnam. Here are some of the business activities that foreigners can easily do in Vietnam:

Import, Export
Wholesale Distribution
Business Consulting
IT Services

Sources:

#2. Investment Capital

Each company in Vietnam needs to declare and deposit an amount of capital.

Technically, there are no regulations on a minimum capital requirement, except in some specific industries. In practice, the local licensing authority will closely examine and assess your proposed registered capital, based on the nature of your business activities and project scale. It will be determined on a case-by-case basis.

In addition, the more capital contribution, the longer-term visa will be granted to investors.

Learn more: Vietnam Investor Visa and Capital Requirements

#3. Business Address

You must have a company address in Vietnam as the registered office and principal place of business (in accordance with Article 38 of the Law on Investment 2020)

In general, the best location to register your company is the one you will be conducting most of your business. It is highly advisable that you come for an on-site visit to make sure a location is the best fit for your business.

#4. Company Structures

In Vietnam, there are main 3 types of company structures that foreign investors can choose from:

Company Structures in Vietnam

Choosing which company structure to establish is very simple. It depends on the number of investors and the management structure you require. For example, an LLC is the best fit for small and medium businesses due to its simple management structure and lower corporate compliance costs.

In addition, the regulations here in Vietnam do not differentiate the tax treatment based on the structure of companies.

Click here to learn more about each company’s structure in Vietnam.

#5. Legal Representative

The legal representative is the individual who represents the company to exercise the rights and obligations arising from the company’s transactions, according to Article 12 of the Enterprise Law 2020.

A Vietnam company may have more than one legal representative. One of them needs to stay in Vietnam. Hiring a local legal representative is certainly not required by law, it is absolutely up to your business demand. A company’s legal representative may take the title of Director, General Director, CEO, CFO, President, etc.

#6. Required Documents

The foreign investors will be required to provide the below documents. In addition, documents of the corporate investor (i.e. company registration certificate) are subject to the legalization and notarization process.

Individual InvestorCorporate InvestorPassports of all investors- Company Registration Certificate
– Passport/ID Card of authorized representative(s) of the InvestorBank Account Balance Certificate
(Note: The account’s balance must be equal to or more than the value of the declared capital)- Financial Statement of the 02 latest fiscal years.
– Bank Account Balance CertificateLease Contract and its legal documentation related to the business addressLease Contract and its legal documentation related to the business address

How to Open a Company in Vietnam

In order to set up a company, it is necessary to follow 5 steps:

Step 1. Rent a Business Location
Step 2. Prepare Required Documents
Step 3. Register a Company
Step 4. Open Local Banks Accounts
Step 5. Apply for Licences/Permits (if required)
Step 6. Comply with post-incorporation requirements

Let’s take a closer look at each of these steps.

Step 1. Rent a Business Location

You will need to find a suitable address for your company, then sign a lease contract with the landlord. Next, you need to request the landlord to provide related legal documents related, such as a certificate of land right use.

Step 2. Prepare Required Documents

Per your lawyer’s suggestions, you will then begin to compile all necessary documentation, notarize it, and translate them into Vietnamese. The lawyer will prepare full application forms which need your signature and stamp (if any).

Step 3. Register a Company

Including 2 sub-steps:

Investment Registration Certificate:
Apply for antakes from 15 working days
Enterprise Registration Certificate: takes from 05 working days
Apply for an: takes from 05 working days

At this point, your hired legal team will take over and handle all of the administrative, legal, and communication with local authorities. Make sure your legal team provides accurate communication and detailed updates on your company registration progress.

Step 4. Open Company Bank Accounts

Once your company is established, you will need to open at least 2 company bank accounts:

A Direct Investment Capital Account, or D.I.C.A, is used to make transactions related to your investments in Vietnam, such as receiving the contributed capital and transferring the profit to your home country. (Please note that the contributed capital needs to be transferred to this account within 90 days of company establishment).
A Payment Account, which will be used for the company’s daily activities, such as contract, salary, and tax payments

Step 5. Apply for Licences/Permits (if required)

Before performing any conditional business/industry, your Vietnam company must apply and obtain the required licenses or permits (see requirement #1 mentioned above).

Step 6. Comply with post-incorporation requirements

After your Vietnam company is incorporated, there are some tasks needed to be performed within the deadline, such as: fully contributing the investment capital, declaring taxes, etc.

Learn more: 10 tasks to complete post registration of a company in Vietnam

How Much to Open a Company in Vietnam?

The minimum actual cost to set up a Vietnam company is approximately 4,580 through the first year of operation. . Most of which is allocated to rent the business location, related incorporation services, and post-incorporation compliance fees.

The minimum cost to start a business in Vietnam begins at USD 4,580 through the first year of operation.

Items

Descriptions

Minimum Costs

A business address

Rent fee per year for a Virtual Office/Office Space/Industrial Property

$970

Company formation service

Legal service fee for advising and registering a Vietnam company

$1,700

Initial set-up works

Buy a USB token device
Buy a company signboard
Buy and register to use VAT e-invoices

$270

Accounting and Audit

Bookkeeping and Filling Tax Reports
Annual audit

$1,640

TOTAL (minimum cost for the first year of operation)

$4,580

Learn more: Estimating Realistic Startup Cost in Vietnam.

How much does it cost to start a business in Vietnam

Navigating through all the documents and requirements when opening a company in Vietnam can be quite a headache and time-consuming. Nova Law Vietnam is here to help!

We have been assisting foreign investors in setting up businesses in Vietnam for years. Nova Law offers a wide range of business legal services: Legal Consulting, Company Registration, Licensing, Visas, and more. Contact our lawyers to register your Vietnam company today!

Author: Lawyer Nguyen Minh Phuong – Hanoi Bar Association

Q&A

Mục Lục

#1. Should I use local nominees to open a company in Vietnam on my behalf?

The answer is “depended”.

First, let get to know what is a local nominee. A Local Nominee is a Vietnamese partner that acts as a shareholder/owner of your company on behalf of You – the actual foreign shareholder/owner.

Technically, using a local nominee to start a foreign business in Vietnam is not an official legal way for a foreign investor to enter the market. In practice, this option has been chosen because it has some advantages:

It’s slightly easier, faster, and cheaper to set up and operate a locally-owned company than a foreign-owned company
A local company is allowed to conduct some business activities which are restricted foreign investment, without having to apply for extra licenses or permits

However, this option is also extremely risky:

By law, the Vietnamese partner is the real company’s owner/shareholder and has authority to decide all corporate matters of the local company, such as access to bank company account, enjoy profits, sale and purchase of the company’s assets. If the Vietnamese partner has inappropriate against benefits the actual foreign owner, local company business activities can be delayed, the foreign owner may suffer major damages
In case conflicts between the Vietnamese partner and the foreign actual owner arise, the foreign actual owners will be not protected by law, regardless there is existence of an agreement between parties

Please keep this in mind: An enormous amount of trust is placed in this Vietnamese Nominee, meaning extreme trust built from years of business collaboration in the past. When profits are bad, what is stopping this “nominee director” from closing the accounts and withdrawing the remaining funds? If profits are great, what is stopping this nominee director from withdrawing funds for their own personal benefit?

#2. How long does it take to incorporate a Vietnam company?

The entire company registration process will take at least 20 working days to obtain the IRC and the ERC. Unlike other countries, the company formation process in Vietnam is not fast.

#3. Do I need a visa to set up a company in Vietnam?

The answer is No. Without a visa and without even coming to Vietnam, you can be the owner or manager of a Vietnam company, but you cannot legally work here. If you plan to travel back and forth to VN, or live in Vietnam and work for your company, you are entitled to apply for a long-term visa sponsored by your Vietnamese company.

Learn more: Vietnam Work Visa and Vietnam Investor Visa.