Company Formation in Vietnam
Service Name
Start
Pro
Elite
Company Name Check and Reservation
Company Formation including Government Fees
Company Secretarial Services for the First Year
Incorporation Documents Package
Registered Office Address for 1 Year
Nominee Services for 1 Year
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Corporate Bank Account Opening
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–
Total Cost
€6750
€7650
€8450
Company Formation in Vietnam: A Strategic Guide for Business in a Dynamic Market
Vietnam has rapidly emerged as a key player in the global economy, attracting significant foreign direct investment (FDI) with its stable political environment, rapid economic growth, and strategic location in Southeast Asia. For entrepreneurs and corporations seeking to tap into a fast-growing consumer market and a cost-effective manufacturing base, company formation in Vietnam presents a compelling opportunity. This comprehensive guide will walk you through the entire process, from understanding the core benefits to navigating post-incorporation compliance. Mastering the Vietnamese company registration process is a crucial step towards building a successful and sustainable business in this vibrant market.
Why Choose Vietnam for Company Formation?
The most common and popular business structure for foreign investors in Vietnam is the Limited Liability Company (LLC). It offers a range of significant advantages that attract a wide variety of businesses.
Rapid Economic Growth: Vietnam is one of the fastest-growing economies in the world. This growth, driven by manufacturing, exports, and a rising middle class, provides a fertile ground for new businesses.
Strategic Location: Located at the heart of Southeast Asia, Vietnam offers easy access to regional and global supply chains. It is a vital link for companies with manufacturing and sourcing operations in Asia.
Cost-Effective Workforce: Vietnam boasts a large, young, and skilled workforce with competitive labor costs, making it an attractive destination for labor-intensive industries.
Favorable Government Policies: The Vietnamese government is actively encouraging foreign investment through a range of incentives, including tax holidays, preferential tax rates for certain industries, and simplified administrative procedures.
Political Stability: A stable political environment provides a secure foundation for long-term business operations and investment.
Pre-Incorporation Checklist: What You Need to Know
Before you initiate the company registration process, several key decisions and preparations are essential.
Choosing a Company Name: The company name must be unique and approved by the Department of Planning and Investment (DPI) in the relevant province. The name must also indicate the legal form, such as “LLC.”
Appointing Legal Representative: A Vietnamese LLC requires at least one legal representative. There are no residency requirements, but the individual must have a valid passport and be able to be physically present in Vietnam for certain administrative procedures.
Defining the Registered Office Address: Your company must have a registered office address in Vietnam. This is the official location for receiving legal documents and correspondence. Using a professional service provider to secure a virtual or physical office is a common practice for foreign investors.
Determining the Share Capital: There is no strict minimum share capital for most industries in Vietnam, but it is a legal requirement to register the company’s charter capital. The capital must be realistic and sufficient for the company’s business activities.
Preparing Legal Documents: The primary legal documents are the Charter (equivalent to Articles of Association) and the Investment Registration Certificate (IRC). The IRC is a crucial document that proves your eligibility to invest in Vietnam.
The Company Formation Process: A Step-by-Step Guide
The Vietnamese company incorporation process involves two main stages: obtaining the Investment Registration Certificate and the Enterprise Registration Certificate.
Obtain Investment Registration Certificate (IRC): The first and most critical step for a foreign investor is to apply for an IRC at the Department of Planning and Investment (DPI). This requires submitting a detailed application, including a business plan and information on the investor and the proposed company.
Obtain Enterprise Registration Certificate (ERC): Once the IRC is approved, the company can proceed to apply for the ERC. This involves submitting the company’s charter, a list of shareholders, and other documents to the DPI.
Post-Registration Procedures: After obtaining the ERC, the company must complete several post-registration steps, including:
Obtaining a Company Seal: The company must create and register an official seal with the police.
Opening a Bank Account: The company must open a capital bank account and a current account to conduct business operations.
Public Notice: The company must publish its incorporation information on the National Business Registration Portal.
Tax and Social Security Registration: The company must register with the tax authorities to obtain a Tax Identification Number (TIN) and with the social security authorities if it has employees.
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Post-Incorporation Compliance and Obligations
The responsibilities of a Vietnamese LLC continue after formation. Failure to meet these obligations can result in fines and legal action.
Annual Financial Statements and Tax Filings: Companies are required to prepare and file annual financial statements with the tax authorities. The company must also submit monthly or quarterly VAT returns and an annual corporate income tax return to the tax authorities. It’s crucial to adhere to these deadlines, as non-compliance can result in significant penalties.
Maintenance of Statutory Registers: You must maintain a set of internal registers, including a register of members and a register of beneficial owners.
Social Security and Health Insurance: If the company has employees, it must register with the Social Security and Health Insurance authorities and pay the mandatory contributions.
Practical Considerations for International Founders
For those based outside Vietnam, setting up a company is a complex but rewarding process that requires careful planning.
Company Tax Residency: A company’s tax residency in Vietnam is determined by its place of incorporation and management. A company incorporated under Vietnamese law is a tax resident of Vietnam. However, a foreign-incorporated company can be deemed a tax resident if its effective place of management is in Vietnam. This can lead to complex international tax issues, making professional advice essential.
Banking and Fintech Solutions: Opening a business bank account in Vietnam can be a lengthy process, particularly if the beneficial owners and legal representatives are non-residents. Traditional banks have strict KYC (Know Your Customer) and due diligence procedures that can require in-person verification.
The Role of a Professional: The legal and administrative framework in Vietnam can be challenging to navigate for foreign investors. Engaging a reputable local law firm or corporate service provider is crucial to ensure a smooth formation process and ongoing compliance.
Conclusion
Company formation in Vietnam offers a highly strategic and cost-effective pathway for international entrepreneurs and businesses. The combination of rapid economic growth, a favorable business environment, and a vast market provides an exceptional platform for global operations. By understanding the multi-step incorporation process and committing to ongoing compliance, you can successfully leverage the power and credibility of a Vietnamese LLC to achieve your business goals in this dynamic Southeast Asian economy.
FAQ
The most common structure is the Limited Liability Company (LLC). It's preferred due to its flexibility, limited liability, and alignment with international business standards.
While there is no strict minimum for most industries, you must register a charter capital that is sufficient for your business activities. The capital amount must be realistic and align with your business plan.
No, there are no residency requirements for the legal representative or director. However, they may need to be physically present in Vietnam for certain administrative procedures, and they must have a valid passport.
The process involves two main stages for foreign investors: first, obtaining an Investment Registration Certificate (IRC), and second, obtaining an Enterprise Registration Certificate (ERC).
You must file annual financial statements and submit monthly or quarterly VAT returns and an annual corporate income tax return to the tax authorities.
The timeline varies depending on the business sector and location, but the process can typically take between 1 to 3 months to complete, due to the multi-step registration process.
The standard corporate tax rate in Vietnam is 20%. However, certain industries and investment projects may qualify for preferential rates or tax holidays.
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