Here’s a practical guide from Enterprise Singapore and our knowledge partner RSM on the nuts and bolts of setting up shop in Vietnam. It covers:
To do business in Vietnam, you may set up a new company, invest in an existing company or project, or set up a representative office or branch office.
Different regulations apply to different business structures and activities.
You may invest directly by:
These forms of investment have business activities and are regulated by the Law of Enterprise and Investment Law of Vietnam.
You can also have a commercial presence in Vietnam by establishing a representative office or branch office.
A representative office is not allowed to conduct direct commercial or revenue-generating activities, while a branch office may do so. However, do note that prevailing regulations do not encourage foreign investors to set up branch offices. It is also not a common form of foreign direct investment and is only permitted in a few sectors.
Setting up a new enterprise or acquiring shares/ interest of existing enterprises, are the most common forms of foreign investment.
Typical legal corporate structures include:
It varies, depending on your business structure:
You need at least one legal representative.
Vietnamese business regulations use "authorised representative" and "legal representative" as the preferred terms, in place of "directors". In some cases, a legal representative can refer to a director.
There is no restriction on the maximum number of legal representatives.
Yes. At least one of your legal representatives must be staying in Vietnam regularly. The resident legal representative can be a foreigner or a Vietnamese.
The legal representative of your company must not be:
For some conditional businesses, such as education, food and pharmaceutical businesses, legal representatives must have the required licences.
Yes, your entire board can consist of foreigners.
Yes, foreigners can have full ownership of a local company.
There are specific businesses mentioned in Vietnam's WTO agreement where you may need to partner a local investor in a joint-venture. The minimum local shareholder percentage depends on the nature of the business.
It depends on your business structure:
Yes, you will need prior approval from local authorities for your proposed business activity.
For service sectors covered in Vietnam's WTO agreement, local authorities at a provincial level can approve the registered business.
For investment projects involving manufacturing activities or service sectors not covered in Vietnam's WTO agreement, where the project investment is VND 5,000 billion (S$293 million) and above, the local authorities need to consult and seek approval from higher authorities such as specialised Ministries or Governments.
Your company is not allowed to carry out the following activities:
You need two types of licences:
Apply for an Investment Registration Certificate and an Enterprise Registration Certificate to set up a new company as a legal entity in Vietnam.
Apply for a one-off licence for the following businesses, after setting up your company:
In addition, apply for an import licence to import some special products, such as mining material, weapons, chemicals, medical products etc. You may need to renew such licences annually, depending on the regulations.
No, it is not necessary.
Generally, you do not need a minimum investment capital. For these businesses, a minimum capital applies:
(Note: VND 1 billion is about S$59,000)
Yes. It takes about 15 working days to get approval.
There is no minimum investment capital required for a typical trading company.
The processing time to get a licence may be shorter for companies with a higher investment capital of at least US$200,000 (S$268,000).
VND 10,000 (S$0.59) per share.
You can only issue shares in Vietnamese Dong.
Yes. Inform the authorities of all capital repatriation and you may only proceed after clearing all tax compliance requirements.
Yes.
It takes four to six weeks to prepare all the necessary documents to open the bank account.
No, you don’t need to keep a minimum capital amount in your bank account at all times and can use the entire amount for business activities. However, some banks may charge an administrative management fee for the bank account.
20% of taxable profits. For enterprises with total revenues of less than VND 20 billion, a 17% CIT rate shall be applied.
No. The corporate income tax rate is the same for both foreign-owned and domestic entities.
The corporate income tax rate in Vietnam is 20%. You may enjoy a lower rate of 10% to 17% if:
Pay corporate tax on a quarterly basis and declare the final amount at the end of the year.
If you repatriate dividends to organisational investors, you may not be taxed if you have fulfilled your tax requirements.
Repatriation of dividends to individual investors may be subject to 5% personal income tax depending on the amount of investment.
They are:
Dividends are not subject to withholding tax.
The Value Added Tax is 5% for essential goods and services, and 10% for all other goods and services other than those specified as VAT-exempted goods or services, or those subject to 0% or 5%. Value Added Tax does not apply to export of goods and services but only for production, business, and consumption.
Vietnam and Singapore have the following free trade agreements and tax treaties:
Under the Vietnamese Labour Code No.45/2019/QH14, you must provide your employees annual leave and public holidays. There are also rules on working hours, overtime work, payment of social insurance, strikes, and termination of employment contracts.
Yes. Both employer and employee must contribute to compulsory social insurances:
Social Insurance and Unemployment Insurance contributions are applicable to Vietnamese individuals only. Health insurance contributions are required for Vietnamese and foreign individuals that are employed under Vietnam labor contracts.
Yes, your employee must have a work permit.
There are two types of work permits:
The maximum duration of a work permit is 24 months, which can be extended when subject to certain conditions. The typical processing time for work permit application is 7 working days. However, Vietnam has implemented border restrictions for foreigners since March 2020 due to the COVID-19 pandemic. Please check on the latest requirements for foreigners to enter the country.
Yes, you may use a virtual office, depending on the nature of your business. For example, you may use a virtual office if your business provides services. However, if you are running a business that requires a physical location, you may need a lease contract for a suitable address with the needed floor area.
Please note all information is provided in good faith for guidance and reference purposes only, and is correct as of 23 July 2021.