Company registration in Vietnam

Vietnam is a rapidly developing jurisdiction in the center of Southeast Asia. The country has a favorable location, developed infrastructure, and a tourism sector, creating good conditions for starting and conducting international business. Investors interested in starting a business and company registration in Vietnam should be aware of the following nuances of the region.

Jurisdiction advantages

The decision to company registration in Vietnam is potentially beneficial because of the following advantages of the region:

• high rates of economic growth of the jurisdiction;
• young, skilled population;
• free trade;
• well-developed infrastructure;
• low costs for starting a business and entering a new market;
• availability of state support for business.

Forms of legal presence and business

When setting up a business in Vietnam, developing a marketing strategy, hiring staff, and raising money, it is essential to choose the right type of legal entity. Investors who are interested in starting a business in Vietnam can realize the business objective in one of several forms:

• A limited liability company is common in Vietnam, open to foreign investors. The obligations of the participants of this type of legal entity are limited solely to the number of funds invested. The number of participants is limited - from 2 to 50 people. This is the most flexible form of business, not associated with demanding accounting and reporting.
• A joint-stock company is a Vietnamese legal entity with a more complex management structure and must comply with stricter reporting requirements. Nevertheless, the liability of the shareholders of this Vietnamese legal entity is limited exclusively to the number of funds invested, and third parties can freely dispose of their shares. The minimum number of participants is 3, and there are no restrictions on the maximum number of participants in the JSC.
• A General Partnership is a form of business conduct in which participants jointly make business decisions and bear complete financial responsibility for the results of their implementation.
• Limited Liability Partnerships are a type of business in which some partners are fully responsible for the results of the business and take over its management, and limited liability partners, who do not take part in the management of the business but do not risk with sums they have invested.
• A branch is an entrepreneurial option in which a foreign legal entity can conduct the same activities in Vietnam as abroad.
• Representation is an option that will suit foreign investors if they plan to monitor and analyze the local markets solely. The option does not include the possibility of conducting business activities but will be suitable for foreign legal entities evaluating the likelihood of investing large sums of money in Vietnam.

Each organization has certain advantages and disadvantages, and it is essential to understand what is important to you now and in the future as your business grows and develops. In addition, each legal entity has its operating mechanism, organizational structure, and rights and responsibilities as defined by Vietnamese law. Prifinance lawyers are ready to consider in detail your business case and offer the best legal form in your particular case.

Procedure and nuances of company registration in Vietnam

The registration documents package is formed, considering the case's background. But if you plan to open a business in Vietnam, you will, in any case, need the following:

1. Investment Registration Certificate. When registering a foreign capital company in Vietnam, you need an investment registration certificate. The Department of Planning and Investment issues this certificate. It usually takes about a month to obtain the certificate.
2. Business Registration Certificate. Companies in Vietnam must also obtain a Business Registration Certificate (BRC). The Department of Planning and Investment also issues this certificate.
3. Tax registration and tax payment for the business license. The business license certificate number is also the tax number of the company. All companies must pay taxes through the online system. Companies also file tax returns and reports through this system. To access this system, businesses must obtain an electronic signature.
4. Capital contribution. Once you receive your BRC, you have 90 days to make a capital contribution. Failure to do so will result in a penalty.
5. Apply for sublicenses or permits, if applicable. Registering a company in Vietnam takes about a month. However, depending on the line of business, some companies need to apply for sublicenses. In such cases, the registration process will be longer.

An approximate list of steps to be taken to register a company in Vietnam is as follows:

1. Determination of commercial priorities and preparation of a business plan for the future Vietnamese legal entity.
2. Selection and reservation of the commercial name for the Vietnamese legal entity.
3. Collection of data and documents required for registration.
4. Selecting and arranging the official registered address for a Vietnamese legal entity.
5. Drawing up and executing constituent and registration documents.
6. Formation and submission for consideration of the registration package of documents, including the document on payment of registration fees. At this stage, the investment and the legal entity itself are registered.
7. Registration for tax and social security purposes.
8. Opening a bank account.
9. Obtaining additional permits and licenses for certain regulated activities.

Prifinance lawyers are ready to advise you in detail on a plan of action that can be implemented in your particular case. Provide data to develop a customized registration plan and implement it as quickly as possible.

Legislation and regulatory environment

Vietnam offers favorable conditions for starting and doing business, including international business. Vietnam allows 100% foreign ownership of companies in most industries. However, it should be enough to cover expenses until the business becomes self-sustaining. You must have a legal address to register a company in Vietnam. All companies in Vietnam must have at least one resident director). Prifinance lawyers are ready to advise in detail on the regulatory peculiarities of doing business in Vietnam.

Vietnam's tax system

If you plan to open a business in Vietnam, you should consider the following aspects of taxation, which are relevant to the region:

• Corporate tax - 20%.
• Personal income tax - 20-35% (depending on the payer and the amount of income).
• VAT - 10%.
• Withholding tax - varies depending on the type of income.
• Capital Gains Tax - (1) corporate - see corporate tax (2) individual - see personal income tax.

How Prifinance lawyers can help

Prifinance is a leading provider of tax and legal services in Vietnam. We provide our clients with a full range of services, including consulting and compliance services, customs clearance, transfer pricing, due diligence, and legal services. If you intend to register or buy a business in Vietnam, Prifinance lawyers are ready to support the implementation of your business decision at all stages, including:

• assess the background of your business case;
• develop customized registration solutions, including the most appropriate legal form of a Vietnamese legal entity;
• collect the required documents and data for Vietnamese legal entities;
• negotiate with representatives of local state authorities, including registrars;
• open and close bank accounts as may be necessary to support the operation of the formed Vietnamese legal entity;
• to provide comprehensive information and legal support in resolving all issues that may arise during the process of the Vietnamese legal entity.

Send input for a detailed business case evaluation and development of customized business solutions.