FAQ

Pre Incorporation

Setting up a company in Vietnam is relatively affordable. The average cost of setting up a Limited Liability Company (LLB) in Vietnam is approximately USD20,740. Please refer to the Company Formation section for the pricing or speak to our Japanese Guest Relation (JGR) for more information on the latest promotion available.

  1. Strategic Location – Close to major markets in Asia as well as shipping routes. Effectively enhancing trade, the two biggest cities are strategically positioned in the South (Ho Chi Minh) and the North (Hanoi), making Vietnam a bridge into neighbouring locations.
  2. Strong and Stable Economic Growth – From 2002 to 2018, poverty rates in Vietnam declined sharply from over 70% to below 6% according to the World Bank Group. According to the General Statistics Office (GSO), GDP growth rate in Vietnam from 2011 to 2019 was between 5%-7% and the GDP growth of 7.02% in 2019 was impressive as it was far exceeding the target set by the National Assembly which was at 6.6 – 6.8%. Vietnam has become one of the fastest-growing economies in the world.
  3. Young educated workforces – According to the Ministry of Education and Training, 97% of the working-age population is literate, with over 52% of its population at their prime working age (Source: PWC)
  4. Free Trade Agreements (FTA) – Vietnam is currently a member of 13 free trade agreements (FTA) such as ASEAN, CPTPP, EFVTA and etc., making it one of the most attractive markets to foreign businesses after China
  5. Competitive Labour Costs – The growing economy with its low minimum wage poses a cost-efficient alternative to China, especially in the manufacturing industry.

Tax Incentives

Tax incentives are generally applicable to investors who establish a tax resident company in Vietnam. The policy is set to encourage foreign companies wishing to engage in continuing operations in Vietnam to incorporate local subsidiary companies.

Generally, there are three major forms of incentives in Vietnam and they are:

  • Corporate Income Tax (CIT) – Application of a lower rate of CIT for a set number of years.
  • Import Tax – Exemption from import duty in respect of goods imported as fixed assets and on raw materials, supplies and components for implementation of an investment project.
  • Land rental or land use tax – Exemption from and/or reduction of land rents, land use fees, and land use tax.
  • Is your business permissible by Vietnam Authorities for 100% foreign-owned?

Most businesses can be 100% foreign-owned. However, some industries such as tourism, advertising, and entertainment require a local partner.

  • Does Investor need to appoint a minimum of one resident director for your Vietnam entity?

Yes.

  • Does Investor need to provide a local, physical Vietnam address as the registered address of the company?

Yes.

  • What is the minimum paid up capital required for your business nature (if any)?

None.

  • What is the minimum paid up capital for a foreigner able to apply for an expatriate visa/ pass in Vietnam?

It depends on visa type (DT1, DT2, DT3 or DT4).

At this moment, unfortunately we do not provide any market research services for businesses.

Overall, Vietnam is a very safe country to live in. Violent crime is rare and the crime rate is very low.

Vietnam is an affordable country to live in. Compared to Japan, investors have a cost advantage by setting up business in Vietnam. For example, meals in inexpensive restaurants in Vietnam can cost less than USD5 (¥548) as compared to Japan at USD8 (¥850).

Vietnam welcomes investors to set up Companies in various industries. Top industries Japanese businesses that previously set up in Vietnam are manufacturing, electronics, tourism, education and retail business.

The national/official language is Vietnamese (Tiếng Việt). English is increasingly favoured as a second language. Mon-Khmer, French and various highlander languages are also spoken in Vietnam.

Despite the current economic downturn due to Covid-19, Vietnam’s economy is bouncing back well and showing an optimistic trend.

According to data from the Government Statistics Office (GSO), Vietnam recorded GDP growth of 5.64% in the first half of 2021, which is three times higher than the growth rate of 1.82% recorded in the corresponding period in 2020.

In 2020, the economy in Vietnam grew 2.9%, which was one of the highest growth rates in the world. Based on the International Monetary Fund’s (IMF) April World Economic Outlook (WEO), Vietnam’s GDP growth is forecast at 6.5% throughout 2021.

Company Formation

In Vietnam the process of forming a foreign investment Limited Company from zero until it can start running a business is approximately 2 month. The whole registration process time may slightly vary depending on the completeness and business activities or sectors.

The breakdown of time limit is as follows: 

  1. Investment Registration Certificate (IRC) application (about 3 weeks)
  2. Enterprise Registration Certificate (ERC) application (about 2 weeks)
  3. Required licenses or certificates and sub-licenses (if any) application (following weeks)
  4. Documents and payments submission for post license requirements (following weeks)

Yes. You can set up your company by providing us with the company details and necessary documents.

In Vietnam, you do not require a Vietnamese resident to register a company. Therefore, you do not need to have a nominee director if you don’t want to do so.

Yes, our Japanese Guest Relation (JGR) will update you from time to time on the status of the application.

On June 17,2020, the Vietnam’s National Assembly adopted the Law on Investment (Law No. 61/2020/QH14)(“LOI 2020”). The revised LOI 2020 enters into force from January 1, 2021. The key LOI 2020 are as follows:

  • Market Access Conditions – Foreign entities are afforded national treatment with regard to investment except in those sectors explicitly set out in an accompanying List of Restricted Sectors. The List of Restricted Sectors will be classified into two groups: (i) a group of sectors which are not opened to foreign investors and (ii) another group of sectors in which the market access of foreign investors are subject to conditions.
  • Nominee Arrangement – The government can terminate an investment project partly or wholly if the investor conducts its investment activities on the basis of a “sham” transaction (i.e., using the Vietnamese nominee to circumvent the restrictions on foreign investors)
  • Foreign Ownership Threshold – Enterprises with more than 50% owned by a foreign entity were treated as “foreign investors” and will not receive the benefits afforded to domestic enterprises.
  • Merger and Acquisition Approval (“M&A Approval”) – The foreign investor require to obtain an M&A Approval when the proposed transaction leads to: 

(i)  an increase in foreign ownership in an economic organization engaging in a business belonging to the List of Restricted Sector (i.e., sectors with market access conditions applicable to the foreign investor); 

(ii) an increase in foreign ownership in an economic organization from below 50% to more than 50% of the charter capital;  

(iii) an increase in foreign ownership in an economic organization where foreign ownership capital already exceeds 50% of charter capital; or  

(iv) M&A activities in an economic organization that has the land use right certificate for the land located in sea-islands or border/coastal commune-level areas or other areas which may affect the national defense and security.

  • Waiver of Investment Conditions for Startups – The requirements to have an investment project and to obtain an investment registration certificate can be waived for a foreign investor if it incorporates a small/medium-sized startup innovative enterprise or an innovative start-up investment fund in accordance with the laws on supporting small and medium-sized enterprises.
  • National Defense and Security – An investor’s investment project and business activities will be suspended or terminated if such activities cause damage, or could cause damage to national defense or national security. In addition to the market entry conditions, the following conditions must be satisfied by a foreign investor who wishes to contribute capital or acquire capital/share in a Vietnamese company:

(i)  The investment must not compromise national defense and security of Vietnam; and 

(ii) The investment must comply with the conditions relating to the use of sea-lands, borderlands and coastal lands in accordance with the applicable laws. 

Advantages

  • Less paperwork and streamlined process.
  • Continued existence even in the event of the death of shareholder/shareholders.
  • Limited Liability Protection – The member are not liable for the Company’s debts and other property obligations
  • Restricted Trade of Shares – The purchase and transfer of capital between members are strictly regulated by law. Managers can easily control the capital contributed by the members, limiting the penetration of strangers into the company. 
  • Flexibility profit distribution – The shareholders are able to allocate their profits based on their capital contribution ratio which is equal and flexible.

Disadvantages

  • Not entitled to issue shares
  • Maximum 50 members
  1. Minimum 1 shareholder 
  2. Minimum 1 Vietnam resident director 
  3. No minimum paid up capital required but has to correspond to the planned expenses of the company
  4. Bank account opening – Direct investment account
  5. Registered physical address
  6. Investment Registration Certificate (IRC)
  7. Enterprise Registration Certificate (ERC)
  8. Capital contribution
  9. Articles of association
  10. Company seal
  11. Tax registration and payment of the business license tax

Application for enterprise registration:

  1. Three (3) Proposed Company Name
  2. Business nature/activities
  3. List of board members
  4. Charter capital. Capital invested by the owner of the sole proprietorship.
  5. Tax registration information
  6. Copy of passport/ID card or other valid personal identification documents of individual members
  7. Copy of Investment Registration Certificate, for foreign investors as prescribed by the Law on Investment
  8. Copies of establishment decision, business registration certificate, or other equivalent documents (for organizational members); identification documents of the authorized representatives

It is required for investors to fill in the company incorporation form in English. Other supporting documents provided do not require translation in English. However, in some cases, for the purpose of the Know Your Client process, our local Japan representative might request for further documentation if necessary.

In Vietnam, the documents to be submitted to the authorities are required to be in Vietnamese language. Our professional team will assist for translation and for the filing and submission.

  • The foreign-owned Limited Liability Company (LLC) has to be registered with the Department of Planning and Investment (DPI) to obtain an Investment Registration Certificate (IRC).
  • All the Private Limited Companies have to apply for an Enterprise Registration Certificate (“ERC”) via the National Business Registration Portal.
  • National Business Registration Portal is a website for organizations and individuals to implement online business registration, access business registration information and be used for the issuance of Business registration certificates.
  • You may engage OCS to assist on the whole registration and company formation process in Vietnam.
  1. Contact our Japanese Guest Relation team at H.I.S. Co., Ltd. 
  2. We will define on your business nature and activities to match your objective in Vietnam
  3. Decide your shareholding structure with minimum one Shareholder 
  4. Decide the key positions of Directors with minimum one Director
  5. Fill in our Incorporation Form and provide the required documents
  6. Sign our Client Service Agreement and make payment

Post Company Formation

There are two main metropolises in Vietnam that are better for doing business in Vietnam and they are Ho Chi Minh City (commercial capital) and Hanoi (country capital).

According to the JLL City Momentum Index 2017, both Ho Chi Minh City and Hanoi are listed as the world’s most dynamic cities based on the population, connectivity, technology and R&D, education, economic output, corporate activity, construction, real estate investment and property prices.

  1. Appointment of Chief Accountant
    According to Vietnamese laws, companies are required to appoint a Chief Accountant as a statutory position.
  2. The role of  this chief accountant is to sign off on all the bank documents, financial statements, accounting books and tax filing etc. In practice, the director of the company can also sign off as the chief accountant.
  3. Open a Company Bank Account
  4. Register Tax Code and Pay for Annual Business License Tax (within 10 days after registration)
  5. Register for E-invoices
  6. Apply for Work Permit and Residence Card
  7. Apply for Sub-licenses (if applicable)
  8. Obtain Company Common Seal

In Vietnam, each bank has different requirements and documentation required. You are advised to speak to the respective bank for opening a local bank account.

Yes, you are allowed to open a Japanese bank account in Vietnam. In Vietnam, we have Sumitomo Mitsui Banking Corporation, Mizuho Bank and MUFG Bank (Vietnam). OCS provides additional services in assistance of opening bank accounts from Japan with Japanese banks.

The next step after registering with above bodies, the Company may proceed with a business license application. It is essential for every business to have a valid license to start a business in Vietnam. Following are the common types of business license in Vietnam:

  1. Investment Registration Certificate (IRC)
  2. Enterprise Registration Certificate (ERC)
  3. Branch, representative office, business location and warehouse registration certificates
  4. Operating license for specific areas (sub-licenses)

Please refer to our customer booklet on further details regarding the above.

Companies need to submit a foreign labour use report along with the reason for hiring a foreigner in a Vietnam company. The report is required to be submitted 30 days before the commencement of work. Prior to that, foreign expatriates need to meet the requirement for a Vietnam work permit or Vietnam work permit exemption. For more information, please refer to our customer booklet.

Value Added Tax (VAT) is regulated for the first time by the Law on VAT issued in 2008. The standard tax rate is 10%. In addition, foreign business entities are subject to Foreign Contractors Withholding Tax (FCWT) which needs to be applied on value added taxable goods and services sold by a foreign entities. For more information, please refer to our customer booklet.

The standard corporate income tax (CIT) rate in Vietnam is 20%. Companies operating in the oil and gas and other precious natural resources (silver, gold, gemstones etc.) sectors range from 32% to 50%, depending on the project.

Yes. Most goods imported or exported across the borders of Vietnam, or which pass between the domestic market and a non-tariff zone, are subject to import/export duties. However, most goods and services being exported are exempt from tax except for a few items, mainly natural resources such as minerals, forest products, and scrap metal. Those items are charged export duties, ranging from zero percent to 45 percent and computed on a free-on-board (FOB) price.

Consumer goods, especially luxury goods, are subject to high import duties, while machinery, equipment, materials and supplies needed for production, especially those items which are not produced domestically, enjoy lower rates of import duties, or even a zero percent tax rate.

In addition to import duty, goods brought to Vietnam are also might subject to the following taxes:

(i) Value-added tax (VAT)

(ii) Special consumption tax (SCT) 

(iii) Environmental protection tax (EPT)

Yes, OCS provides one stop solution for tax consultation, audit and legal services.

Yes, our Japanese Relationship Manager in Japan and in Malaysia is able to assist you with your needs and inquiry.