Vietnam’s economy continues to draw global attention as an attractive destination for business. With a vibrant market, low labor costs, and strategic location in Southeast Asia, foreign investors are increasingly considering business ventures here. Yet navigating the legal and administrative steps of company formation can be complex. This article provides a clear, comprehensive guide to help you understand the process of setting up a business in Vietnam as a foreigner, drawing on the expert counsel offered by LHD Law Firm.
Understanding the Legal Framework and Business Structures
Foreign entrepreneurs seeking to establish a company in Vietnam typically choose between setting up a Limited Liability Company (LLC) or a Joint-Stock Company (JSC). An LLC can be formed by one to fifty members and provides limited liability protection. A JSC requires a minimum of three shareholders and is suitable for larger or more complex ventures. There is generally no fixed minimum capital requirement, but the amount declared must reflect the nature and scale of your business. In practice, many small service companies start with capital in the range of USD 3,000 to 10,000. More capital-intensive sectors like finance, real estate, or education may require higher minimums.
Key Preconditions: Legal Representative, Business Address, and Documentation
Any foreign-invested company must appoint at least one legal representative residing in Vietnam. This individual may be a foreigner holding a valid work permit, or a local resident. If the representative is the founder but a foreigner, a work permit exemption might apply. Your business must also have a registered address within the country, preferably a physical office designated via a lease agreement. Virtual office arrangements may be acceptable for certain service-based businesses, but most enterprises involving manufacturing, retail, or food and beverage need a tangible operational space. Notarized, legalized, and officially translated documents are required for any foreign originals related to your business or parent company.
Navigating the Registration Process: IRC and ERC
The company setup journey typically begins with obtaining an Investment Registration Certificate (IRC). This involves submitting a detailed investment proposal outlining your business objectives, scope, capital, and operational plan to the Vietnamese authorities. Licensing authorities may request further approval—called pre-investment approval—if your line of business involves sensitive sectors or large-scale investment. Once the IRC is granted, you can proceed to secure the Enterprise Registration Certificate (ERC), which legally establishes your company and enables it to conduct operations in Vietnam.
Post-Licensing Steps: Seal, Bank Account, Capital Contribution, and Public Notification
After receiving both IRC and ERC, several essential steps remain before full operational launch. Your company must create an official seal, still required for formal documentation despite changes in registration requirements. Opening a corporate bank account in Vietnam is necessary for financial Set up company in Vietnam operations, including charter capital contributions, which must be deposited within 90 days of ERC issuance. You also need to complete statutory labor and tax registrations, pay any required license tax, and publicly announce your company’s establishment via the national business registration platform.
Ongoing Compliance: Operational Licenses, Taxes, and Social Insurance
If your business operates in conditional sectors such as retail, education, or food services, you may need additional licenses or sub-licenses. Compliance with Vietnamese Accounting Standards and annual audits by government-approved auditors are mandatory. Companies must register for applicable taxes, including corporate income tax, value-added tax, and personal income tax for employees. Labor and social insurance filings must also be initiated once you begin hiring staff. Foreign-invested enterprises can open accounts in foreign currencies and repatriate profits, provided tax obligations are met.
Insights from the Field
Business practitioners often stress the importance of proper invoicing and accounting procedures. It is advised to secure a reliable local accountant familiar with Vietnamese Accounting Standards to handle tax filings and audit preparations. Foreign investors may not be able to immediately withdraw profits; instead, dividends can be distributed following audit completion and tax clearance.
Conclusion
Establishing a company in Vietnam as a foreigner involves a multi-step process with regulatory nuances and compliance obligations. From choosing the appropriate business entity and securing a resident legal representative, through obtaining IRC and ERC, to navigating post-registration setup and ongoing compliance, each stage is critical. Engaging professional guidance from LHD Law Firm ensures you meet regulatory requirements, avoid common pitfalls, and establish a solid foundation for your Vietnamese venture. With careful planning, expert support, and timely execution, your business can successfully tap into one of Asia’s fastest-growing economies.