This post answers most of the questions commonly asked by first time investors who have received half or inaccurate information and are confused about the process of registering and operating a business in Vietnam.
What is the process to register a company in Vietnam?
The process to register a company involves 5 steps.
1. Applying for an investment registration certificate (IRC)
2. Applying for an enterprise registration certificate (ERC)
3. Making and registering the company seal
4. Making a public announcement
5. Registering the tax code/ VAT number with the tax department
This is the standard process to register a company to operate any type of business in Vietnam. After this, depending on the nature of the business, the entity may or may not require additional sub licenses.
What documents are required to register a company in Vietnam?
To register a company on your behalf, we require to know the exact nature of your business and the following 3 documents.
1. Notorised copies of the investor’s passport
2. Legal address to register the company (lease agreement)
3. Proof of funds (Bank statement – from a local bank or an overseas bank)
*If the bank statement is from an overseas bank, the documents needs to be notorised and consular legalised.
How can I get a legal address to register a company?
If you do not have an address to register your entity, Mahan will provide you with a legal address for a small fee. Alternatively you can use any of the many virtual office services in Ho chi minh city.
What is consular legalisation, is there any alternative/workaround to this?
Consular legalisation is a process by which documents originating outside Vietnam are authenticated. The process involves 3 steps.
1. Notarizing the documents in
the country of the investor.
2. Getting the documents certified by the foreign office of the country of the
investor.
3. Authenticating these documents through the Vietnam embassy/ consulate
located in the country of the investor.
For banks statements, getting them consular legalised is a difficult and time consuming process. The workaround is to deposit the funds in a local Vietnamese bank and then request the local bank to issue a bank statement. Mahan will assist in the opening of a bank account for this purpose. No address proof is required as we guarantee the authenticity of the depositor.
How long does it take to register a company in Vietnam?
At Mahan, we are able to register a company (in Ho chi minh city) in 20 working days from the date all the documents have been submitted. This is the case for un-conditional businesses.
For businesses categorized as conditional businesses the registration process may take longer. For example obtaining the licenses for real estate development may take upto 90 working days. The reason for the longer approval times is because for this category of businesses, applications are processed by the central government in Hanoi and not by the local provincial government.
What are Mahan’s charges to register a company in Vietnam?
For unconditional businesses eg. wholesale trading, consulting, manufacturing etc the charges typically never exceeds USD 1800. The breakup is as follows.
1. Government relates processes & fees – USD 500 (application fees, seal creation & registration, public announcements X 2)
2. Legal fees – USD 1100 (including i. preparation of necessary project reports (for investment certificate) ii. preparation of application dossier iii. Payment of fees and submission of documents iv. Responding to queries & collecting documents).
3. Other miscellaneous expenses – USD 200 (translation, photocopying, coffee money)
For conditional businesses eg. education related, real estate, retail trading etc the fees are dependent on the nature of the business. The fees typically range between USD 5000 – 7000 (maximum).
Please see a full list of conditional businesses by clicking here.
Why is the cost for registering a conditional businesses so high?
Conditional businesses are difficult to register. This is because in these sectors in the government only wants to issue licenses to qualified, experienced and financially strong investors who will add value to the sector in the form of some technological innovation or technology transfer or skill development. Additionally, the government also wants to protect local players within these sectors.
For example, in the case of real estate development, the government only grants an investment certificate if the investor can pledge a minimum of USD 1 million as a charter capital.
Another example is the medicines trading business i.e. setting up of retail chemist/ drug stores. To enter this sector there are no specified capital requirements however the venture must necessarily be a joint venture with an existing, qualified, local operator who must have majority equity. This is an example of a protectionist device to protect local businesses.
Cases such as these involves additional work in the form of preparing detailed project reports and in some instances even lobbying the necessary government departments for approvals. For these reasons the costs are higher.
What are the hidden costs?
At Mahan, there are no hidden costs. We will provide you with a service contract which will contain a full description of services, a comprehensive costing for each of the services and a final list of deliverables. Also included will be the timelines and documents required (from the investor). This is a binding agreement and our commitment to delivery services in a transparent, timely and professional manner.
To make the process quick & efficient, we also provide a list of optional services along with a description and costing, in our very first communication depending on the requirement of the investor eg. costing for business visa & temporary residence card. Any selected services will be included in our service contract.
What is the minimum capital required to setup an entity in Vietnam?
As per the investment law there is no specified minimum startup capital. However the licensing authority requires that every investor show a startup capital which will be sufficient to carry out their intended business.
As a rule of thumb we request investors to show a minimum startup capital of USD 10,000 regardless of whether they setup a full fledged company e.g. limited liability company (LLC) or a local representative office. The reasoning behind this is as follows.
1. Office rent – USD 500/ month
2. 1 X staff salary – USD 300/ month
3. Utility bills & other misc costs – USD 100/ month
Cost to operate a company for 1 year = ((500+300+100)X12) = USD 10,800
For some conditional business lines there may or may not be a specified startup capital requirement. For example, for real estate development the minimum capital investment required is USD 1 million or VND equivalent.
What is the next step after the entity has been registered?
The next step after an enterprise registration certificate has been issued is opening up of a company bank account, transferring in the charter capital and registering the tax code with the tax department.
How does the temporary resident card system work & do I require a work permit as an investor?
Inorder to permit investors to operate their enterprises and to facilitate ease of travel, investors along with their immediate families are issued temporary residence cards. These are in many ways similar to a multiple entry visa and are typically issued for between 2 – 5 years.
Investors who are business owners of an entity registered in Vietnam do not require a work permit. They are however required to report to the labor department and submit an application for exemption from having to apply for a work permit.
Family members of investors holding temporary residence cards and who wish to work in Vietnam do however require a work permit if they intend to pursue employment i.e they will require sponsorship for a work permit from a potential employer.
At Mahan, we can assist with this entire process. To learn more please read our article on Business visas, work permits and temporary residence cards for business owners.
Do I need to be physically present in Vietnam during the entire registration process?
No. At Mahan, we will handle the registration process on your behalf after you have signed off on the application forms. We only need you to be present in Vietnam for 1 day to provide us with copies of your passport, sign our service contract and the application dossier. After this you are free to leave Vietnam. We will keep you informed about the progress of your application and deliver the documents to you once they are in our procession.
If you choose our Tax registration service, we will also remotely open a company account for you and complete the tax registration process on your behalf. This process is completely safe and secure as there will be no money in the account when we open the account and you only need to transfer the capital into this account after it has been handed over to you.
Do I need any special licenses over and above the investment registration certificate (IRC) & enterprise registration certificate (ERC)
Depending on the nature of your business you may or may not need a special licenses.
For example if you consider the case of any un-conditional businesses such as general consultancy, no special license is required. On the other hand any sort of food or cosmetics related business, though unconditional may require some special licenses. For example a whole sale food import business will require a food import license issued by the ministry of health. A similar license is required to setup and operate a restaurant or food processing facility.
In the case of conditional business, most of these require additional licenses. For example investors looking to setup up educational institutions, require a special education license from the department of education. Retail trading also requires a special retail trading license issued by the department of industry and trade.
It should be noted that for both conditional as well as unconditional business, these special licenses can only be obtained after an investment registration certification and enterprise registration certificate have been issued. A good rule of thumb is to examine the licensing laws for a particular business in your own country along with the required criteria. Generally something of a similar nature will be applicable in Vietnam.
Mahan as an experienced consultant can advise and assist in procuring these additional licenses. Furthermore in certain cases where the investor may not be able to meet certain conditions, we can suggest practical solutions or workarounds to overcome the more stringent requirements.
Is it possible to register a company outside Ho chi minh city?
It is absolutely possible to register a company outside ho chi minh city however the charges for this service exceed USD 1800 and are dependent on the location where the company is to be registered.
An easy workaround to this is to register a company in Ho chi minh city and then transfer the entire company to the desired area of interest or open a branch office in the desired location. This can be done by filling out a simple transfer application form.
The process is quite simple and we can guide the investor to carry this out by themselves if they have some local staff who can fill out the paperwork.
What is special about working with Mahan?
Quick Response – Upon receipt of your query and in less than 24 hours we will aim to provide you the most relevant and accurate information in a concise and transparent manner along with an approximate costing. This is part of our free consultancy service.
Experienced – For investors wanting to see firsthand how businesses operate, we can show them our own trading company setup (warehouse, office, distribution etc) and also share with them some of our best practices. For certain business lines we could also provide certain specific and confidential information about buyers in the local market, if applicable. Visit our trading company at www.kienden.com to learn more about what we do.
Transparent – In instances where investors do not require to setup a company we will let them know at the very beginning eg. in the case of export oriented businesses. Also if in the initial stages where an investor is looking to sell their products or searching for a supplier but is not sure about the market conditions, we will present them several solutions which will permit them to explore the market without the need for setting up a company. This way an investors risk is minimized significantly. No other agency will provide these services as they stand to lose revenue.
Friendly & Helpful – Unlike other agencies, we do not disappear after the company is registered but stay on to provide relevant and practical advice and help setup processes which are typically required for the smooth operation of a company eg. accounting & tax reporting system. We do not charge for any post incorporation services.
Unlocking your business potential in Vietnam,
helping you grow in a region on the rise.
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