Opening a company in Vietnam for that matter anywhere overseas can be complicated. Hence it is essential that foreign investors understand the process prior to registering a company in Vietnam. Here are 3 steps to follow prior to opening a company in Vietnam.
The main reasons which drives investment in Vietnam are its central geographical position in the ASEAN region. Another crucial aspect is, its proximity to supply chains in China & access to global markets. The government of the socialist republic of Vietnam has also made encouraged investors with pro-investor reforms. Lastly, Vietnam has large educated, skilled and cheap workforce which makes it an ideal investment destination.
Read more about the ease of doing business in Vietnam.
Investors typically have two options when it comes to opening a company in Vietnam.
Direct Investment method
Setup a new 100% foreign owned entity or buy an existing foreign company – With the help of a good service provider this can be done in 20 working days.
Indirect Investment method
An investor can also buy an existing 100% Vietnamese owned entity.
It take around 7 working days to setup a Vietnamese company. To transfer the equity of this company takes around 25 working days.
Trivia
Typically, during the transfer process the investor already begins operations.
Here are 3 Simple Steps to Opening a company in Vietnam
We have summarized this process as follows.
#1. Firstly, decide your business entity prior to opening your company in Vietnam
Out of the many options available, we recommend that an investor wishing to open a company in Vietnam opt for a limited liability company (LLC). This is mainly due to its simple structure and ease of operation. The main benefit of registering a LLC is that equity holders are not liable for debts and losses beyond their share of the contributed equity.
Opening a company in Vietnam as LLC makes it a taxable entity.
#2. Setting up your company
The government of the SRV has set out the investment law of 2005 for registering a company in Vietnam. Any investor wishing to open a company in Vietnam must comply with the regulations stipulated under Decree no. XX. This law on investment requires the investor to decide on the following prior to opening a company in Vietnam:
- Company name – The DPI needs to approve the name of the company.
- Equity holders – From 1 to 50.
- Legal representative – Can be a equity shareholder or a non-equity shareholder. Unlike Singapore, a local Vietnamese director is not required in order to open a company in Vietnam except in certain sectors. The government has listed these as conditional businesses. They have certain investment conditions including having a local partner.
- Paid-up capital – An investor is free to choose the amount of investment capital to open a company in Vietnam.
- Registered address – An investor needs to have a office address prior to opening a company in Vietnam.
Post registration, the investor is required to make a public announcement. Simultaneously, the investor is also required to register the company with the registrar. After this process some of your company details become public record. The public domain lists information such as business registration number (MST), registration date, shareholders and business lines.
#3. Open a bank account
After registering your company in Vietnam, an investor can open a bank account. They may choose from a variety of local as well as international banks.
Business Processes after opening your company in Vietnam
Additional post-registration activities may include:
- Licenses and permits – Some business activities require approval or a license from government authorities. Examples include: private schools, video companies, travel agencies, liquor distributors, money lenders, banks, financial advisers, childcare centers, and importers, wholesalers and retailers of liquor.
- VAT/ Tax Registration code – The business registration once registered with the tax department becomes the tax code of the company. The tax registration code is typically referred to “Ma So Thue” in Vietnamese or MST in short. The company must quote this number in documents used for official business communications. Once registered with the tax department becomes the VAT tax code of the company.
- Registration of digital signature – Every business in Vietnam is required to purchase a digital signature and register this with the tax department and the bank in which the company has an account. This signature is used to sign all reports submitted to the tax and other departments of the government.
- Registration of e-VAT invoices – As of 2019, the government of Vietnam has abolished paper VAT invoices and in its place introduced e-VAT invoices. These invoices have to be purchased from a 3rd party. These are essentially registered with the tax department post purchase.
- Registration with Department of Social Insurance (BHXH) – The Social Insurance scheme is similar to a compulsory pension fund scheme in which the employer and Vietnam citizen/permanent resident employee contribute a percentage of the monthly salary to the fund.
FAQs – Opening a company in Vietnam
What are the steps for company registration in Vietnam?
There are only 3 easy steps to register a company in Vietnam;
1) Choose the type of business entity,
2) Complete the documents required for Vietnam Company Registration, and
3) Open a bank account & register the tax code.
What are the requirements for company registration in Vietnam?
The requirements for company registration in Vietnam are;
1) Company name – Firstly, must not be in use by another entity. Secondly, DPI needs to approve it.
2) Shareholders – Minimum of 1, upto 50 members.
3) Legal representative – Can be any one of the capital contributing members or a non-capital contributing member i.e not necessarily Vietnamese.
4) Company Secretary – Not required to open a company in Vietnam.
5) Paid-up capital – No minimum set capital for doing business in Vietnam. Essentially, the capital must be sufficient to carry out the intended business, and
6) Registered address – A legal address is required to is required to open a company in Vietnam.
How long does it take to complete a company registration in Vietnam?
A Vietnam company registration service provider can complete the registration in 20 working days. The investor is however required to make the necessary documents available in advance.
If you choose to buy a pre-existing business it typically takes 25 working days to transfer the equity.
A professional consultancy like Mahan can draft these documents on your behalf. Our team will not only guide you through the entire process of starting a business in Vietnam but also support you with drafting all the documents. Additionally, we will also undertake to submit these to the government on your behalf, reply to any queries from the government and ensure that you are awarded an investment registration certificate in the stipulated time.
For more information please get in touch by visiting our contact us page and providing us with information on your project.
What are the processes for company registration in Vietnam?
The processes for company registration in Vietnam includes choosing your Vietnam company name, completing the required documents, and registering your business with the Department of Planning and Investment, and then opening a bank account.
What is the easiest way to complete a company registration in Vietnam?
The easiest and quickest way to complete a company registration in Vietnam, is to find a Vietnam company registration service provider. The provider will help your new company to comply with the Department of planning and investment.For more information on how to apply for an investment registration certificate in Vietnam or any matter related to starting a business in Vietnam please fill out the form below. Also read our article on staring a business in Vietnam and getting an investment registration certificate.