How to establish a business in Vietnam

Vietnamese government has been more and more welcoming to foreign entrepreneurs wishing to establish their business in Vietnam. Regulations have been easing up the process, reducing points of contact and making all steps transparent. However, establishing a business can still be a daunting process if unprepared.
Viettonkin Consulting experts are here to assist you walk through the process of establishment a business in Vietnam.

Fundamental knowledge about legal entities in Vietnam

Limited liability company (LLC) and joint-stock company (JSC) are the two main legal entity types for a business to establish in Vietnam.
An LLC includes from 1 to 50 members known as owners or founders but no shareholders.
The other type is JSC which also known as a shareholding company or an incorporation. However, there are at least 3 limited shareholders to share the main revenue and responsibility in this company, which is the best suited for a medium to large size venture. Because the corporate structure is more complex compared to LLC’s one.
There are some other types of entities you can refer at Legal Entities in Vietnam.

Company set-up process

A basic process for all kinds of business to establish in Vietnam:

Step 1: Difficult choices require help to establish a business

Before setting up a business in Vietnam, you need to consider and prepare several information which can be mentioned below:

• Type of your entity (above-mentioned)
• Choose your company name which should be short, straightforward to remember and pronounce, and must not be resembled other enterprises’ names.
• Decide your headquarter place, choose a legal industry to register, determine authorized capital for your business, and select a title for company’s representative in law.

Of course, there are scores of different options you can choose depending on your company’ capacity. Meanwhile, a professional consulting firm will give you practical advices, with clear processes from start to finish, and guide you through the regulations must follow. Taking consulting service saves both time and money to establish a business in Vietnam.

Step 2: Business registration

Your company needs to prepare a dossier to submit to the Department of Planning and Investment and Business Registration Office then waits for getting the result.
A project dossier for establishing a company in Vietnam shall comprise:
For Investment procedures:

• Registration/Request for issuance of Investment Certificate
• A report on financial capability of the investor
• The joint-venture contract or Business Cooperation Contract (BCC) (if anny)
• Other documents required by Vietnam laws.
• Copy of the people’s identity card, passport or other lawful personal certification, for individual members
• Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations
• Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.

For forming a Company:

• Request for setting up a Company
• Draft of the company’s charter
• List of members of company
• Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered
• Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized
• The joint-venture contract or Business Cooperation Contract (BCC) (if any)
• Other documents required by Vietnam laws.

There are the two most important certificates that international investors are obliged to obtain named Investment Registration Certificate (IRC) and Enterprise Registration Certificate (ERC). The former is from the Department of Planning and Investment, the latter is from local Business Registration Office.
The timeline to register includes 3 basic periods:

Step 3: Register the sample of seal

After notifying the licensing authority, your company may have one or several corporate seals that sample are published on the national business registration website as your work requirements.

Step 4: Tax registration

The last important step is register your tax declaration. The good news is your company can register the tax declaration, filling, payment or refunds through the Internet thank to the Circular No. 110/2015/TT-BTC on electronic transaction in Tax Administration.

Especially for foreign-invested business

• Foreign investors must follow the procedures for issuing an Investment Certificate when establishing a foreign-invested company when the company has between 1% and 100% of the capital contributed by the foreign investor from the beginning
• Foreign-invested companies (companies that have been granted investment registration certificates in Vietnam) continue to set up more economic organizations:
  • If the Foreign-invested companies owned from 51% to 100% of the target company’s charter capital: The investor must carry out the procedures for the grant of an investment certificate when set up new economic organizations and carry out the procedures of getting the approval from investment authority (approval notification) when purchasing shares or capital contributions;
  • investment in a BCC contract must carry out the procedures applied for foreign investors in case of the Foreign-invested companies owned from 51% to 100% of the company’s charter capital;
• Cases in which foreign investors contribute capital or purchase shares in Vietnamese companies that already have business registration certificates (including cases where up to 100% of the companies’ contributed capital) are not required to be implemented procedures for issuance of Investment Registration Certificates, except for companies doing business in the field of education and training, if foreign investors purchase beyond 1% of the contributed capital, they also need to carry out procedures for granting Registration Certificates. invest.
• For companies doing business in the field of retailing goods to consumers or retail establishments, they need to apply for more business licenses base on the specific cases;

Note: Currently, in terms of foreign investors who contribute capital with Vietnamese people to set up companies, for example: joint ventures between Vietnam and foreign investors, the optimal and reduced plan Minimum procedures should follow the step-by-step as follows:

• Step 1: Establishing Vietnamese companies;
• Step 2: Apply for a qualified license for conditional professions;
• Step 3: Transfer of capital contribution to foreign investors;
• Step 4: Applying for a business license (Business license issuance procedure only applies to companies doing business in the field of retailing goods to consumers or setting up retail establishments) and others sub-licenses according to the local regulations.

Viettonkin Consulting stands by your side with international know-how and local knowledge for the fast-growing companies throughout the region. If you have any questions, please feel free to contact us via email: info@viettonkin.com.vn or hotline: +84 918 866 858.