Steady economic growth, ample natural resources, dynamic consumer market and strong exports makes Vietnam the perfect place for foreigners to conduct business. Nowadays, Vietnam offers great business potential for foreigners willing to start a business by setting up a company and for foreign investors to invest due to its strategic location. Foreigners are encouraged by vietnamese government to make investment in Vietnam. However there are restrictions in some cases concerning investment capital, investment area, special business licenses required. The investor is suggested to market research and get advices from consulting company in Vietnam.
It’s crucial to understand the requirements and process of foreign-owned company formation in Vietnam. If you are a Vietnam resident and thinking about setting up a company in Vietnam, the explanation below we will take you through the process of incorporation, explain the steps that you will need to complete.
WHY SET UP A COMPANY IN VIETNAM?
Reliability: When registering a Company in Vietnam its investors (or company owners) and third parties have to present a clear picture and understanding of the business to the government. Registering a company in Vietnam allows third parties to examine the company’s status regarding various matter for example, its corporate profile, financial state, shareholders list, directors and more. As a result, parties such as partners of a company, its investors, banks or private money lenders find the company reliable.
Security: A company is a legal entity which is established for a lengthy period. Normally, the company operates until the owners are unable to operate it and dissolve it. All the company’s day to day management is normally performed by its Directors, which are assigned by the shareholders. Some advantages of forming a company are protect your brand/company name, your personal liability for financial losses and allow you to get a proper visa for live in Vietnam.
WHICH LEGAL STRUCTURE IS THE MOST CONVENIENT?
Setting up a company means creating a separate legal entity from yourself, even if you’re the founder. Any profits will belong to the company (not you) and in order to receive income you will need to withdraw money as salary payments, dividends or a loan.
Choosing how to structure a new business is a big decision and forming a Limited liability company (LLC) or Joint-stock company (JSC) are two of the options available, they are the most common types of legal entities in Vietnam.
A Limited liability company can have 1 to 50 members, also known as founders or owners. Besides that a Joint-stock company must have a minimum of 3 shareholders (there is no limit to the number).
WHAT IS THE MINIMUM CAPITAL REQUIREMENT IN VIETNAM FOR A SMALL BUSINESS?
The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment. Most business lines do not require a minimum capital requirement, however we recommend you to choose a reasonable and realistic capital.
In some business areas like real estate, banking and finance, a minimum capital is required. In general for non-conditional investment area, the provincial Department of Planning and Investment which in charge to evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.
There is no legal requirement to set up a business bank account for your limited company, however, it’s much easier to trade and manage your business if you have one. A director can, for example, withdraw salary, expenses or dividends from the company.
WHAT ARE MANDATORY REPORTS SUBMISSIONS REQUIREMENT IN VIETNAM?
There are a number of legally-mandated requirements with which Foreign Owned Company in Vietnam must comply, failure of which will impact the ability of the company to continue operating in Vietnam. These procedures and requirements may be different from what you are accustomed to in your home countries. Investors should therefore be sure to familiarize themselves with these requirements as well as to seek professional advice.
Most of requirements are:
- Accounting and tax reporting (monthly, quarterly and annually), including accounting books,corporate income tax (CIT), value-added tax (VAT), and personal income tax (PIT).
- Payment of the annual business license tax
- Audited annual report made through an independent Vietnamese auditing company at the end of each fiscal year (your company financial statements will be reviewed). The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year
- Compliance with immigration and labour laws including registering local employees with social insurance, work permit application, temporary residence card to make sure that all foreign employees are legally to work in Vietnam.
For additional information on our company formation and corporate service, feel free to visit the official Department of Planning and Investment government website http://www.dpi.hochiminhcity.gov.vn/ or to contact our corporate services advisor.
IzyViet is able to provide proficient services to our corporate clients, from the management of your business setup through its early stages until your business grown stage.