Setting up a business in Vietnam is the most effective way to begin to take advantage of this market. It might be easier than you think. So how to set up a business in Vietnam as a foreign investor? There are several rules to follow. Use this legal guideline to find out what the procedure is for starting a company in Vietnam. Depending on your particular business activities, besides these 8 general steps, you may need to take other steps as well.

Step 1. Decide on Business Activities

This is an important point to start because Vietnam is not a fully open market for foreign investors. Some restrictions to certain business sectors do apply. You definitely need to consult with local lawyers to understand the following:

• Are your business activities allowed or restricted to perform in Vietnam?
• What is the maximum foreign ownership ratio? Does this setup require a Vietnamese partnership?
• Is your business required to obtain additional licenses or permits? If yes, how long does the licensing work take and how much does it cost?
• Are your business activities eligible to enjoy investment incentives? If yes, what incentives you can benefit from?

We are sure that such information is important for you when you make a business plan. Because they will affect the feasibility, time, and cost of launching your business in Vietnam.

Step 2. Select a Company Type

In Vietnam, there are main 3 types of company structures that foreign investors can choose from:

• Single Member LLC: 01 investor
• Multiple Member LLC: 02-50 investors
• Joint Stock Company: minimum 03 investors

All companies in Vietnam are taxed in the same way, regardless of the company type. Choosing what type of company to establish is simple. It depends on the number of investors and the management structure you require. Establishing an LLC is the best fit for SMEs due to its simple management structure and low corporate compliance costs.

Learn more: Types of companies in Vietnam: LLC or JSC?

Step 3. Determine Investment Capital

This will depend on 3 factors:

Factor #1. What is your capital requirement to run your business?

Factor #2. Does the law have a requirement for minimum capital for your particular business activities? In general, there are no regulations on a minimum capital requirement, except in some specific industries. In practice, the local licensing authority will closely examine and assess your proposed registered capital, based on the nature of your business activities and project scale. It will be determined on a case-by-case basis.

Factor #3. By law, the more capital contribution, the longer visas term will be granted to foreign investors.

 Learn more: A Comprehensive Guide on Vietnam Investor Visa

Step 4. Rent a Business Address

According to Vietnamese regulations, before registering a company, foreign investors are required to have a physical business location. Hence, the investors need to sign a leasing contract, then obtaining supporting legal documents of the premise. They will be a compulsory part of business registration required documents.

The best place to register your company will be the one you will be conducting your business. In general, all provinces and cities in Vietnam are taxed in the same way. Except some priority locations are granted significant tax incentives, including:

• Economic and high-tech zones 
• Locations with especially difficult socio-economic conditions

Renting a premise is a long-term commitment and not a small deal, it is highly advisable that you come for an on-site visit to make sure a business location is the best fit for your business. It will also be much easier to negotiate a fair leasing contract.

Send us an email, we will support you in checking if a specific location is eligible to enjoy tax incentives.

Step 5. Apply for an Investment Registration Certificate 

Investment Registration Certificate (“IRC”) concept in Vietnam is similar to the Investment License in other countries. Applying for an IRC is only required for foreign-owned businesses. This is the most difficult and challenging licensing step in order to establish a foreign-owned business in Vietnam. In practice, due to the complexity of this procedure, you will need a local law firm, such as our firm, to assist you in preparing application documentation and work with the licensing authority on your behalf.

You will be requested to provide the below documents:

• A leasing contract and legal supporting documents of a business location as we mentioned in Step 2
• Passports and bank statements of individual foreign investors
• Certificate of formation and its financial statements of corporate investors
• Additional supporting documents may be requested

This licensing process will normally take 1 month or more to complete.

Learn more: An overview of the Investment Registration Certificate in Vietnam

Step 6. Apply for an Enterprise Registration Certificate

After successfully obtaining an IRC, you will go through a process of company formation, by applying for an Enterprise Registration Certificate, also known as an ERC. This is a simple licensing step and can be done within a week. A provincial Business Registration Office will grant an ERC to verify the establishment of your company.

Learn more: What is an Enterprise Registration Certificate?

Step 7. Open your Business Bank Accounts

Next, you will need to open at least 02 business bank accounts, these are:

• A Direct Investment Capital Account: is used for certain capital-related transactions, such as contribute/transfer/sale of capital, conduct revenue and expenditure transactions related to investment activities;
• A Current Account: This will be used for your company’s daily business activities such as paying employees, receiving payments, paying taxes.

Please note that the registered capital needs to be contributed to the DICA within 90 days of company establishment.

Step 8. Complete all Post-Incorporation Requirements

Once your company is established, you should consult with, then hire tax advisors and accountants to oversee your bookkeeping and taxes. You should also get lawyers to help you with all legal compliance tasks, labor issues, and apply for additional licenses or permits (if any).

Learn more: 11 Post-Incorporation Requirements

The most successful businesses build a strong team of local experts around them, which include:

• Lawyers
• Accountants and tax advisors
• Bi-lingual personal assistants
• Bankers
• HR consultants
• Digital marketers

After completing the 8 Steps outlined above – your business will be ready to launch and start making money in Vietnam!

Setting a Vietnam Business Services

The Nova Law team consists of Corporate Lawyers and Tax Advisors. We are always here to help you set up your Vietnamese business in the right way and get your visa. Nova Law provides the most COMPLETE and TRUSTED legal solution for foreign investors in Vietnam. Contact us for more information

Learn more: Vietnam Company Formation Service

Q&A on Setting Up a Business in Vietnam