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Setting up a company in Vietnam

When setting up a company you may want to consider these factors:

  1. Business Factors

    Vietnam has stringent bureaucratic requirements with regards to foreign investments, although investors are generally permitted to invest in Vietnamese entities. However, there are various licensing and approval processes required for investments in certain sectors. Once an investment in Vietnam is deemed to be  “foreign”, the (intended) investment projects in Vietnam must obtain an Investment Registration Certificate (IRC).

    Vietnam also reserves the right to restrict investment in certain “sensitive” sectors. The list and conditions for investing in those conditional business lines are all posted on the National Portal for Business Registration. Furthermore, investment in industries that may be harmful to national security and defense,  social safety and order, community health, jeopardise Vietnamese historical traditions, culture and customs and/or damage or destroy natural resources and the environment are prohibited.

    You may also want to consider the following when making your decision :-

    • The industry and type of business that will be conducted
    • Nationality of the headquarters / individuals (s)
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

Your Options

There are three types of business forms available to foreign companies in Vietnam. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Vietnam and the planned business activity.

When setting up a company in Vietnam, you have the following options:-

  • Corporation
  • Branch Office
  • Representative Office

This article provides a general guideline for foreign businesses on entering Vietnam for business purposes. In particular, it looks at common pathways to establishing a business presence in Vietnam, generally through a corporation, branch office or liaison office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Vietnam economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Data is based on the time of writing, September 2015 or closest available dates.


Incorporation of a company in Vietnam is often a lengthy, difficult and costly process due to the numerous bureaucratic requirements companies are required to comply with.

There are two types of corporations that can be set up:

  • Limited liability corporation
  • Joint-stock company 

The most commonly selected option is the limited liability corporation, however the choice largely depends on the expected activity level in Vietnam.

1.Limited liability corporation (LLC) [cong ty trach nhiem huu han]

A limited-liability company is a legal entity established by its members through capital contributions to the company.  Liability of members is restricted to the extent of their capital contributions.

Investment Capital Requirements

There is no minimum capital requirements for foreign investors intending to establish a LLC in Vietnam. Investors can be corporations or individuals. LLCs may be established by a single investor (single-member LLCs) or multiple investors (multiple member LLCs). Multiple member LLCs consist of at least two (2) stockholders, up to a maximum of 50 members. The regulations for single-member and multiple-member LLCs are mostly similar.

Depending on the ownership structure, LLCs established by foreign investors may take the form of either:

  • A 100% foreign-owned enterprise (where all members are foreign investors); or
  • A foreign-invested joint-venture enterprise between foreign investors and at least one domestic investor.

All charter capital has to be fully paid up within 90 days of establishing the LLC.


The management structure of a LLC comprises of the members’ council, the chairman of the members’ council, the director or general director and a controller. A board of supervisors is also required where the LLC has more than 11 members. The Members’ Council is the highest decision- making body of the LLC and comprises of all capital contributing members.

Accounting/ Auditing requirements

Preparation of financial statements is mandatory for each company, and the balance sheet and profit and loss account of the company have to be filed with the Ministry of Finance, the local tax authorities, Department of Statistics and other local authorities subject  to requirements by the law within ninety days from the end of the financial year.

All foreign-invested business entities must have their annual financial statements audited by an independent auditor operating in Vietnam. Banks, non-banking credit institutions and foreign banks’ branches are required to rotate audit firms after five consecutive years.

In addition, foreign invested enterprises and organisations incorporated and operating in Vietnam reporting in a foreign currency are also required to prepare an additional set of financial statements translated into VND to be submitted to the authorities. These translated financial statements must also be audited.

2. Joint- stock company (JSC)

A joint-stock company is established through a subscription for shares in the company. Under Vietnamese law, only JSCs are permitted to issue shares to the public and may be listed on stock exchanges.  The charter capital of a JSC is divided into shares, and each shareholder holds shares corresponding to the amount of capital contributed to the company. JSCs may either be 100% foreign-owned or may take the form of a joint venture between both foreign and domestic investors.

Investment Capital Requirements

A JSC must have a minimum of three shareholders, with no maximum. Shareholders are generally free to assign their shares to other persons, except in a few cases where restrictions exist.

A JSC’s charter capital equals the the aggregate value of the issued shares that the founding shareholders and the other shareholders have subscribed and recorded in the charter of the JSC.


A JSC’s governance structure comprises of a General Meeting of shareholders, the board of management, the chairman of the board of management and the general director. A Board of Supervisors is also required where the JSC has more than 11 individual shareholders, or if a corporate shareholder holds more than 50% of the shares of the joint-stock company.

The GSM is the highest decision-making body of a JSC, while the Board of Management manages the day to day operations of the JSC. The BOM is required to have at least 3 members, with a maximum of 11. The number of members of the BOM who must reside permanently in Vietnam is stipulated in the JSC’s charter.

Accounting /auditing requirements

Similar to the LLC, JSCs are also required to prepare and submit audited financial statements to the appropriate authorities within ninety days from the end of the financial year.

Steps for Incorporation

Incorporation in Vietnam is generally considered a lengthy and bureaucratic process.

Step 1: Check the proposed company name; obtain a business registration certificate as well as a tax registration certificate from the local business registration office under the Department of Planning and Investment

The first step in the incorporation of a Vietnamese entity is to submit the relevant documents in accordance with Government Decree 43/2010/ND-CP (15 April 2010) on enterprise registration, as amended by Government Decree 05/2013/ND-CP (9 January 2013) (“Decree 43”).  Provided the application file for enterprise registration fully satisfies the conditions for issuance of an enterprise registration certificate, information about that file shall be transferred to the database of the Department General of Taxation (Ministry of Finance). The Department General of Taxation will then create a unique enterprise code number and transfer it to the national database within two working days from the date of receipt of information from the national database of information. The provincial business registration office will then issue it to the enterprise. This code number is both the business registration code number and the tax code number of that enterprise (Article 8 of Decree 43).

Agency: Department of Planning & Investment

Time: 14 days

Cost: VND 200,000

2) Make a company seal

The company obtains a company seal from a seal maker.

Agency: Sealmaker

Time: 8 days

Cost: VND 165,000 – VND 370,000 for bronze seal

3) Registration of the seal-sample at the Police Department

In Vietnam, most business transaction documents must be signed and stamped in order to be considered valid and legal. When registering the seal at the police division, the company representative also has to lodge a copy of the enterprise’s Business and Tax Registration Certificate and also present his or her identity card.

Agency: Local Police Office

Time: 1 day

Cost: VND 50,000

4) Open a bank account

It is worth noting that the minimum deposit to open an account differs by bank. To open the account, applicant will require a bank- issued application form, the company seal, the company’s business registration certificate, and the resolution of the management board on the authorised signatures.

Agency: Bank

Time: 1 day

Cost: No charge

5) Publish the registration contents on the National Business Registration Portal (NBRP)

Under Decree No. 05/2013/NĐ-CP dated 09/01/2013, enterprises are required to post their registration contents on the National Business Registration Portal (NBRP)within 30 working days since the date of the establishment or the amendment registration.

They are also required to pay a publication fee of VND 300,000 as per Circular No. 106/2013/TT-BTC of the Ministry of Finance dated August 9, 2013.

Agency: National Business Registration Portal (NBRP)

Time: 5 days

Cost: VND 300,000

6) Pay business license tax

The business license tax is paid to the tax authority where the enterprise registers its tax reports or through designated commercial banks. This is an annual tax and is paid in the first month of the enterprise’s operating year and in the month it obtains its tax registration certificate and tax code. Companies established during the first 6 months of the year are required to pay the entire annual business license tax and 50% if established in the second half of the year.

Agency: Tax office or commercial bank

Time: 1 day

Cost: VND 1,000,000

7) Buy pre-printed VAT invoices from the Municipal Taxation Department or obtain and print self-printed VAT invoices

All companies are required to use self-printed VAT invoices from 1 January 2011. As such, a newly established enterprise is required to order its VAT Invoice Books from a publisher and register the circulation of its VAT Invoices with the Municipal Taxation Department.

To register for self-printing, the company founders must submit a standard-form along with (a) a sample of the company’s self-printed invoice, including all statutory details; (b) a map showing the location of the company’s office or copy of the lease contract if the premises are leased, certified by the ward commune people’s committee; (c) the general director’s identification card; (d) a copy of the business registration certificate; and (e) and the tax registration certificate as well as a copy.

Agency: Municipal Taxation Department

Time: 10 days

Cost: about VND 200,000 per book

8) Register with the local labour office to declare use of labour (Municipal Department for Labour, Invalids and Social Affairs).

Within 30 days of starting operations, the employer must register all employees and their qualifications with the Labour Office.

Agency: Municipal Department for Labour

Time: 1 day

Cost: no charge

9) Register employees with the Social Insurance Fund for the payment of health insurance and social insurance.

All employees who have contracts for 3 months or longer must be registered with the Social Insurance Fund. The employer must complete a form provided by the Hanoi Social Insurance along with the following information: the employee name and date of birth, salary (as stated in the labour contract), the social insurance book serial number (for employees already issued with those books), a certified copy of the company’s business registration certificate, and a copy of each labour contract.

The Social Insurance Office will issue an insurance registration book for each new employee that was not issued such book by the previous employer within 30 days of receipt of the application. Health insurance certificates are issued during the first month of the year.

Agency: Social Insurance Fund

Time: 1 day, simultaneous with previous procedure

Cost: no charge

10)  Registration for trade union with Vietnam General Confederation of Labour

The employer must register with the local trade union or industry trade union (as defined below) no later than 6 months from the date it starts operations.

The term “trade union” includes (a) provincial or municipal-level confederations of labour under the Vietnam General Confederation of Labour; (b) central-level industry trade unions; (c) trade unions of corporations under the Vietnam General Confederation of Labour; (d) confederations of labour of districts, towns, and provincial cities; (e) local-level industry trade unions, (f) trade unions of processing zones, industrial zones, and high-tech zones; (f) trade unions of corporations; and (g) superior trade unions of other establishments. These trade unions are responsible for establishing a trade union for the company, according to the provisions of the Labour Code, the Law on Trade Unions, and the Charter of the Trade Union of Vietnam, to represent and protect the lawful and legitimate rights and interests of the employees and the labor collective.

If a company trade union is not established within 6 months, the superior trade union shall appoint a provisional executive committee of the trade union.

Agency: Confederation of Labour

Time: 7 days

Cost: no charge

Branch office

Foreign corporations operating in Vietnam can operate as a branch office without the need to incorporate. However, it is generally advisable to incorporate rather than set up a branch office in Vietnam, given the numerous drawbacks associated with having a branch office. However, generally, branches are not a common form of foreign investment given they are only permitted in a few sectors.

As a matter of practice, apart from the culture, education and tourism, banking, tobacco, legal services and airline industry, there have been very few branches established in Vietnam.

A foreign company can establish a branch office in Vietnam provided it has obtained prior approval from the government. The Branch will have to apply and obtain the establishment license, and possess a seal bearing the name of the Branch. The conditions for obtaining a Branch license are quite simple. Normally, a Branch license shall be granted if the foreign entity satisfies the following conditions:

(i) It possesses a legal certificate of business registration, in accordance with the laws of applicant’s country;
(ii) Has been established for a period of not less than 5 years, from the business registration.

The application needs to be filed with the  MoIT ( Ministry of International Trade) Approval is location specific and subject to guidelines issued in this regard. There are eligibility criteria and procedural guidelines for establishment of a branch office by foreign entities in Vietnam.

The branch’s operating license expires five years from the licensing date and is renewable.

Representative Office

A representative office is not an independent legal entity and hence,  may not conduct direct commercial or revenue-generating activities with the execution of contracts, receipt of funds, sale or purchase of goods, or provision of services.

ROs are generally used as a first step for foreign enterprises looking to enter Vietnam. While not permitted to engage directly in revenue-generating activities, ROs are used to provide a wide range of ancillary support to their head offices overseas.

There are four steps that need to fulfilled to set up a representative office and operate legally:
1) Obtain the main license.
2) Submit the chief representative’s income tax and labour declaration.
3) Obtain the operation license.
4) Obtain the representative office stamp

Approval for the establishment of a Vietnamese RO is only granted if the parent company has a certified business registration certificate in its country of incorporation and has been in operation for a minimum of one year since the effective date of incorporation.

An application dossier for a Vietnam representative office license must be submitted to the Provincial Department of Industry and Trade. An RO license, valid for a maximum of five years with an option for renewal, shall be issued within 15 working days of receipt of valid application documents, excluding any time spent amending or supplementing the application.

In general, ROs are allowed to:

  • Act as a liaison office to oversee the business environment;
  • Search for trade and/or investment opportunities and partners;
  • Supervise and assist with the execution of contracts entered into between its head office and Vietnamese partners;
  • Act on behalf of its head office to supervise and direct the implementation of projects in Vietnam.


Besides the corporate forms mentioned above, there are two other ways of doing business in Vietnam available to foreign investors:

1. Business Cooperation Contract (BCC)

A BCC is a cooperation agreement between foreign investors and a minimum of one or more Vietnamese associate with the intention to carry out a specific business activity.

2. Public and Private Partnership Contracts (PPP)

A PPP contract is an investment form executed based on a contract between the government authorities and project companies for infrastructure projects and public services.

1.Business Cooperation Contract (BCC)

BCCs are usually used for short- to medium-term projects lasting five to fifteen years in sectors where participation is conditional or restricted. The use of a BCC does not involve the formation of a new legal entity. Instead, the investors in a BBC generally divide the revenues and/or products arising from a BBC and have unlimited liability for the debts of the BBC.

A coordination board may be set up, if necessary, to ease daily operations, made up of an equal number of representatives nominated by the parties. The foreign partner can also set up an executive office in Vietnam to act as its representative for the duration of its performance of the BCC.

2. Public and Private Partnership Contracts (PPP)

PPP Contracts includes Build-Operate-Transfer (‘BOT’), Build-Transfer (‘BT’), Build-Transfer-Operate (‘BTO’), Build- Own-Operate (‘BOO’), Build-Transfer- Lease (‘BTL’), Build -Lease-Transfer (‘BLT’) and Operate-Manage (O&M) Contracts.

Both public and private investors
are encouraged to engage in PPP Contracts. The rights and obligations of the foreign investor will be dictated by the terms of the PPP contracts and the applicable regulations governing such contracts. Investment sectors include:

  • Transportation infrastructures and relevant services;
  • Lighting systems, clean water supply systems, water drainage systems, water/waste collection and treatment systems, social/resettlement houses, cemeteries;
  • Power plants and power transmission lines;
  • Infrastructures for healthcare, educational and training, cultural,sport and relevant services, offices forgovernment authorities;
  • Infrastructure for commerce, science and technology, hydrometeorology, economic zone, industrial zone, high- tech zone, centralised information technology zone, information technology application;
  • Infrastructure for agriculture and rural development, services for enhancing the correlation of agricultural production with processing and consumption of agricultural products; and
  • Other sectors according to the Prime Minister’s decisions.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Vietnam, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Vietnam, they must also decide whether they will administer that employment internally or use a Global Employment Organisation to handle payroll and employment responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Vietnam
  • the company needs help with tax, employment, immigration and payroll compliance in Vietnam

The complexity of employment regulations in Vietnam makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Vietnam allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Vietnam.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Vietnam. Read more about outsourced employment through Shield GEO.



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