The Complete Guide to Setting up a Business in Vietnam for Foreigners

Thinking of setting up a business in Vietnam as a foreigner? Wondering about the requirements and procedures? In this guide, Thao & Co. breaks down everything you need to know to get your business up and running, with easy-to-follow information on the whole process.

Key points:

1. ▫ The advantages and disadvantages of the Vietnam market
2. ▫ Requirements for setting up a business in Vietnam for foreigners
3. ▫ Step-by-step guide to establishing your business in Vietnam

Setting up a business in Vietnam as a foreigner: Is it possible?

As one of the fastest-growing economies in the world, Vietnam has become a prime spot for foreign investors. The Vietnamese government has seized this opportunity by rolling out regulations and policies that make it easier for foreigners to invest and contribute to the country’s economic growth.

So, if you’re wondering whether foreigners can set up a business in Vietnam, the answer is a resounding yes – provided you meet the requirements and comply with local laws.

However, the success of your venture in Vietnam will depend on several factors. Two key elements that play a significant role are your chosen business model and industry, which will greatly influence how you bring your business ideas to life.

Is Vietnam a good place to set up a business?

To determine whether Vietnam is the right destination for your business, it’s important to weigh the key advantages and disadvantages of this dynamic economy.

Advantages

▫ Political stability: Vietnam is a single-party state known for its political stability, with low risks of rebellion or terrorism. The government also enforces comprehensive laws to combat cybersecurity threats.

▫ Economic policies: The Vietnamese government actively promotes economic integration and has implemented policies to attract foreign investment. Coupled with a rapidly growing economy, this offers a wealth of opportunities for new businesses.

▫ Human resources: Vietnam possesses a young and talented workforce that’s adaptable to new technologies and equipped with notable skills. Moreover, labor costs in Vietnam are significantly more competitive compared to other countries in the region.

▫ Tax policies: While not everyone may view this as a strong advantage, Vietnam’s tax policies are generally more favorable to foreign investors than those in many neighboring countries.

Disadvantages

▫ Legal procedures: Complex legal and administrative procedures have long been an obstacle for foreigners who want to set up a business in Vietnam. Although the government is making consistent efforts to simplify these procedures, in general, the legal procedures for setting up a business are quite complicated and time-consuming.

▫ Language barrier: Vietnamese is the official and dominant language in Vietnam. Although English is already integrated into the national education curriculum, not all Vietnamese are fluent English speakers. This can pose communication challenges for foreign investors.

▫ Cultural differences: Understanding Vietnamese business etiquette and cultural nuances can be tricky for foreign investors unfamiliar with the local culture. Partnering with a local agency can be beneficial in helping you communicate effectively with Vietnamese people and navigate your journey of setting up a business in Vietnam.

Requirements for setting up a business in Vietnam for foreigners

Investor:

1. ● Individuals who are at least 18 years of age with full civil capacity; or
2. ● Organizations that have legal entity status in Vietnam.

Business line:

1. ● The business must not operate in sectors and trades that are prohibited; or
2. ● The business meets the requirements of the sectors or trades subject to conditional investment.

Charter capital:

1. ● Capital contributions must be completed within the regulated timeframe (typically 90 days of receiving the enterprise registration certificate).
2. ● The charter capital must meet the minimum amount required for specific business lines (finance, insurance, real estate, etc.).

Investment registration:

1. ● Investors must obtain the investment registration certificate for new investment projects.

Name and headquarters of the enterprise:

1. ● The enterprise must have a legally valid address for its headquarters in Vietnam.
2. ● The business name must comply with Vietnam’s naming regulations.

Human resources:

1. ● The enterprise must comply with Vietnam labor laws in recruitment and human resources management.
2. ● Foreign workers (if any) must obtain the Vietnam work visa and work permit.

Legal compliance:

1. ● The entire process of establishing and operating a business must adhere to Vietnamese laws in all respects, including taxation, insurance, financial reporting, and more.

How to set up a foreign-invested business in Vietnam?

The process of setting up a business in Vietnam can vary based on your chosen business model. However, there are 4 main steps that most prospective enterprises must follow to be recognized as legal business entities in Vietnam:

1. Identify your type of enterprise

The first step is to decide on the type of enterprise you want to establish. Vietnam recognizes 5 main types of enterprise. Choosing the right one involves considering factors such as:

1. ● Number of members
2. ● Organizational structure
3. ● Capital sources

Here are the recognized types of enterprise in Vietnam:

No.	Type	What is it?
1.	Sole proprietorship	Owned and invested in by a single individual
2.	Partnership	Founded and co-invested by 2 individuals
3.	Single-member limited liability company	Funded by a single individual or organization
4.	Two-member limited liability company	Funded by 2 individuals or organizations.
5.	Joint-stock company	Requires at least three individuals or organizations as capital contributors.

For a detailed comparison, download
🔽Thao & Co.’s PDF guide on Vietnamese types of enterprise

2. Obtain the Investment Registration Certificate

Foreign investors may not always need to obtain an investment registration certificate if certain conditions are met, such as:

1. ● They have signed a Business Cooperation Contract (BCC) with a domestic investor.
2. ● The investment project is small to medium in scale and qualifies as an innovative startup investment project.
3. ● Or specific circumstances as regulated by local authorities.

However, in most other cases, an investment registration certificate is mandatory for setting up a business in Vietnam. Here’s how to obtain it:

1. A dossier of request for approval of investment policy for an investment project:

1. ● A written request for implementation of the investment project
2. ● A document on the legal status of the investor (individual or organization)
3. ● Documents explaining the investor’s financial capacity
4. ● The investment project proposal
5. ● A copy of the paper on land use rights

2. Submit your prepared documents to the Investment Registration Agency, which could be:

1. ● The Department of Planning and Investment; or
2. ● The management boards of industrial parks, export processing zones, hi-tech parks or economic zones.

Your application will then be forwarded to the appropriate authority for review.

3. Receive the approval of investment policy for your investment project.

4. Receive your Investment Registration Certificate.

3. Register your enterprise

Here’s a step-by-step guide:

1. The required documents will vary depending on your type of enterprise. A standard enterprise registration dossier typically includes:

1. ● Enterprise registration application
2. ● Copies of legal documents for each member or organization involved
3. ● Company charter (not applied for sole proprietorship)
4. ● List of members (if there are more than one member)
5. ● A copy of your Investment Registration Certificate
6. ● Power of attorney (if someone else is registering the enterprise on your behalf)
7. ● Any other documents as specified by the local authorities

2. Submit the complete dossier and pay the enterprise registration fee through one of the following 3 methods:

1. ● In person: Visit the Business Registration Office at the Department of Planning and Investment or a district-level business registration agency.
2. ● By postal order: Send your payment to the authorized agency.
3. ● Online: Use the National Business Registration Portal for electronic payment.

After submission, you’ll need to wait for approval and then receive your Enterprise Registration Certificate.

3. Within 30 days of receiving your Enterprise Registration Certificate, you must complete the procedure by making a public announcement of its content. This can be done in person, via postal order, or online using the same methods mentioned above.

4. Obtain a business license

In certain industries, obtaining a business license is mandatory for enterprises to operate legally in Vietnam. It’s important to note that a business license is different from an enterprise registration certificate.

Some of the industries requiring a business license include:

1. ● Production and distribution of cultural products such as live recordings and sound recordings

1. ● Insurance, banking, stock trading, and other related services

1. ● Advertising services

1. ● Education services

1. ● Logistics services

1. ● Real estate services

1. ● Health and social services

1. ● Legal consultation services

1. ● Tourism services

1. ● E-commerce

1. ● See the full list of industries that require a business license here

If your business falls into one of these categories, you must obtain the appropriate business license. The procedure and required documents may vary depending on the specific industry.

5. Actions to take after completing enterprise registration

Once you have obtained all the necessary documents to legally operate your business in Vietnam, here are the key steps to complete:

1. ● Make your company seal and submit a seal sample on the National Business Registration Portal.

1. ● Open a corporate bank account and declare it on the portal.

1. ● Register your digital signature (token) for tax declaration and online transactions.

1. ● Register your corporate tax code and declare your taxes for the first time at your local tax department.

1. ● Ensure the license tax is paid by the last day of the first month of business operation.

1. ● Register social insurance for all employees within the first 30 days of business operation.

The cost of setting up a company in Vietnam

When setting up a company in Vietnam, there are several mandatory fees that you’ll need to pay to the authorities:

1. ● Investment registration fee (if applicable): 1.5 million VND to 3 million VND per submission
2. ● Enterprise registration fee: 50,000 VND per submission (or free if done online)
3. ● Enterprise registration certificate announcement fee: 100,000 VND per dossier
4. ● Business licensing fee for specific industries: 1 million VND to 20 million VND per dossier depending on the industry and locality
5. ● License tax: 2 million VND to 3 million VND per year

Other mandatory fees:

1. ● Seal making costs: 200,000 VND to 500,000 VND per seal
2. ● Digital signature registration fee: 1,5 million to 2,5 million per year, depending on the plan
3. ● Bank account registration fee: free of charge to 500,000 VND per account
4. ● Document notarization and certification costs: 50,000 VND to 200,000 VND per document

Additional expenses depending on your needs:

1. ● Legal consultation services
2. ● Accountant and tax services
3. ● Legalization and notarized translation services

To sum up, the cost of setting up a company in Vietnam for foreigners can range up to tens of millions of VND, depending on the business scale and industry. Therefore, it is best to conduct thorough research, create a detailed investment plan, and consider partnering with a professional service provider to navigate the process smoothly.

FAQs about setting up a foreign capital business in Vietnam

Here are answers to some of the most frequently asked questions about starting a business in Vietnam as a foreigner:

Can I set up a business with 100% foreign capital in Vietnam?

Yes. Foreigners can establish a 100% foreign-owned business in Vietnam, provided that the business operates in non-conditional industries. However, some industries require joint ventures with local partners or have restrictions on the foreign capital contribution ratio.

Can a foreigner be the representative of a company in Vietnam?

Yes, foreign investors can serve as the legal representative, founding shareholder, or capital contributor of a company in Vietnam. If you are the legal representative of your business, make sure you comply with the local regulations and have a valid address in Vietnam.

What are the naming rules for companies in Vietnam?

When naming a company in Vietnam, the following rules apply:

1. ● The company name must consist of two parts in this order:
   • [Type of business] [Business name]
   • For example: Công ty TNHH Công nghệ & Truyền thông F7 (English: F7 Technology & Communication Liability Limited Company)

1. ● The company’s initials can be based on either the Vietnamese or foreign language name.
   • For example: An Nhien Trading Joint Stock Company can have initials ANT JSC.

1. ● Names of government agencies or sociopolitical organizations are not allowed.

1. ● Words, phrases, or symbols that conflict with Vietnamese cultural values are prohibited.

1. ● Protected commercial names, brand names, or geographical indications are not allowed.

1. ● Names that are identical to, or easily confused with, existing registered enterprises are not allowed, except in cases involving dissolved or bankrupt enterprises.

What to keep in mind when registering my business address?

When registering your business address in Vietnam, ensure that it meets the following criteria:

1. ● Location: The address must be within Vietnam’s territory.
2. ● Details: The address should include the house number, street name or village name, ward/commune, district name, and city/province.
3. ● It cannot be a residential address with no business functions.
4. ● You must provide supporting documents such as office lease contracts or land ownership papers.
5. ● The address must be real; virtual or non-existent addresses are not allowed.

Should I partner with business setup service providers?

Partnering with business setup service providers can offer several benefits, but it’s important to weigh the pros and cons:

Advantages:

1. ● Saves time and minimize complications throughout the setup process
2. ● Ensures that all documents are prepared and submitted correctly.
3. ● Provides detailed consultation for a deeper understanding of local culture and regulations.

Disadvantages:

1. ● Involves extra service expenses.
2. ● Poses potential risks if you partner with unreliable service providers.

Setting Up Your Business in Vietnam: Open Doors to New Opportunities with Thao & Co.

Vietnam, with its welcoming market and abundant potential, is the perfect destination for foreign investors to bring their business ideas to life.

Every journey comes with its own set of challenges. In this case, the language barrier and navigating a foreign legal system are among the first hurdles you’ll face.

> Need help with the administrative process so that you can focus on your business strategy?

> Want to understand the complex legal regulations?

Let Thao & Co. assist you in the most professional and efficient way! With extensive knowledge and experience, our legal experts will help you navigate through every procedure.

Our services include:

✅ Legal consultation and enterprise type selection: Get expert advice to choose the right business structure that aligns with your goals.

✅ Document preparation and submission: We handle your enterprise registration paperwork from start to finish.

✅ Legalization and notarized translation services: Ensure your documents meet all legal requirements with our translation services.

✅ Investment registration and other legal documentation support: We assist with all necessary legal documents, including investment registration.

✅ Comprehensive support throughout the entire process: From the initial consultation to the final steps, we’re with you every step of the way.

As a native agency fluent in English, we serve as your personal guide, helping you communicate effectively with local authorities and understand Vietnam’s culture and legal procedures.

By choosing Thao & Co., you will experience dedicated support and transparency at every stage of your project.

This is exactly what every entrepreneur seeks when venturing into new markets!

Thao & Co. – Your trusted partner in conquering the Vietnam market. Contact us now for a detailed consultation and take the first step toward your success!