Company Registration in Vietnam- An Overview
Vietnam is located in South Eastern Asia. It shares borders with China, Laos and Myanmar. There are 63 provinces located in Vietnam. Vietnam carries out large economic activities related to agriculture. Cultivation of rice is one of the primary sources of income in Vietnam.
The country is quite cheap in terms of labour when compared to other parts in Asia. It location makes it a hub for carrying out business with China. The manufacturing capital of the world is China, however, local manufacturers in Vietnam can choose to access supply chains through Vietnam. Through this economic activities would increase.
Vietnam offers technology incentives for different companies to establish; hence many investors would consider Vietnam for the process of company registration. An investor going for company registration in Vietnam would also benefit from the double taxation treaties which Vietnam has with other countries such as South Korea, Japan and India.
Benefits of Company Registration in Vietnam
The following benefits are the benefits of company registration in Vietnam:
- Cheap Labour
The cost of employing local labour in Vietnam is cheap when compared to other countries such as China and Indonesia. When statistics are considered, the monthly minimum wage of labourers adds up to USD 70 in Vietnam. This is less when compared to China.
- Low Rent
The cost of living is Vietnam is low. Apart from this, if an investor has to take a warehouse in Vietnam, it is comparatively cheaper than China.
- Supply Chain
Vietnam shares borders with China. Hence Vietnam can gain advantage through supply chains established with China. Due to this, there is easy access to raw materials and capital goods in Vietnam.
- Double Taxation Agreements
An investor going for company registration in Vietnam would also benefit from the double taxation treaties which Vietnam has with other countries such as South Korea, Japan and India. Due to this, investors would not be taxed twice for any income earned in Vietnam. Capital which is earned in Vietnam can be repatriated to domestic countries with ease.
- World Class Infrastructure Facilities
Vietnam offers world class infrastructural facilities. There are more than three economic zones present in the mainland of Vietnam. There are more than 300 industrial parks and three Hi-tech parks present in Vietnam. All these benefits would attract investors to go for the process of company registration in Vietnam.
- Trade Relations
Vietnam has developed trade relations with the USA and the European Union. There are no trade issues between the above countries. Vietnam is the largest exporter of goods to the USA. Locally manufactured goods are exported from Vietnam.
- Liberalised Investment
The government of Vietnam has constantly developed investment policies to liberalised foreign investment in the country. This makes it easy to carry out business in Vietnam. The main motto of the government of Vietnam is ease of conducting business. Apart from this, foreign investors can have ownership percentage in the entity.
Eligible Business Structures for Company Registration in Vietnam
The following are eligible business structures for company registration in Vietnam:
- Vietnamese Limited Liability Company
This is also known as an LLC. An LLC is the most commonly preferred form of business structure used for conducting business in Vietnam. This form of entity would require one shareholder and one director. The shareholder does not have to be a resident of Vietnam. Even the director does not have to be a resident. However the director would have to obtain a work permit, travel and stay in Vietnam for a particular period of time. One year managerial experience is also required for the director. Usually foreigners would utilise this type of business structure to carry out any form of investment in Vietnam. A FIC (Foreign Investment Certificate) would be required to start this type of entity. Minimum capital for the FIC would be required.
- Vietnamese Free Zone Company
This type of entity is established in one of the free zones of Vietnam. An entity established in one of the free zones would usually have some form of tax benefits and incentives. Foreigners wanting to go for company registration in Vietnam would have some project related to manufacturing and export. However, the foreign investor would require to have minimum capital of USD 200000 for establishing this type of entity.
- Vietnamese Joint Venture Company
A foreigner can utilise this structure for company registration in Vietnam. One foreign shareholder is required for forming this type of entity. Along with this a local Vietnamese national would also contribute to the development of the company. Usually prominence of government is present in forming this type of organisation. A representative would be usually appointed for foreign LLC when considering this type of entity.
- Local Limited Liability Company
A local limited liability company is also known as a resident limited liability company. Here a local resident or nominee would be appointed as a shareholder of the company. This type of entity is not suitable for foreign ownership.
- Vietnamese Public Limited Company (JSC)
For forming this type of entity at least three shareholders are required. There is no limit on the number of shareholders for this type of organisation. This company is allowed to list shares in a publicly traded stock exchange. JSC have to conduct meetings in accordance with the requirements of the company. The meetings held would be the General Shareholders Meeting and the Board of Directors Meeting.
- Branch Office
A branch office in Vietnam is an extension of the foreign parent company. A branch office is only allowed to carry out operations under the supervision of the foreign parent company. The law which regulates the formation of branch offices in Vietnam is the Vietnam Law on Commerce. An entity going for the process of company registration in Vietnam can utilise this type of structure, only if there is five years of business carried out in Vietnam. Branch offices have to appoint a local resident representative for filing the requirements.
- Representative Office
Like a branch office, the representative office is an extension of the foreign parent company. The representative office is only allowed to carry out promotional activities and not allowed to carry out any other operations for profit in the country. This business must carry out activities for a period of one year in Vietnam.
- Multi Members LLC (2M-LLC)
This multimember LLC is an entity that has more than two members. The liability of the members is limited to a particular extent.
Eligibility Criteria for Company Registration in Vietnam
The following criterion has to be sufficed for doing business in Vietnam:
- Minimum Capital Requirements
There is no minimum capital requirements for company registration in Vietnam. However, there are different business structures which are established in Vietnam. These businesses would require different amount of capital as per the requirements. For example, for starting a company in a free trade zone in Vietnam, the minimum capital which has to be invested is USD 200000. Apart from this, some business such as banks and finance would require regulatory permission for carrying out a business in Vietnam.
- Foreign Investment Certificate
A foreign investor for company registration in Vietnam would require to have a foreign investment certificate. This foreign investment certificate would be a permission that the government has provided approval for investing in Vietnam.
- Regulatory Permission
Permission from the requisite authority would also be required for forming a company in Vietnam.
- Residency Requirements
There is no need to appoint a Vietnamese resident as a shareholder and director. However, a branch office, representative office and a foreign LLC would have to appoint a local representative for carrying out the requirements in Vietnam.
Procedure for Company Registration in Vietnam
The following steps have to be considered for company registration in Vietnam:
- Application for Investment Registration Certificate
First and foremost, the applicant (foreign company) would have to make an application to Department of Planning and Investment. This is the main authority in Vietnam that provides the certificate. Every applicant investing in Vietnam would have to make this application for registering the investment. Regulatory compliance with the relevant ministry may also be required.
- Application for the Business Registration Certificate (Enterprise Registration Certificate)
In the next step, the applicant would have to make an application to the department of planning and investment for the Enterprise Registration Certificate.
Once the above steps are carried out, the applicant would have to make a public announcement that the entity has been established. The corporate seal would be made and the sample must be published in the national enterprise registration portal.
- Trade License
Once this has been secured, the applicant has to consider making an application for the trade license. There are two types of trade licenses which would include general trade license and multi level marketing trade license.
Compliances for Companies in Vietnam
- Annual Shareholder Meetings- Have to be carried out by Public Limited Companies or JSC.
- Board Meetings- Board meetings have to be carried out quarterly for public limited companies.
- Tax Returns- Corporate Tax Levied in Vietnam is 20% and Personal Tax- 35%.
- Initial Investment, Foreign Investment and Business Registration has to be notified with the relevant authority. If there is a change in the foreign investment, then such change must be notified to the department of planning and investment.
- Minutes of the board meeting and the annual shareholders meeting have to be kept at the registered office of the company. All other records have to be present with the company.
- At least one resident legal representative must be residing in Vietnam.
The following documents are required for company registration in Vietnam:
- Investment Certificate
- Enterprises Certificate
- Memorandum of Association
- Articles of Association
- Business Licenses
- Passport and Visas
- Residency Information