What is Company Registration in Vietnam?
The economy of country is the 47th largest economy in World. Country after reform gradually integrated into global trade and investment result in its market as the market-oriented economy. Despite progress, investment remains low at the time due to opaque bureaucracy and a weak judicial system of the country. The maximum cap for personal income tax rate is 35 percent, and the maximum corporate tax rate is 22 percent. Other taxes include a value-added tax (VAT) and a property tax charged on property value. Administrative function and its procedures have been streamlined, and the regulatory framework for smaller businesses has been improved and will result well enough for economic prosperity. Most of basic infrastructure and service/facilities like for air travel, water, electricity, telecommunications, postal service, and gasoline for public etc. which price are set by the state, ultimately regulates prices for some natural resources, pharmaceuticals, and products produced by government-run enterprises such as health care, education, and some housing. Barriers to foreign investment remain significant, but they have been liberalized subject to some sort of terms and condition. The government and concerned agency are regularly working for easier access to Vietnam market for international business/trade in order to explore the unused resources and other key aspects of the economy.
Why Investment in Vietnam?
The investment in Vietnam is increasing and global agency is looking after it's fascinating growth despite obstacles due to following reasons:-
- Security & Political Environment
- Strategic Geographical Location
- High Economic Growth
- Young & Energetic Population
- Abundant Resources
- Significant improved legal environment
- Active global integration
Business Form & Structure
As like another country, it has also offered basic business form like a sole proprietorship, partnership, and company. Further foreign company can incorporate their subsidiary, branch and representative office as per the applicable law to be set up with some terms and condition.
- Limited Liability Company
- Joint Stock Company (JSC)/Shareholding Company
It is further extended to one member or more than one member limited liability company (LLC). It is a legal entity established by its members by way of capital contribution to company. The members of an LLC are liable for the financial obligations of LLC to the extent their capital contributed.
It is a legal entity established by its founding shareholders on the basis of their subscription of shares of the JSC. It requires at least 3 shareholders (with no maximum number of shareholders)
Forms of Direct investments
Government of Vietnam provides three means for foreign investment.
- Joint Venture
- 100% Foreign Owned Enterprise (FOE)/Wholly foreign-owned
- Business Cooperation Contract (BCC)
- Representative office
Fundamentally it is a scenario where foreign investors and local partners come together for particular business agreement and register the same as per the applicable law and carries business activities in country. It can be formed on above two form of business structure explained above with required documents and arrangements.
It is a legal entity set up by one or more foreign investors under a form of enterprise set out above. Foreign investments are not subject to minimum investment capital restrictions.
It is agreement incur in between local Vietnam people and foreigner to mutually assist the operation of business/trade in both country. This form of investment does not form new legal entity and investors have unlimited liability for the debts of the BCC.
It is dependent unit of a foreign entity and may conduct commercial activities for direct profit-making purposes in line with international treaties to which Vietnam is a signatory. Foreign companies can also establish branches to conduct trading activities and activities directly related to trading of goods.
Foreign company having any sort of relation with Vietnam or people of Vietnam also can open a representative office in country. This kind of office can’t do or conduct direct commercial activities however the marketing and research work can be done by Representative office.
After all this discussion it’s better to have step by step incorporation procedure of most popular format company in Vietnam i.e. Limited Liability Company (LLC)
First: Check the proposed company name, obtain business registration certificate as well as tax registration certificate from the local business registration office under the Department of Planning and Investment. It takes around 5-6 days to complete and cost around VND 2, 00,000 /- official fees for registration.
Second: Make a company seal. It has cost around VND 1, 65,000 to 3, 70,000 for bronze seal which takes around 2-4 takes to complete this task.
Third: Registration of seal-sample with the business registration office. It takes around 5 days and seal must specify enterprise name and enterprise ID number.
Fourth: open a bank account
Fifth: Buy preprinted VAT invoice from the Municipal Taxation Department or obtain and print self-printed VAT invoices. It takes around 10 days along with previous process and cost around VND 2, 00,000 per books.
Sixth: Publish the registration contents on the National Business Registration Portal (NBRP) which cost around VND 3, 00,000.
Seventh: Pay Business License Tax. Applicant is required to pay license tax which cost around 10, 00,000 /- and take 1 day to complete the process.
Eight: Register with the local labor office to declare use of labor (Municipal Department for labor, invalids and social affairs). Applicant is required to take registration within 30 days of starting operations stating details of employee on specified format given by department.
Ninth: Register employees with Social Insurance Fund for the payment of health insurance and social insurance. On application duly complied and signed by applicant within 30 days of application department will issue registration certificate.
On a review of Vietnam commercial law, other applicable rules and regulation, resources and governance it would not be wrong to state that the foreigner can do have investment there for their higher return on money/time investment. Moving ahead as the country is exploring new avenues of economy; it's a good time to have investment on stated economic and most popular business in country. Moreover it is good to note that the country is improving its governance and efficiency day by day moving for open market economy with a great interaction for global trade/business.