Starting a Business in Vietnam: A Comprehensive
Legal Guide for Foreign Investors
Vietnam has emerged as a prime destination for
foreign investment, bolstered by its strong security, political stability, and
strategic geographical location. The Vietnamese government has also introduced
a series of preferential policies designed to facilitate and encourage foreign
investment, making the country an increasingly attractive place to start a business in Vietnam.
A
Step-by-Step Guide to Starting a Business in Vietnam as a Foreigner
1.
Determine Your Business Structure in Vietnam
The initial step for any investor seeking to
establish a business in Vietnam is selecting the appropriate business
structure. This decision should be based on the number of capital contributors,
the amount of capital contributed, and the overall financial strategy of the
business.
Under Vietnamese law, foreign individuals and
organizations may choose from several business structures, including:
Limited Liability Company (LLC)
Joint Stock Company (JSC)
Partnership
Private Enterprise
2.
Define Your Business Activity in Vietnam
The next critical consideration is the nature of the
business activities you intend to conduct.
Non-Conditional
Businesses:
If the chosen business activity is not subject to
specific legal conditions, the company may commence operations immediately
following its establishment. These business activities are categorized as
non-conditional and are common among many enterprises.
Conditional
Businesses:
However, if the business activity falls under a
conditional category, the enterprise must fulfill specific legal requirements,
such as obtaining the necessary business licenses, meeting minimum charter
capital requirements, and adhering to foreign ownership ratios. Only after
satisfying these conditions can the business legally operate.
3.
Choose a Business Location in Vietnam
Investors must select a legally compliant location
for their business operations within Vietnam. The business address must be
situated within the country and meet specific legal requirements relevant to
the type of business. For example, company offices cannot be located in
residential apartment buildings or dormitories, and factories must be situated
in zones designated for industrial purposes.
4.
Name Your Business
A unique and legally compliant business name is
required for all newly established businesses in Vietnam. The name must not
duplicate or closely resemble any existing registered business names and must
not include terms associated with government or state agencies.
Businesses may opt for abbreviations or English
names; however, these names must not cause confusion with existing entities and
must avoid the inclusion of prefixes, suffixes, or cultural symbols that could
lead to misunderstandings.
5.
Obtain Necessary Certificates for Your Business
-Investment
Registration Certificate (IRC):
Foreign investors must apply for an Investment
Registration Certificate from the competent authorities in Vietnam. This
certificate is a mandatory requirement for any project seeking to establish a
new legal entity in the country. The processing time for obtaining the IRC is
typically around 30 days, depending on the specifics of the project.
-Enterprise
Registration Certificate (ERC):
Following the issuance of the IRC, foreign
individuals and organizations must apply for an Enterprise Registration
Certificate from the Department of Planning and Investment. This process
generally takes around 7 days. Upon obtaining the ERC, the business gains legal
status in accordance with the Law on Enterprises in Vietnam, enabling it to
commence operations.
Compliance
and Ongoing Obligations
From the commencement of operations, the business
must ensure ongoing compliance with Vietnamese regulations. This includes the
submission of monthly reports related to foreign labor, investments, taxes,
health, and insurance to the relevant authorities. Businesses may choose to
manage these compliance obligations internally or engage professional services
to avoid penalties and ensure smooth operations.