Starting a business in Vietnam is more difficult than in any developed nation in Asia, as it’s still a developing nation going through fast changes. The average time to establish a 100% foreign-owned company in Vietnam can be as little as 45 days and involves many steps, the most important being applying for the correct registration certificates. The most important licenses that you should be aware of are the Investment Registration Certificate and the Business Registration Certificate, also known as the Enterprise Registration Certificate.
Are you entering the Vietnamese market? See Cekindo’s Company Registration Services
In Q2 2022, Barron’s reported the country’s highest growth rate in over a decade, with year-on-year GDP growth at 7.72%. In addition, according to the 2020 Doing Business Report by the World Bank, the outlook for setting up a business in Vietnam has undergone much positive transformation since 2008, due to its improved investment transparency and other initiatives in the government’s goal of making the country more business-friendly and competitive.
To operate a 100% foreign-owned company in Vietnam, with or without generating revenue, you will need to acquire two licenses from relevant authorities: an investment registration certificate and an enterprise registration certificate (also known as a business registration certificate).
This article will provide you with some legal insights into obtaining the licenses.
Investment Registration Certificate
The Investment Registration Certificate (IRC) is a physical or e-document with information about the registered investment project.
Cases in which the procedures for applying for an Investment Registration Certificate must be carried out:
- Investment projects of foreign investors
- Economic organizations when investing in establishing economic organizations; investment, capital contribution, purchase of shares and contributed capital of economic organizations; investment under a BCC contract in one of the following cases:
- More than 50% of the charter capital is owned by a foreign investor or the majority of general partners are foreign individuals, for economic organizations being a partnership.
- More than 50% of charter capital is owned by an economic organization specified in Point 1.
- More than 50% of charter capital is owned by foreign investors and the economic organizations specified in Point 1.
Have you heard about our Vietnam Business Podcast? We interview foreigners doing business & succeeding in Vietnam.
If your investment project fits into the standard plan and is within an accepted sector that allows foreign investors, the procedure takes about 45-60 days and you will receive your Business certificates within 5 days of approval.
However some projects are subject to a special investment policy: these are usually large/important projects with great significance in terms of politics, national defense, security, economy, culture, and society.
For these projects, before applying for an IRC, the investor must go through the procedures for approval of the investment policy from various governmental organizations and departments.
Enterprise Registration Certificate (or Business Registration Certificate)
In many countries, this document is considered generally as the business license or business permit for the company, since it allows a company to be fully incorporated and start operations. In Vietnam, however, the Enterprise Registration Certificate is also known as the Business Registration Certificate (BRC) and is issued to all organizations under the Law on Enterprises.
With an Enterprise Registration Certificate (ERC), authorities can find all details concerning the registration of a business (charter of the company, list of founding personnel, etc.) as well as its tax registration. An ERC can be a physical document or an electronic document.
Several conditions must be met for an enterprise to receive an ERC (or BRC) from investment authorities:
- The enterprise’s field of business is not restricted
- The enterprise’s official name complies with Vietnamese naming laws
- All registration documents are in order
- All fees, including the enterprise registration fee, are submitted
Check out our latest detailed guide: How to Set Up a 100% Foreign-owned Company in Vietnam
Initial Tax Registration and Bank Account Setup:
Initial Tax Registration
Tax registration is an essential part of an incorporation process: this is a prerequisite to carrying out tax obligations and becoming eligible for any business activities in which the company wants to participate in.
The documents necessary for Initial Tax Registration include:
- Application form for tax registration
- Schedules of subsidiaries, affiliates, contractors, etc. (if any)
- Enterprise registration documents
The law does not stipulate that an enterprise must open a bank account after its establishment.
However, most tax authorities require businesses to pay taxes electronically to minimize the overload of administrative procedures. Moreover, bank accounts also help businesses more conveniently in transactions with customers and partners.
The procedure for opening a bank account depends on the requirements of the bank that the Customer wants to open an account.
Other required licenses
Apart from the basic documents above, businesses must also check for any other licenses specific to their sectors or fields and obtain them as well. For example, these can consist of special consumption tax (cigarettes, alcohol, bars, casinos, etc.), environmental protection tax (petroleum products, coal), and import & export taxes.
Company Registration Procedure
The items stated below are the details of the company registration procedure in Vietnam:
- The founder of the authorized individual has to submit a complete registration dossier to the registration agency.
- The registration agency will check if the submitted documents are complete and valid in 3 days.
- If the application is refused, a notification in writing will be sent to the founder or the authorized person with the reasons and requirements stated.
- In addition, all foreign companies in Vietnam must also meet other specific conditions under the Law on Investment and Law on Enterprises.
In order to ensure it’s completed on time the applicant must provide all the required information:
- Name of company
- Registered address
- Registered capital
- Other legal documents
It is advisable that you engage a trustworthy company formation and business registration agency for the certificate registration establishment in Vietnam. If you are a foreigner it is not advised to do it by yourself as it’s a long bureaucratic process compounded by the language barrier.
Latest regulation updates – Applicable in 2022
The government recently made some changes regarding companies that are 100% foreign-owned in terms of additional reports that must be filed on a yearly basis. This includes the FDI Report, this report provides details on your tax payments, capital investments, loans, personnel, and company activities. It’s compulsory to file this report on an annual basis, otherwise, you will incur fines. For more details read our full article.
Cekindo is a leading provider of global market entry services in South East Asia. We are part of InCorp group, a regional leader in corporate solutions, that encompasses 8 countries in Asia, headquartered in Singapore. With over 500 legal experts serving over 12,000 Corporate Clients across the region, our expertise speaks for itself. We provide transparent legal consulting, setup, and advice based on local requirements to make your business perfectly fit into the market with healthy growth.
Don’t take our word for it. Read some reviews from some of our clients.
Originally published on November 5, 2019 at 08:38 am; updated October 20, 2022