Tips for Foreigners to Follow When Setting up Company in Vietnam

Tips for Foreigners to Follow When Setting up Company  in Vietnam

For an outsider to a nation like Vietnam which open doors profit for business, it is endeavoring to make a business to work and grab the opportunity. After settling in, the entrepreneur might wonder, "How difficult it is to set up company in Vietnam or how challenging the business environment is for operating and doing business in Vietnam when dealing with administrative procedures from registering investment, setting up the company, complying with periodic reporting and tax declarations?" If you are reading this and feel like this, you are not alone. After the first eagerness feeling of potential business to generate, the entrepreneur might wonder "How difficult it is to set up company in Vietnam."

As a spot with an ideal topographical position and copious work assets, and developing shopper market, Vietnam is progressively growing unequivocally, turning into a nation drawing in worldwide speculation among Southeast Asia nations. Foreign investors must conduct research on Vietnam's policies, investment incentives, legal requirements, and the process and procedures for establishing a business in order to carry out effective investment activities. If international investors are considering investing in Vietnam, this will provide some quick advice on the fundamental factors they should take into account.

A person with far off ethnicity or an association laid out under unfamiliar regulation could enlist speculation and direct business exercises in Vietnam. Unfamiliar financial backers are allowed to take part in any legitimate business, nonetheless, there are a few explicit enterprises that financial backers should meet the expected circumstances to have the option to enroll speculation. There are a few areas in Vietnam where foreign investors cannot do business due to national security concerns or the state's monopoly.

An investor who wants to start a business in Vietnam must get a certificate of investment registration from an authorization agency, according to Vietnam law. The Investment Registration Certificate (IRC) will typically be issued within 15 days of receiving a valid dossier for an investment project. However, it is essential to allocate sufficient time for the preparation of the necessary documents, such as the application, financial report, bank balance, and personal documents. Before being submitted, many of these documents require apostille, also known as notarization, legalization, and translation into Vietnamese.  

Vietnam regulation doesn't need a base money to set up a business, with the exception of restrictive venture or business lines. In any case, financial backers are obliged to contribute capital as per the timetable expressed in the IRC and that the public authority has the privilege to demand the financial backer to make sense of the marketable strategy agreeable to them in view of the proposed speculation capital. On the off chance that the financial backer can't contribute sufficient capital as per the serious time limit, the equipped authority might apply sanctions, including denial of the IRC or the financial backer needs to change the IRC to mirror the real commitment of venture. After receiving the IRC, the investor must then submit a request for an Enterprise Registration Certificate (IRC), which must be obtained within five days of the date of submission of a valid dossier in order for the business establishment to complete its establishment.

Now that the company has established itself in Vietnam, it can officially sign a lease agreement, hire staff, and engage in business transactions to purchase or sell goods or services. The documents must be signed and sealed to be legally binding. The next issue is how to obtain a seal. When an organization was managed by the Public Security authority, it was more difficult to have a seal created for it after it was established. Legislators and business experts have been discussing the possibility of completely removing the seal from legal documents in Vietnam because the signature of the legal representative is the most crucial element. Throughout the time, the once severe regulation overseeing the seal issuance has been relax. However, in Vietnam, the seal is still very important because it shows the official notice, such as the decision by the business's legal representative to end a labor contract, along with the signature of the representative. or an unmistakable endorsement of a company's participation in a transaction to hire a factory construction company. The investor has the right to use multiple seals, subject to the terms of the company charter. The venture should send a notification to the business enlistment office where its administrative center is situated for distribution on the Public Business Enrollment Entryway prior to utilizing, modifying, obliterating, or changing the quantity of seals. The seal can be utilized beginning the day the warning system has been done and the seal test has been transferred on the Public Business Enlistment Entrance for confirmation reason.

In most jurisdictions, with the exception of tax haven nations, the investor is required to pay close attention to their tax obligations during the business's initial operation. However, Vietnam is not included on the exemption list. Every business is required to provide a tax declaration. Consistently, the business should pay various duties and expenses, for example, permit charges (in light of enlisted sanction capital); Corporate Personal Duty (CIT) when the organization creates gain; declare and pay Value Added Tax (VAT) on behalf of an individual on goods or services sold. declare and pay Personal Income Tax (PIT), or, in some instances, export and import tax, and land tax.

The investment project reporting regime must also be fully adhered to by foreign investors in accordance with the law. These reports will be issued on a regular basis (monthly, quarterly, or annually) regarding topics such as: compliance with tax payment obligations and periodic reporting to ensure timely implementation as prescribed will help the company avoid unnecessary risks such as administrative sanctions, business suspension, and penalties that could impact the business. implemented investment capital, business investment results, information on labor, employed foreign workers, and reports on environmental protection.

ANT Lawyers, the leading law firm in Vietnam, provides nationwide comprehensive legal services. The firm is made up of lawyers and attorneys who specialize in a variety of areas, such as investment law, labor law, corporate law, and other areas, and it provides clients with legal advice and representation. In addition to providing services that are professional and ethical, the company is committed to providing each client with the best possible solutions. ANT Lawyers Law Firm is a trusted partner for individuals and businesses in Vietnam.

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Benefits of Setting Up Company in Ho Chi Minh City

Ho Chi Minh City is considered as Vietnam’s economic hub. During the long history of foundation and development, the city’s economy is growing constantly and motivating the development of the country.

Setting up company in Vietnam

The city is therefore considered as a potential investment environment for domestic investors as well as foreign investors. The investment through establishing companies and conducting business activities in Ho Chi Minh city certainly promises to achieve multiple benefits. These benefits come from the following reasons.

First, Ho Chi Minh City has strategic location advantage in Vietnam. Southeast Asia Region, Ho Chi Minh City is 1,700 km south of Hanoi, 297 km east of Phnom Penh, Cambodia, 881 km east of Bangkok, Thailand.

Food, glass, textiles, paper products, plastics, chemicals, building materials and machinery are produced here. Ho Chi Minh City accounts for 20% of total gross domestic product (GDP), 30% of industrial production and 40% of export products of Vietnam. The city also accounts for 33% of the national budget and 60% of foreign investment flows into the region. In the past few years, the economy have been grown at a rate greater than 10% (6% to 8% nationally).

Second, Ho Chi Minh City is home of  well – qualified, abundant and young human resources.

With a population of more than 8 million, accounting for more than 10% of the total Vietnamese population, Ho Chi Minh City itself has potential employment market to make any business investment. The work force in Ho Chi Minh City was estimated to reach 4.7 million people in 2012, making up more than 50% of the total population of the city. The percentage of trained labor increased from 40% in 2005 to 55% in 2010 and was forecast to reach 70% in 2015. The percentage of labor source holding postgraduate degree is also increasing year by year and most of them tend to stay in the city after holding degrees. Ho Chi Minh City is also home to more than 80 universities and colleges, vocational schools with over 400,000 students providing an abundant trained work force.

With the above – mentioned abundant labor force, any companies set up in Ho Chi Minh City can easily recruit suitable employees in a short time..

Third, the city has modern and high infrastructure system. Namely, when setting up company in Vietnam, the owners will benefit from the modern and comprehensive infrastructure system.

Tan Son Nhat Airport is the largest airport in the country with the capacity to accommodate 20 million people a year. From Tan Son Nhat Airport, there are 50 routes to other countries all over the world such as China, Japan, Korea, Singapore, European countries, etc.

Saigon Port serves as a gateway to the Mekong River Delta, the South China Sea (83 km away from the sea) and the Asia continent. The port has a total area of 500,000 m² with 5 terminals meeting the international standards, and it handles about 8.3 million tons of cargo annually. Throughout the history of foundation and development of Saigon, Saigon Port plays an important role in making Ho Chi Minh City a flourishing trading center. It accounts for a fifth of the nation’s Gross Domestic Product and almost a third of its industrial production.

Ho Chi Minh City is also home to industrial zones. According to the statistics of Cushman & Wakefield, the city has 18 industrial parks that are operating with a total area of 3635 ha. When investing in such industrial zones in Vietnam, enterprises can benefit from various incentive policies such as low rate tax or other incentive policies.

Telecommunication and information technology in the city is modern. The system of post and telecommunication in Ho Chi Minh meets international standard, providing fast, reliable and high quality services such as ADSL, rapid data transfer, wide broadband MAN. The Internet service in Ho Chi Minh city is also among the cheapest in the world.

Besides, the city is also considered the best working conditions. Enterprise will not be fear that it is not enough place for working. The city with the system of offices provide ideal working environment for all investors.

With highly professional staff and great experience in business in Vietnam, ANT Lawyers would like to support you in establish company in Vietnam.

 

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How to Set-up Travel Services Business in Vietnam?

How to Set-up Travel Services Business in Vietnam?

Foreign investor could only set-up joint venture with Vietnam travel agency to set-up travel services business in Vietnam because transport of passenger belongs to investment areas with conditions applied to foreign investor in Vietnam.

10 Questions to Ask Before Setting up Company in Vietnam?

No one could deny that information technology has tremendously changed the way travel services business operates. The use of booking reservation system application on smartphone and internet are widespread that make travel has never been easier.  Foreign investor would be interested to explore the travel services market. However, 100% foreign owned company is not allowed to set-up travel services business in Vietnam. As this investment area is conditional, it is advised that a law firm in Vietnam should be consulted to ensure compliance with local regulations.

The application process and documents requirements are briefly as following:

1. Required documents:

-Application for the International Travel Business License (form);

-Certificate of business registration (copy – certified)

-Business plan for the international travel agency;

-Tour schedule

-Proof of at least 4 years of experience in international travel business operations

-Certified copies of the tourist guides’ cards whereby at least 3 international tourist guides are required

-Confirmation of bank deposit (as per regulations);

-Proof of office premises or legally registered place of business

2. Business License Application Procedure

-Submission of the required documents to the correct authority (Department of Culture, Sports and Tourism of the province/city where the business is headquartered).

-The Department of Tourism of the province/city completes the records of appraisal and submits a written request with the agency’s records to the Ministry of Culture, Sports and Tourism in Vietnam within ten working days from the date of receipt of a valid application. When cases are not eligible for the proposed permit to the state agencies, the provincial tourism department shall cite the specific reasons for refusal. 

-The state management agency of tourism (VNAT – Ministry of Culture, Sports and Tourism) is responsible for reviewing and licensing the international travel business within ten working days from the date of both receipt of the file and written request of the state agency of tourism in the province. In case of refusal, the ministry shall state the specific reasons to the state and provincial tourism authorities

3. Number of records

-Submission to the Department of Culture, Sports and Tourism: 01

-Tourism Authority Filed in: 01

ANT Lawyers, a law firm in Vietnam could offer service to establish company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

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How to Set Up Company in Hanoi?

How to Set Up Company in Hanoi?

The Law on investment 2021 has a lot of investment incentive policies in economic sectors in Vietnam for foreign investors.

Foreign investors that invest in Vietnam in general and Hanoi in particular for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted Investment Registration Certificates (“IRC”) and Enterprise Registration Certificate (“ERC”). Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

The investor who wishes to apply for IRC in Hanoi, s/he need to have a possible project which is accepted by the Government (The Department of Planning and Investment of Hanoi City). The dossier on applying for IRC

For Investment Registration Certificate, the investor must prepare the dossier included:

i) An application form for execution of the investment project, including a commitment to incur all costs and risks if the project is not approved;

ii) A document about the investor’s legal status;

iii) Document(s) proving the financial capacity of the investor including at least one of the following documents: the investor’s financial statements for the last two years; commitment of a parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for the investor’s financial capacity; other document proving the investor’s financial capacity;

iv) Proposal for the investment project including the following main contents: investor or method of investor selection, investment objectives, investment scale, investment capital and plan for raising capital, location, duration and schedule of the investment project, information about the current use of land in the location of the project and proposed demand for land use (if any), demand for labor, proposal for investment incentives, impact and socio – economic efficiency of the project and preliminary assessment of environmental impact (if any) in accordance with regulations of law on environmental protection.

If the law on construction requires formulation of a pre-feasibility study report, the investor is entitled to submit the pre-feasibility study report instead of a proposal for the investment project.

v) If the project does not require the State to allocate or lease out land or to permit land repurposing, a copy of the document regarding the land use rights or other document identifying the right to use the location for execution of the investment project is required to be submitted;

vi) Contents of the explanation for the technology to be used in the investment project if the project requires appraisal and collection of opinions on the technology in accordance with the Law on Technology Transfer;

vii) The business cooperation contract if the investment project is executed under a business cooperation contract;

viii) Other documents relating to the investment project, and requirements on the eligibility and capacity of the investor in accordance with regulations of law (if any).

After having the project, the investor needs to apply for Business Registration Certificate, the dossier included:

i) An application for enterprise registration;

ii) The enterprise’s charter;

iii) A list of members of a limited liability company with two or more members or a list of general partners;

iv) A notarized copy of identity card or valid passport of individual member;

v) A notarized copy of the Business Registration Certificate of the organization’s member;

vi) A notarized copy of valid identity card or passport of the organization’s legal representative;

vii) The copy of Investment Registration Certificate.

The time for applying the investment project is 15 working days and the time for applying the company is 03 working days after the date of submitting the valid dossier.

ANT Lawyers, a law firm in Vietnam could offer service to set-up company in Vietnam. We assist clients needing legal service in obtaining investment certificate, business registration certificate, or other  licensing procedures.

 

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Why Da Nang is a Place for Setting up Business

Da Nang has been creating flexible policies, good environments attracting foreign investors setting up company, building factory, and developing service business.

Setting up Business in Da Nang

Da Nang is a social and economic center of central area of Vietnam with the role as the center of industry, trade and tourism and service. It is a seaport city, an important transport hub for the transit of domestic and international transportation. Presently, Da Nang has been rising as a comprehensive and sustainability developing city.

With the advantages of geographical location, people and nature, the leader of Da Nang is planning to build the city becoming a major tourist center of the country, developing tourism industry with entertainment centers and luxury resorts in Vietnam.

In practice, Da Nang has been reducing administrative procedures, creating favorable conditions for investors in obtaining certificate for investment. In the meantime, the city also supports investors understanding the information and maintaining direct dialogue mode with businesses leaders and managers in order to promptly assist any difficulties encountered by investors in the process of project implementation. Da Nang’s leaders are famous in being proactive in providing the latest information about the law in investment, especially information on the process of changing investment certificate… to facilitate the investment plan of the investors whom are investing in Da Nang. For investment projects in infrastructure construction using ODA capital, the city has been quickly implemented the clearance and compensation in time to hand over the project site to the investors as planned.

To ensure the tourism environment and sustainable development, the city focuses on attracting projects in high technology industry, supporting industry and services with high added value i.e. information technology, education, healthcare and logistics…, especially favouring clean and quality projects rather than large projects but are likely to cause environmental issues.

Along with economic development, Da Nang also has activities and measures for environmental protection by investing in building projects to protect and improve the environment such as: modernization the sewer and wastewater treatment system (JICA), building east-west economic corridor (ADB)… to ensure sustainable and long term development of the economy.

An important element for economic development is the local security. Da Nang has done a great job in maintaining public security in order to guarantee investors a stable and safe political, social environment for investors.

It can be seen that Da Nang converges suitable elements and really is a promising land for investors both domestic and international, to invest in entertainment, real estate, tourism, IT, healthcare, education services.

With highly professional staff and great experience in business in Vietnam, ANT Lawyers would like to support you to establish company in Vietnam.

ANT Lawyers – A law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

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Conditions of Setting up Import and Export Company in Vietnam

Conditions of Setting up Import and Export Company in Vietnam

If a foreign-invested company wishes to apply for export/import or distribution rights, it has to submit the below listed documentation to the competent authorities:

1. Export/Import rights:

The foreign investors who invest to exercise right to export, right to import must follow procedures for grant of investment certificates; the foreign-invested enterprises in Vietnam which supplement the operational business activities for exercise of right to export, right to import must follow procedures for adjustment of investment certificates:

a. Dossier of verification for grant or adjustment of investment certificate as prescribed by law on investment;

b. A written explanation about the satisfaction of conditions in exercise of goods trading and directly related activities;

c. Documents proving the financial capability and experiences of investor in exercise of right to export and right to import;

d. Vouchers of tax agencies on performing the enterprise income tax liability within two consecutive years in the case the foreign-invested enterprises wish to supplement the exercise of right to export, right to import.

2. Trading activities/Distribution

The foreign investors with investment projects on exercise of goods trading and directly related activities in association with the setting up of enterprises must follow procedures for grant of investment certificates.

a. A dossier comprises:

i) Dossier of verification for grant of investment certificate as prescribed by law on investment;

ii) A written explanation about the satisfaction of conditions in exercise of goods trading and directly related activities according to the form MD-6 promulgated together with this Circular;

iii) Documents proving the financial capability and experiences of investor in exercise of business operation of goods trading and directly related activities.

b. After having acceptance opinion of the Ministry of Industry and Trade, the competent state agencies shall grant investment certificate. The investment certificate shall concurrently be business license.  Although not stipulated in the law, before granting an investment certificate with these business lines, the authorities usually consider application on case by case basis, taking into account market stability, population density in the area where the company is located and the consistency of the investment project with the master plan of the said area.

For these business lines the competent authorities must obtain the approval of the Ministry of Industry and Trade before issuing the investment certificate.

3. License for setting up retail establishments

If a foreign-invested enterprise wishes to set up a retail establishment in addition to the first retail establishment, it must follow procedures for license for setting up retail establishment, a dossier comprises:

a. Dossier of verification for grant or adjustment of investment certificate as prescribed by law on investment;

b. Dossier of license for setting up retail establishments, comprising:

i) Application for license to set up retail establishment;

ii) A written explanation about the satisfaction of conditions of setting retail establishments as per the law;

iii) Document of provincial People’s Committee that approves the working result of the Council of checking the economic demand to consider the conformity of setting up of a retail establishment in addition to the first retail establishment.

iv) Report on exercise of goods trading and directly related activities of licensed projects;

v)Vouchers, which are issued by tax agencies, about exercise of enterprise income tax liability in two adjacent years.

After having acceptance of the Ministry of Industry and Trade, the competent state agency shall grant the license for the setting up of retail establishments.

Our lawyers of foreign investment practice at ANT Lawyers - a law firm in Vietnam would like to support you in setting up company in Vietnam.

 

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Where is least expensive cities for working and living in Vietnam?

Where is least expensive cities for working and living in Vietnam?

The price indexes has always been on top of information list which investors look for when making investment into a new country. Beside various information i.e. GDP, Stock market, unemployment, producer price, interest rate, balance of trade, the investors also check the consumer price index and income to determine the attractiveness of market entry. There are many attractiveness factors including the low cost of living and low level of income in comparable with other neighboring countries, for making investment in setting up company in Vietnam for manufacturing purpose.

Where in Vietnam is cheapest city to live and work?

 According to statistics of 2021, taking Hanoi as the base indicator, the top 10 localities with the most expensive cost of living include: Hanoi (100%), Quang Ninh (99.5%), Ho Chi Minh City (98.98%), Da Nang (96.4%), Hai Phong (95.58%), Lao Cai (94.75%), Son La (94.58%), Lang Son (94.55%) %), Khanh Hoa (94.55%) and Dien Bien (94.41%).

How it has changed since 2015?

The top 10 provinces and cities with the most expensive cost of living in the country in 2015 include: Lai Chau (100.3%), Hanoi (100%), Son La (99.27%), Lao Cai (99.02%), Dien Bien (98.85%), Ho Chi Minh City City (97.39%), Ha Tinh (97.14%), Ha Giang (96.5%), Da Nang (96.44%) and Binh Phuoc (96.12%).

In 2021, Hanoi’s per capita income reaches more than 6 million VND/month.  Since 2016, Hanoi has always been in the top 3 localities with the highest income in the country.

In 2015, Da Nang ranked 9/63 with a price equal to 96.44% compared to Hanoi. By 2017, the city “jumped” to third place, up 6 places compared to 2015. In 2021, Da Nang’s cost of living is 96.4% of that of Hanoi and ranked 4th in the country in terms of expensiveness. In 2021, Da Nang has per capita income of more than 5.2 million VND/month, ranking 5th out of 63 provinces and cities. Previously, 2019 was the year the city had the highest income in the past 10 years with more than 6 million VND/person/month.

In 2021, Ho Chi Minh City reached 98.98% and ranked 3rd out of 63 provinces and cities in cost of living.   From 2002 to 2016, the city has always been the place with the highest income in the country. From 2018 to present, Ho Chi Minh City maintains the “runner-up” position (behind Binh Duong), in which, 2019 is the year with the highest income with 6.7 million VND/person/month.

Besides the three central cities that are constantly in the top of the most expensive localities in the country, Lao Cai is the only mountainous province.

In 2020, Lao Cai ranked 5th in terms of the expensive level in consumption, equal to 96.52% compared to Hanoi. Lao Cai is the most expensive province among 14 Northern Midlands and Mountainous Provinces (the cheapest is Phu Tho, equal to 91.07% compared to Hanoi, ranked 56th nationwide). By 2021, Lao Cai’s index drop to 94.75%, the lowest level of the place since 2015 until now. With this index, Lao Cai ranks 6th in the country in terms of the expensiveness of the cost of living.

In particular, although the cost of living is quite high, the income of people in Lao Cai is not high. The average income of people in this locality was only 1.8 million VND/person/month in 2016 and ranked 53rd in the country. In 2021, people in Lao Cai earn an average of 2.51 million VND, ranking 55th in the country.

The low level of income and least living cost make Vietnam a favourable destination for investment.  Many labour intensive manufacturers in garment, shoes, furniture… have long chosen Vietnam as a place for establishing company in manufacturing. There are growing number of companies in electronics also manufacture in Vietnam to take advantage of the comparable low wage workforce.

With highly professional staff and great experience in foreign investment, ANT Lawyers - law firm in Vietnam would like to support you to establish company in Vietnam.

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What Important Step-by-Step Guide to Establish Company in Vietnam?

When foreign investors invest in Vietnam, they could establish company in Vietnam. Foreign investors have the right to choose the appropriate forms of enterprise such as a limited liability company, joint stock company, etc. with specific steps are as follows:

How to establish company in Vietnam?

Step 1: Register the investment project

Investors submit an investment project registration file to the Business Registration office of the province or city or the management board of an industrial zone, an export processing zone or a high-tech zone for the approval of an investment project during the period within 15 days (without time for clarification).

Step 2: Apply for Certificate of investment registration

After approval of the investment project, investors submit a valid record to the Department of Planning and Investment within 10 days to apply for a business registration certificate.

Step 3: Apply for the certificate of business registration

After obtaining the business registration certificate, the investor shall submit the application for enterprise registration certificate to the enterprise registration office within 3 days.

Step 4: Publish the content of the business registration

After being granted the certificate of enterprise registration, the investor shall disclose information about the enterprise on the national enterprise registration portal within 30 days, including the following information:

i, Business lines;

ii, List of founding shareholders and shareholders being foreign investors for joint-stock companies.

Step 5: Registered business stamp

The enterprise has the right to decide on the form, quantity and contents of the stamp of the enterprise. The content of the stamp must show the following information:

-Company’s name;

-Business code.

After receiving the legal entity stamp and before using the business stamp, the enterprise must send a notice on the stamp of the enterprise to the business registration office for publication in the National Information Portal on the business registration.

Step 6: Notice of use of stamp:

After having stamp made, investors submit notices on use of stamp forms to the Investment registration agency. After receiving the record, the Investment registration agency issues a receipt for the enterprise, publishes the notice of the enterprise on the National Business Information Portal and issues a notice of the posting, stamp samples of enterprises, branches and representative offices for enterprises.

Step 7: Open bank account:

Investors need to open two types of bank accounts, namely the investment capital account to receive the investment amount and the transaction account for conducting daily transaction in Vietnam.

Step 8: The post licensing procedures:

For the conditional business lines:

Investors investing in conditional businesses lines as regulated in Appendix 4 of the Investment Law 2014 must apply certificate of business qualification, practicing certificates, professional liability insurance, legal capital requirements, etc. before conducting business in Vietnam.

ANT Lawyers - a Law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

Source ANTLawyers: https://antlawyers.vn/library/what-important-step-by-step-guide-to-establish-company-in-vietnam.html

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