Posted 8.09. 2020 by Cekindo
In Vietnam, foreigners are allowed to establish and own their foreign companies through direct or indirect foreign investments. Businesses that are fully owned by foreigners or taking part in joint ventures with local businesses in Vietnam are regarded as direct foreign investments.
Setting up a business in a foreign country is many foreigners’ dreams and aspirations. However, it is no denying that foreign investors will have to face many potential issues, challenges, and delays when it comes to company incorporation in Vietnam.
While Vietnam’s economy is booming and the Vietnamese government has put in a lot of effort to ease the process for foreigners, there are still an array of typical issues that foreigners have to overcome.
These issues frequently occur during the company registration process, or right after foreigners have completed their new company setup.
Cekindo has gathered 7 most common issues faced by newly-established Vietnam’s foreign companies. We want to help you avoid unnecessary mistakes and costs for your company incorporation in Vietnam.
1. Loan Issue
Foreign business owners must pay their loans through their company’s capital account that is registered. Also, loans that are not documented are subject to tax obligations as the tax authorities treat the loans as the company’s revenue.
2. Registered Capital Issue
Upon the issuance of an Enterprise Registration Certificate (ERC), foreign investors shall settle their company’s registered capital into the company’s capital account within 90 business days. Since the capital is registered, the amount must be the same as the one stated on the ERC.
3. Tax Inspection Issue
Once the ERC is issued, the tax authority in Vietnam will come to your business location to verify that you have a legit business and operations. It is compulsory to have your business’ official blue panel on display, and your employees and legal representative present.
4. Business License Tax Payment Issue
Failure to pay your business license tax on time can lead to penalties such as monetary fines, even though the payment amount is not large. You may also need to spend a significant amount of time to rectify the problem.
5. Cash Payment Issue
In Vietnam, you can only perform cash payment with a maximum amount of VND 20 million, approximately US$850. Amounts greater than US$850 must be carried out through bank transfer. Failure to do so means that tax authorities may not deduct the expense from your business profits, leading to unfavourable corporate income tax.
6. VAT Registration Issue
When you register VAT, you must also determine your company’s VAT accounting method. You won’t be able to get your VAT refunds if there is no VAT payment method determined.
7. Compliance Report Issue
Different government sectors in Vietnam will require your business to provide several compulsory reports. This also applies for new company incorporation in Vietnam even if your new business hasn’t had any revenue or employees yet. It is also mandatory for foreign companies to submit an annual audit report to the authority before any profit distribution.
Cekindo’s company incorporation advisors in Vietnam help you establish the most appropriate legal entity for your type of business in the country.
Our services include company registration, certificate and license application, corporate secretarial outsourcing, as well as corporate advisory services.
Our professional team at Cekindo provides tailored company incorporation services to many local and foreign investors looking for no-hassle and carefree company establishment and other incorporation-related services.
Company incorporation in Vietnam should be a stepping stone for your business expansion, not a burden hampering your business growth.
Focus on your business, not paperwork. Contact us today for your company incorporation in Vietnam via the form below.