Everything You Need To Know To Set Up a 100% Foreign-owned Company in Vietnam

Take your first step to enter Vietnam's thriving market by learning the procedures of setting up a 100% foreign-owned company in Vietnam.

Vietnam has turned into a utopia for foreign investors, thanks to the government’s extensive assistance and trade agreements, the growing middle-income groups, and evolving consumer attitudes. The country’s promising economic opportunities act as a catalyst for foreigners to form and register businesses in the country.

This small Southeast Asian country is one of the few that recorded a GDP growth during 2020 and 2021 whereas much more developed countries suffered from COVID-19-induced economic recession. 

Over the first half of 2022, Vietnam has made considerable progress in recovery with sharp increases in new and returning businesses, as well as commendable effort from the government to stimulate the economy. 

Foreign investment is a key element in Vietnam’s economic growth and capital generation, facilitated by a sustainable supply chain premise and attractive incentives from the government. 

If you are a foreign investor interested in expanding your business to this dynamic and quickly evolving young economy, you must first learn about business formation. To start doing business in Vietnam, you need to create a compliant legal entity. This should take anywhere from one to three months, depending on the entity type.

Thinking about setting up a business in Vietnam? Let us help you.

Choose an appropriate business structure/entity for Company Setup 

The Law on Investment and the Law on Enterprise are two important laws that govern the formation and operation of both domestic and international businesses in Vietnam. 

Foreign investors have four options to set up a company in Vietnam, depending on their market entry strategy, scale of operations and other business-related factors.

Limited Liability Company (LLC)

This is the most common company type and is the ideal solution for most foreign investors of small-to-medium businesses. LLCs can be started with just one member, or up to 50 members. 

Fundamentally, for each investor of an FDI (Foreign Direct Investment) LLC, their liability is tied to their contribution in the capital. LLCs are also chosen for their reduced paperwork responsibilities as well as high transparency. They also have quick processing procedures, so you can get started in only 45 days. 

Joint-Stock Corporation (JSC)

Alternatively, JSCs would be more suitable for starting larger businesses, as there is no upper limit to the number of shareholders. You would need at least three shareholders to found this type of entity, however. 

Shares can be transferred, sold or bought, and the company will continue to exist despite the death of any shareholder. Establishing a JSC would also unlock the potential to be listed on a public stock exchange when the company reaches a certain size.

Representative Office

If you are expanding your business to Vietnam instead of starting a new one, you might want to do market research and establish a footprint before fully committing. This is where a Representative Office comes in. 

A Representative Office can also allow for participation in events and promotional activities, recruitment, and TRC sponsorships. However, it does not have the ability to generate income or function as a validated business. 

Branch Office

Usually the next step to take after testing the business waters of Vietnam, a Branch Office operates under and alongside its parent company abroad, removing the need for a separate legal entity. 

This means that you can start generating profit with full business activities, as the Branch will become part of your brand’s international network. You would need to employ a Legal Representative to establish one, however.

Check out our podcast if you want to learn more about the process of foreign company registration in Vietnam!

The incorporation process of a foreign company in Vietnam

Each of the four legal entity’s incorporation requires different procedures and might take anywhere from one to three months.

Generally, there are three main elements to such a process, which are listed below. 

LegalAccounting & TaxHR & Payroll
Includes registration paperwork, company seal & bank accountIncludes tax registration, tax submission & FDI auditsIncludes taxes, insurance & consultation

International investors should closely follow all of the steps below for complete compliance with Vietnam’s foreign company registration procedure.

  • Submit your company and/or personnel’s documents
  • Register an office address & find a Legal Representative 
  • Obtain Investment Registration Certificate (IRC) from the Department of Planning and Investment 
  • Obtain Enterprise Registration Certificate (ERC)
  • Engrave an official company seal (required to authorize any issued document)
  • Open a bank account with your investment capital
  • Submit Tax Registration & obtain E-Signature (for e-invoicing)
  • Obtain any other business license necessary for your specific sector

Not sure where to start with company registration? Check out our comprehensive guide below, now available as an interactive checklist!

vietnam business setup company registration checklist

Required documents to set up a foreign-owned company in Vietnam

Completing the set-up procedure for business registration in Vietnam involves a lot of paperwork. Depending on the kind of business chosen by foreign investors, additional documentation may be required.

First, coming to Vietnam, you will have to file for an IRC as mentioned above. For this you will have to enquire with the appropriate local authorities. 

After that, starting an official business requires an ERC, which certifies your company’s legitimacy in the country. Here are the required documents to submit:

  • Application for enterprise registration: The application should include the enterprise name, the address of a registered office, business line, charter capital of the owners, types of shares, number of employees, details of relevant partners/representatives, and tax registration credentials;
  • List of board members;
  • Company charter/ articles of association;
  • Copy of passport/ID card or other valid personal identification documents of individual members;
  • Copy of IRC, as specified under the Law of Investment.

Read more: Required Certificates for Foreign Investors in Vietnam

Recent legal updates for FDI companies

As of 2022 and beyond, foreign investment companies are to undergo an annual audit, also known as the FDI Company Yearly Audit. This will be conducted internally as well as by an independent party. The audit includes: 

  • Corporate information;
  • Board of General Directors’ report;
  • Independent Auditor’s report;
  • Audited financial statements, with a balance sheet, income statement, cash flow statement and other notes.

Cost of foreign company incorporation in Vietnam

The costs vary depending on the types of business structures that investors opt for. Following are certain costs you will need to take into account:

  • Costs for registering a company and obtaining business licenses;
  • Minimum capital requirements (vary according to the selected business sectors);
  • Cost for co-working space/ local offices and relevant facilities and management fees;
  • Other possible types of charges: Salaries for employees, tax payments, compliance costs for maintenance of the company, or hiring a Vietnam accounting service to keep your business free from hassle;
  • HR & Accounting must also be factored in.

RELATED: Market Entry in Vietnam: Succeeding Through a Successful Strategy

How Cekindo can speed up your company incorporation process

Company setup in Vietnam consists of multiple procedures that are time-consuming and overly official. Having company registration professionals, like Cekindo, by your side can save you a great deal of time as well as provide you with a hassle-free experience. Cekindo provides a wide spectrum of ancillary services related to company registration, like legal consultancy, license and other documents acquisition, tax and accounting, and HR services. 

Let’s start by filling out the form below and talk to one of our professional counselors.

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Tomas Svoboda - Cekindo - Vietnam Country Manager

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Ing. Tomas Svoboda

Tomas is an expansion manager responsible for Vietnam. His role is to define the key potential of the Vietnamese market and to ensure that Cekindo branch in Vietnam provides its clients with smooth and hassle-free market entry solutions.