Many foreign investors are interested in starting a business in Vietnam due to its dynamic demographics, large & young workforce, increasing middle-class, strong economic growth, and several trade agreements with other countries.
Read About Cekindo’s Business Set Up Services in Vietnam
However, to be able to start and run a business successfully in Vietnam, there are tips and tricks to follow:
Starting and Running a Business in Vietnam: Tips & Tricks
Company Registration
Choosing the right entity and registering your company is the first step you have to take when starting a business in Vietnam.
Several legal entities are available in Vietnam: limited liability company (LLC), joint-stock company (JSC), branch, representative office, and shelf company. Read more about your company registration options in Vietnam.
Limited Liability Company:
- 100% foreign ownership is allowed
- Setup time: 1 to 3 months
- Number of owners: minimum – 1; maximum – 50
- Simpler company structure compared to JSC
Joint-stock Company:
- 100% foreign ownership is allowed
- Setup time: more than 3 months
- Number of owners: minimum – 3; no maximum
- Similar to LLC
Branch Office:
- Used to establish a presence in Vietnam
- Can issue a VAT invoice
- Can generate profits
- License tax applicable
- Can get into contracts and agreements
- More complex setup compared to representative offices
Representative Office:
- Used to establish a presence in Vietnam
- VAT invoice issuance not allowed
- Profits generation not allowed
- License tax not applicable
- Contracts and agreements signing not allowed
- Licensing process is simpler
- Easy to shut down
Shelf Company:
- Extremely easy and quick to set up in a day or two
- Run business immediately
- Can get approval from bank and credit faster
- Gain new clients and secure business contracts more rapidly
RELATED: Why SMEs in Vietnam should Consider Payroll Outsourcing
Tax Compliance
Once your company is registered, you must then comply with tax regulations.
Vietnam’s tax laws have been going through constant changes and increased complexity, so it could pose some challenges to foreign business owners.
Make sure to seek professional assistance to ensure full tax compliance. Below are some general guidelines for your reference:
- Report your tax monthly, quarterly, half-yearly, and annually.
- You may need to pay several taxes such as company income tax (CIT), value-added tax (VAT), business license tax, and labor taxes.
- Ensure transparency and effective communications within the company in terms of tax reporting and compliance.
- Review all tax and accounting works internally and with external professional help.
- VAS or Vietnamese Accounting Standards are the basic accounting system in Vietnam. You need to follow the VAS guidelines carefully.
Employment Regulations
When your company registration and tax compliance have been taken care of, you will have to look into the employment legislation and compliance.
- If you want to hire foreigners, your foreign workers must apply for a work permit and residency visa (or business visa) to stay and work legally in Vietnam.
- Foreigners are required to obtain a work permit if they are going to work in Vietnam for more than 3 months. A work permit is valid for 12 months and it is renewable. As for foreigners working for less than 3 months in Vietnam, they just need a business visa but they will need to have a sponsorship letter from a local company.
- It is not the same when it comes to hiring full-time employees and independent contractors. In Vietnam, you don’t have to pay for an independent contractor’s medical insurance, social security, and unemployment tax.
Business Culture
For you to achieve success when starting a business in Vietnam, you must have the ability to understand and catch on to the Vietnamese business culture.
Vietnamese society is geared towards collectivism, with their family and community having priority over their business and individual needs.
Therefore, you never want to lose any business opportunities in Vietnam due to the lack of business customs.
Here are some of the business etiquettes and customs in Vietnam you must have in mind:
- Be punctual for your appointments and meetings
- Build relationships first before getting into business negotiations
- Exchange small gifts
- Wear professionally, neat, and modestly without showing too much skin
- Shake hands during greet and meet
- Show respect to seniors by greeting and addressing them first
- Address someone properly with their titles
- Exchange business cards in both English and Vietnamese, and hand them out with both hands
- Introduce your company after the icebreaker
Start Your Business in Vietnam with Cekindo
With notable experience in the Vietnamese market, Cekindo is a leading business advisory firm offering an array of commercial and strategic consulting services. We serve both local and international corporates, providing you with unparalleled insights with our blend of industry and functional expertise.
By partnering with Cekindo, you can obtain better results when starting a business in Vietnam. Our integrated and value-added approach also enables you to achieve compelling business growth, optimized performance, and cost-efficiency.
Our professional team at Cekindo comprises experts from different industries and fields with solid experience in operational management, business leadership, and legal compliance from around the world.
We are here to close the strategy execution gap and change the game for your business. Fill in the form below to discuss your business requirements.
