Vietnam Company Incorporation – a 2022 Guide for Foreigners

Investing in Vietnam? This is your company incorporation guide for 2022 based on current market conditions and newest nationwide updates

Vietnam continues to be the flag-bearer of the fastest-growing economy in SEA backed by impressive demographic factors and the government’s progressive fiscal measures for improving the investment landscape. According to the Ministry of Industry and Trade (MOIT), Vietnam’s GDP registered 5.22% in the 4th quarter of 2021, which was higher than the same period of 2020 (4.61%). Several financial institutions have forecasted the growth to reach 6.5-6.7% by the end of 2022. If you are thinking about investing in Vietnam and starting a business, it starts with company incorporation.

Are you a foreigner looking to invest in Vietnam? See Cekindo’s Company Incorporation Services. We also made a Business Setup Checklist for investors just like you!

In this article, we lay out a complete guide regarding company incorporation in Vietnam highlighting various opportunities available, rules & regulations, incentives granted by the government, and the process of setting up a foreign-run entity in Vietnam. This article takes into account the recovery from the pandemic, and respective lockdowns, the opening up of the borders to tourists, and a general predicted bounceback of the economy.

Foreign Company Setup Rules in Vietnam

Foreigners are allowed 100% ownership of their own companies in Vietnam. However, the setup fees are more expensive and the time to establish a 100% foreign-owned entity is longer compared to that of a local company, or a partnership agreement.

New Foreign Tax Regulations and Investment Opportunities to Be Aware Of as of 2022

As per the new investment law introduced in 2021, Decree 31/2021/NĐ-CP, it is imperative for a foreign business to undergo an FDI audit while conducting commercial operations in Vietnam. This audit is due on March 31st of the calendar year.

However, depending on the type of foreign company, an audit is classified into 3 types: independent audit, state audit, and internal audit. Generally, for FDI companies, an independent audit is undertaken, conducted by professional auditors.

The FDI audit report consists of the following information:

  • Corporate information
  • Board of General Directors’ report
  • Independent Auditor’s report
  • Audited Financial Statement, which further includes:
  • Balance sheet 
  • Income Statement
  • Cash flow Statement
  • Notes to the Financial Statements

However, frequent changes in the taxation laws and regulations continue to irk investors and at the same time increase the costs of operating in the country in order to stay compliant. Even though the FDI is an unfortunate new challenge, investors are willing to offset this by making the most of the untapped opportunities available in the mushrooming markets of Vietnam.

Have you heard of our Vietnam Business Podcast? The first episode is on starting a business in Vietnam as a Foreigner.

Business Opportunities in 2022 

Flourishing Fashion Industry: The fashion industry has long enticed shoppers from around the world, therefore contributing the second-largest turnover share in the country’s export. Moreover, in 2021, Vietnam’s garments industry clocked USD 4,872 million in revenue.

Burgeoning Fintech Sector: The fintech sector in Vietnam has witnessed an exponential growth trajectory between 2017 & 2021. Presently, there are around 203 companies in the country that offer a gamut of fintech services, such as online financing, mobile payments, wealth management, and blockchain, to mention a few.

Thriving E-Commerce Sector: Vietnam’s e-commerce industry is forecasted to register USD 9 billion by the year 2025 and shall have the highest growth rate in Southeast Asia by 2026. Moreover, product segments like electronics, fashion, and furniture have recorded tremendous growth.

Hungry F&B Industry: As per a report by Business Monitor International Ltd (BMI), Vietnam was recognized as one of the most desirable Food and Beverage markets in 2019. The market generated USD 42 million in sales in 2020 and contributed 15.8% to the GDP.

Renewable Energy: To combat climate change and global warming, Vietnam is committed to its ambitious goal of achieving carbon neutrality by the year 2050. Furthermore, the rising population of Vietnam is driving an unquenchable need for more electricity, forcing the shift from coal to renewable energy inevitable.

Government Tax Incentives for 2022

Due to the advent of the COVID-19 pandemic and subsequent lockdowns, businesses have struggled to keep up with their revenue targets and even suffered losses. Therefore, the National Assembly gave the green light to a resolution on monetary measures to bolster the Socio-Economic Development and Recovery Program. The resolution directs authorities to bring the VAT (value-added tax) rate from10% to 8%. Such measures are expected to augment production and boost the invigoration of Vietnam’s economy. The resolution will be applicable until December 31, 2023.

Vietnam’s Entry Rules & Regulations for 2022

To facilitate the ease of doing business, Vietnam has announced to resume the entry of international visitors from the 15th of March. However, tourists will still have to self-quarantine themself for one day and present a negative COVID-19 report to the airport authorities before departure and upon arrival. Visa duration is currently set at 30 days with the possibility of extension.

RELATED: Vietnam Economy 2022: Set To Be The Fastest-Growing In The SEA Region

A Summary of Company Registration Entities in Vietnam

If you are a foreign business owner or company and wish to run a 100% foreign-run company in Vietnam, here are your options for the year 2022:

Limited Liability Company

Best-suited for small and medium-sized businesses, Limited Liability Companies (LLCs) are the most common legal form adopted by foreign investors for incorporation in Vietnam. It only requires one founder, however multi-member larger LLCs can also be formed by having 2-50 members.
Some features of LLCs include:

  • Liability is limited to the charter capital contribution
  • Streamlined operations and reduced paperwork
  • Ease of raising additional capital
  • Free to conduct income-generating activities

Representative Office

A representative office (RO) in Vietnam is well-suited for foreign investors interested in monitoring and analyzing the market conditions, before fully expanding into the country. Therefore, the representative office is not allowed to conduct any income-generating activities and shall only involve hiring local talent as well as market research-related operations and managing contracts signed with local partners.

Branch Office

By establishing a branch office in Vietnam, the parent company can perform all commercial activities and earn profits without having to incorporate a separate legal entity. Its features include:

  • No restriction on signing agreements and contracts
  • Invoices can be issued
  • Accounting and taxation records can be kept independently or dependently

Joint-stock Company

Recommended for medium and large-sized businesses, a Joint Stock Company (JSC) in Vietnam requires a minimum of three founders. Its structure and framework are more restrictive due to the large size of the corporation. Its features include the following:

  • Based on a complex corporate structure
  • Each shareholder’s liability is limited to their contribution and can easily transfer the ownership of shares
  • No limit on the number of shareholders

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

A Summary of Documents Required for Company Registration in Vietnam

Investment Registration Certificate (IRC): It is issued by the Department of Planning and Investment (DPI) and is mandatory for foreign investors to obtain this certificate. The information includes details about the investor, investment goals, project tenure, investment capital, investment incentives/assistance, and others.

Enterprise Registration Certificate (ERC): It contains information like the name of the enterprise, tax code, address of the headquarters, etc. It is issued by the business registration office and is mandatory for the investor to obtain this document for completing the company incorporation procedure in Vietnam.

Taxes & Capital Contribution: After receiving both the certificates, investors are obliged to proceed with their tax registration, paying the business license tax, and make their initial capital contribution 

Conclusion

The culmination of factors like growing middle-class, friendly business environment, political stability, and inexpensive but cheap labor is acting as a catalyst in attracting foreign investors to expand their business in Vietnam. However, there is no single incorporation model that fits into all investment scenarios. Hence, the investors should be aware of the available legal forms and shall consult an expert like Cekindo, before initiating the incorporation process.

Contact Our Consultant

Vojtech Zehnalek

Verified by:​

Vojtech Zehnalek, MSc.

Vojtech Zehnalek is the CEO of the Cekindo Vietnam office. He graduated in Economics and International Trade from the University of Economics in Prague, the Czech Republic, and he also earned a Business Degree at the Vlerick Business School in Belgium.