Vietnam has a corporate-friendly environment that makes it easy for companies to operate. The Vietnamese government has been implementing various measures to attract foreign investment and promote economic growth. These measures include tax incentives, streamlined administrative procedures, and investment in infrastructure. As a result, Vietnam has become an attractive destination for foreign investors, particularly in the manufacturing sector. In 2020, foreign direct investment (FDI) into Vietnam reached a record high of $28.5 billion, a 25% increase from the previous year.
The country has a relatively low level of corruption, and the government has made several reforms to make it easier for firms to operate. Additionally, Vietnam has a well-educated workforce, which means that companies can find skilled employees to help them grow. This article is beneficial to those investors who plan to register and operate a company in the country. If you are one of them keep reading.
Types of company structures
Vietnam offers the following firm structures for businesses to choose from.
Limited liability company
The limited liability company (LLC), which is a distinct legal entity from its owners, is the most common type of corporate structure. This structure provides the owners with limited liability protection while also allowing for flexible administration and financial benefits.
Representative office
For businesses looking to establish a presence in the nation without creating a separate legal entity, a representative office may be the best option. This structure allows for a foreign enterprise to have a presence in the nation for market research, promotion, and other non-commercial activities. However, a representative office cannot engage in profit-generating activities.
Process of company registration
Company registration is a detailed process that can be concluded in several steps.
Obtaining a business registration certificate
The corporations must obtain a corporate registration certificate from the Department of Planning and Investment. This certificate outlines the enterprise’s investment activities and is required for all foreign investors.
This certificate is required for all businesses, regardless of their size or type. The process of obtaining the certificate can take several weeks and involves submitting a variety of documents, including a corporate plan, financial statements, and proof of legal representation.
Getting corporate license
The firm must register for a corporate license with the Department of Industry and Trade. This license allows the enterprise to operate legally in the nation and must be renewed annually. The application process requires several documents, including a lease agreement for the syndicate’s office space, and a list of the enterprise’s directors and shareholders.
Registering for tax
Finally, businesses must register for tax and social insurance with the local tax authority. This registration is mandatory for all companies operating in the country and must be completed within ten days of receiving the corporate license. Failure to register can result in significant fines and penalties.
Requirements of business registration
To register a company, several requirements must be met. Firstly, the firm must have a legal representative who is a Vietnamese citizen or a foreigner with a valid work permit. The enterprise must also have a business address in the nation, which can be either a physical office or a virtual office.
The enterprise is also obligated to submit the required capital. The amount of capital mandated varies depending on the type of business and industry. For example, a limited liability corporation requires a minimum capital of VND 10 million, while a joint-stock firm requires a minimum capital of VND 30 billion. It is crucial to ensure that the required capital is readily available before proceeding with the registration process.
In addition to the minimum capital requirement, it is important to note that the capital must be fully paid up within 90 days of the firm’s establishment.
