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Setting Up A Business In Vietnam – Complete Guide

Setting up a business in Vietnam involves navigating through multiple stages where seeking approval and gathering required documentation from relevant local authorities. There are also additional requirements that need to be fulfilled depending on the business entity type and the particular market sector the company intends to enter.

Thus, this article will provide a step-by-step breakdown of the company setup process, aiding firms in establishing their presence within Vietnam as efficiently as possible.

 

Selecting A Business Entity 

Which is the best-suited entity model for your business?

Which is the best-suited entity model for your business?

 

For ambitious firms setting their sights on Vietnam’s flourishing business landscape and wanting to capture these opportunities, the burning question often revolves around which business entity is ideal for their operation and goal.

It is also the key step right after picking out the ideal market entry mode, where a business has identified the strategy or method a company employs to enter a new market. If you are still unsure about the mode of entry, do check out our detailed guidelines here

Otherwise, when it comes to the business entity, there are four common options:

 

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is formed through capital contributions, with limited legal liability and minimum charter capital requirements but no specific limitations on capital. LLCs can be categorized into two groups: 

  • Single-member LLC (owned by a single individual or entity), 
  • Multiple-member LLC (must have two or more owners or members, but cannot exceed 50 members).
Advantages Disadvantages
  • Flexible organization structure.
  • Applicable to a wide range of business scope and industries. 
  • The shareholder’s liability in an LLC is limited to the value of their shares and does not extend to personal assets.
  • Restrictions on ownership transfer. 
  • Cannot issue shares, making it harder to raise capital.
  • Registration can be complex *
  • Mid to high operation costs

* Depending on the industries or current government regulations

 

Why Choose a Limited Liability Company?

As Vietnam’s most popular business entity, many choose Limited Liability Companies because it enables them to trade with both local and international markets, thereby maximizing potential profit. More importantly, this business entity is also preferred for its high transparency in operations, fast incorporation process, and flexibility in operation and management structure. 

For firms seeking full control of business operations, we highly recommend a 100% ownership LLC, which can be achieved by either creating one with 100% capital contribution from them or purchasing complete ownership of a Vietnam company.

Limited Liability Company Register Procedures:

  1. Apply for Investment Registration Certificate
  2. Apply for Enterprise Registration Certificate
  3. Apply for other Sub-Licenses (if required)
  4. Post-Licensing Procedure

 

Joint Stock Company (JSC)

A Joint-Stock Company (JSC) is a type of business entity where ownership is divided into shares, each representing a portion of the company’s capital. This form of organization allows for the pooling of capital from multiple investors, who become shareholders by purchasing shares of the company. 

There are no specific limitations on the maximum number of shareholders, but it requires at least 3 shareholders, who can be individuals or organizations, to form a JSC.

Advantages Disadvantages
  • Access to a broader capital base through the sale of shares
  • Easy ownership transfer procedures
  • Separate between ownership and management
  • Complex legal and regulatory requirements
  • Complicated organization structure
  • Registration can be difficult and lengthy
  • High operation cost

 

Why Choose a Joint Stock Company?

JSC is often the preferred choice for larger companies with expansive operations or ambitious growth plans, as it allows for dividing ownership into shares, facilitating the pooling of capital from numerous investors. 

Moreover, the ability to trade shares on public exchanges enhances liquidity and provides investors with the opportunity to buy and sell ownership stakes easily.

Joint Stock Company Register Procedures:

  1. Apply for Investment Registration Certificate
  2. Apply for Enterprise Registration Certificate
  3. Apply for other Sub-Licenses (if required)
  4. Post-Licensing Procedure

 

Branch Office

A Branch Office is a type of business establishment in Vietnam that operates as an extension of its parent company, conducting commercial activities within the country on the parent company’s behalf.

Advantages Disadvantages
  • Direct control and oversight by the parent company
  • Can remit profits abroad
  • Leverage the parent company’s brand and resources
  • Registration can be complex *
  • Liability extends to the parent company
  • Limited to certain industry sectors
  • High operation cost

* Depending on the industries or current government regulations

 

Why choose a Branch Office?

Branch Office is a common choice for businesses aiming to extend their operations and establish a direct foothold in Vietnam, especially those with larger multinational corporations that have complex operation processes.

Branch Office Register Procedures:

  1. Apply for Branch Office Registration Certificate
  2. Post-Licensing Procedure

 

Representative Office (RO)

A Representative Office (RO) serves as a liaison office or representative arm of a foreign company in Vietnam. It is required to have a resident representative who is responsible for managing the office’s affairs in Vietnam.

Advantages Disadvantages
  • Allows for market presence without engaging in profit-generating activities
  • Low operation cost
  • Wide range of business opportunities and industries (must not generate revenue)
  • Registration can be complex * 
  • Not allowed to conduct business activities that yield revenue. 
  • Parent company bears liability

* Depending on the industries or current government regulations

 

Why choose a Representative Office?

Representative Offices can be useful for companies seeking to establish a presence in Vietnam without committing to a full-fledged business operation. It enables them to conduct non-trading activities such as market research, promotion of the parent company’s products or services, and acting as a communication channel between the parent company and local partners or clients.

Branch Office Register Procedures:

  1. Apply for an Establishment License
  2. Post-Licensing Procedure

 

Considering the variations among business entities and the article’s length, the upcoming sections will exclusively cover the LLC, detailing its prerequisites and step-by-step setup process in Vietnam. 

If you are interested in setting up a business in Vietnam using other business entities, feel free to reach out to us here.  We’re happy to provide further detailed guidance and recommendations on how to set up your company in Vietnam with ease.

 

Setup Process In Vietnam For Limited Liability Company

Limited Liability Company setup process in Vietnam

Limited Liability Company setup process in Vietnam

 

Step 1 – Preparation For Registration Process of LLC

Before initiating contact with Vietnamese authorities to seek approval for establishing an LLC, it’s paramount for businesses to conduct thorough research on the sector-specific regulations as different industries may have unique requirements, such as specific permits, certifications, or compliance standards. 

Failing to adhere to these regulations could result in delays or complications during the setup process. Therefore, businesses must ensure they have a comprehensive understanding of the regulatory landscape applicable to their industry in Vietnam.

It is also worth noting that the timeline for obtaining approvals and licenses may vary depending on factors such as the complexity of the application process and the responsiveness of government agencies. Similarly, the setup costs can vary significantly based on factors such as the operation scope, translation services, and other third-party service fees.

 

Legal and Registration Fees Operational 

Costs

Licensing and Post- licensing costs * License Term Timeframe for Establishment
Limited Liability Company (LLC) Moderate to High Moderate Business license cost from US $10,000

Sub-license cost from US $4,000

Unlimited  Around 2-4 months, with a simpler and faster setup compared to a joint-stock company

* The estimated costs include all legal and registration fees, notarized and legalized services, translation services, agent service charges, and other expenses for a ready-to-operate business entity.

 

Step 2 – Apply For Investment Registration Certificate 

Firms will need to apply for an Investment Registration Certificate (IRC) for their LLC in Vietnam. The IRC serves as proof of the investor’s registration with the Vietnamese government and outlines key details of the investment project, including its objectives, scope, location, capital investment, and expected timeline. 

It is an essential document for obtaining necessary licenses, permits, and approvals from relevant authorities throughout the investment process.

 

The application process will require the following information and documents:

  • Document(s) regarding the legal status of the investor
  • An application for the implementation of the investment project
  • A copy of the ID card or passport
  • An investment proposal that specifies details of the project in Vietnam
  • Document(s) proving the financial statement
  • Demand for land use; or a copy of the lease agreement certifying the investor’s right to use the premises to execute the project shall be submitted.

 

How To Apply For Investment Registration Certificate

To proceed with the IRC registration, the investor must declare online information about investment projects on the National Foreign Investment Information System and submit the file for the Investment Registration Certificate within 15 days. After being provided with an online access account, the investor can track the processing and results of the application. 

Expected Processing Time: 20 – 30 working days

 

Step 3 – Apply For Enterprise Registration Application

An Enterprise Registration Certificate (ERC) is a legal document issued by the Department of Planning and Investment (DPI) or its local counterpart, serving as official proof of the enterprise’s legal registration and provides key information about the enterprise, such as its name, business activities, legal representative, address, charter capital, and registration date.

In other words, it means your LLC is officially formed in Vietnam with approval from the government. Thus, ERC is required for conducting business activities in Vietnam and is necessary for opening bank accounts, signing contracts, obtaining business licenses, and engaging in other commercial transactions.

 

The application process will require the following information and documents:

  • Proposal form for investment project implementation
  • Legal documents of individual investors: a copy of ID card, citizen ID card, or passport;
  • An application form for business registration with full details (company name, address, contacts, etc.)
  • Charter capital (in case of an enterprise) or investment capital (in case of a sole proprietorship)
  • Copies of: Legal representatives, board members or shareholders, letters of appointment and authorizations, etc.

 

How To Apply For Enterprise Registration Certificate

Businesses can submit ERC applications through either direct submission or online submission via the National Business Registration Portal. The business registration agency will review the application documents for both formality and substance and issue the certificate within 3 working days of receiving the valid documents.

Expected Processing Time: 20 – 30 working days

 

Step 4 – Apply For Other Sub-Licenses (If Required)

After obtaining the IRC and ERC for the LLC, businesses may need to apply for additional sub-licenses, depending on the specific sector in which they operate in Vietnam as certain industries or business activities may require special permits, licenses, or approvals from relevant regulatory authorities.

Therefore, we highly recommend firms consult with legal advisors or market experts familiar with the regulatory landscape in Vietnam who can provide valuable guidance and assistance in navigating the process of obtaining sub-licenses.

Expected Processing Time: 35 – 50 working days depending on relevant Government Authorities.

 

Step 5 – Post-Licensing Procedures

LLCs in Vietnam must complete several post-license procedures to ensure legal compliance and operational readiness. These procedures encompass various administrative tasks and registrations that are essential for the smooth functioning of the business.

 

Step 1 – Registration for Corporation Tax and Company Seal: LLCs must register for corporation tax with the tax authorities and obtain a company seal, which is used for official documentation and transactions.

Step 2 – Initial Compulsory Insurance Registration: Depending on the nature of the business activities, LLCs may need to register for compulsory insurance, such as social insurance, health insurance, and unemployment insurance, for their employees.

Step 3 – Initial Operational Registrations: This includes announcements on the government system, registration for e-signatures, e-invoices, and cashless tax payments. Additionally, LLCs must register for compulsory insurance software to manage insurance-related processes efficiently.

Step 4 – Create Direct Investment Capital Account (DICA) and Transaction Bank Account: LLCs are required to open a Direct Investment Capital Account (DICA) to manage their investment capital in Vietnam. They also need to open a transaction bank account for conducting financial transactions related to their business activities.

Step 5 – Cashless Tax Payment Registration: LLCs must register for cashless tax payment, which involves setting up electronic payment methods for tax obligations to the tax authorities.

 

Completing these post-license procedures is crucial for ensuring legal compliance, operational efficiency, and financial transparency.

 

Special Case – Set Up an LLC By Purchasing 100% Shares of a Vietnam Company

Set up a 100% purchased shares of a Vietnam company

Set up a 100% purchased shares of a Vietnam company

For firms interested in acquiring an existing Vietnamese company for LLC incorporation rather than starting from scratch, we recommend following this registration procedure instead.

Step Procedure Goal Processing Time
1 Incorporation of 100% Vietnam-owned Company ERC under the name of Nominate Director (Vietnamese) 5 -10 working days
2 Convert to a 100% foreign-owned Company – Certificate of Capital Contribution of Foreign Investor

– Updated ERC under the name of Foreign Investor

35 – 50 working days
3 Apply for other Sub-Licenses (If required) Sub-licenses 35 – 50 working days depending on relevant Government Authorities
4 Post-Licensing Procedure – Initial registration for corporation tax and company seal

– Initial compulsory insurance registration

– Initial operational registrations, including announcements on the government system, e-signatures, e-invoices, cashless tax payment registration, and compulsory insurance software

– Create Direct Investment Capital Account (DICA) and Transaction Bank Account 

– Cashless tax payment registration

20 – 30 working days

 

Other Notable Considerations For Setting Up A Business In Vietnam (For LLC)

Key considerations for setting up an LLC in Vietnam

Key considerations for setting up an LLC in Vietnam

 

Company Name

In Vietnam, when naming a Limited Liability Company (LLC), it’s important to adhere to certain regulations to ensure compliance and clarity. The LLC name must have two versions: one in Vietnamese and one in a foreign language. 

 

  • The Vietnamese version should consist of two parts: the LLC part, which will be expressed as “công ty trách nhiệm hữu hạn” or its abbreviation “công ty TNHH”, and the actual company name using the Vietnamese alphabet ( can include special letters such as F, J, Z, W, numbers, and symbols).
    Example: Công Ty Trách Nhiệm Hữu Hạn Sun Hill
  • As for the foreign version of the LLC name, it must align with the regulations outlined in Article 39 of the Law on Enterprise 2020

 

Additionally, it should not replicate or closely resemble existing LLC names, infringe upon the names of state agencies or social organizations without proper consent, or include symbols or words that conflict with Vietnamese culture and customs.

 

Minimum Capital Requirement

Vietnam does not impose minimum capital requirements for most sectors and business lines. However, the Department of Planning and Investment evaluates the registered capital to ensure it is sufficient to cover the business expenses until it becomes self-sustainable. While it’s feasible to establish an LLC with less than US$ 10,000, most businesses typically require capital at or above this threshold, depending on the operation nature, scope, and requirements.

 

Registered Address

While virtual office addresses suffice for certain service-based businesses, most firms must have a physical location—a leased or owned office or building—to establish an LLC in Vietnam. 

During the registration process, firms must submit documents verifying the address where the LLC will operate once the incorporation is finalized. 

 

Company Representative

Every LLC needs at least one individual to serve as the resident director, acting as the company’s legal representative. This individual must either have a permanent address in the country or reside there for a minimum of 183 days per year, and can be either Vietnamese or non-Vietnamese. However, if a non-Vietnamese individual assumes this role, they must obtain a work permit.

 

Setting Up A Business In Vietnam For Future Success

Setting up a business in Vietnam is anything but simple, requiring firms to be well-versed in the requirements and preparations for registering their company here. From selecting the right business entity to seeking approval from government authorities and completing post-license procedures, it can take firms months to successfully establish their operation in Vietnam.

One of the better ways to do this is by relying on a trusted market partner who can help you navigate through the landscape with ease; that’s how Dataily Lab successfully set up its strong foothold within Vietnam with Launch JDI support. Read their full story here!

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For more insights on how to enter Vietnam successfully, read our next curated insights: Market Entry Strategy For Vietnam

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