10 Questions to Ask Before Setting-up Company in Vietnam

Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firm in Vietnam for advice and service offering.

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding…which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?

Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two ore more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e. trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

How ANT Lawyers Could Help Your Business?

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Change of Headquarter of Da Nang Immigration Department

As of August 2018, according to the project for rearranging the administrative function of the Government and the Ministry of Public Security, Immigration Department of Da Nang has been merged into Immigration Department of Hanoi. Therefore, the procedures related to entry, exit of Vietnamese citizens and foreigners such as issuing visa, exempting visa, temporary residence card, permanent residence in Da Nang shall be implemented in Immigration Department of Hanoi.

Relating to the dossier and procedures carried out at the Immigration Department of Da Nang such as issuing passport, temporary residence card, permanent residence, the application shall be submitted to Immigration Department of Da Nang. Thereafter, this agency shall transfer such dossier to Immigration Department of Hanoi for approval. Finally, the results shall be returned to Da Nang.

For most of immigration procedures which used to be implemented in Immigration Department of Da Nang, such as issuing visa, the applicant shall submit dossier directly to Immigration Department of Hanoi. The change could possibly add up processing time, and inconvenience if there is requirement for re-submission, amendment and supplement.

ANT Lawyers law firm offer offices in both Hanoi and Da nang, there fore could facilitate the process for individuals and businesses to register entry, residence permit in Da Nang for the smooth experience, to assist foreigners entering Vietnam doing business, setting up company and making investment.

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Danang to call on investment in hi-tech, real estate after Tet

DANANG – The central coastal city of Danang plans to call for investment in 44 projects mostly in the fields of hi-tech and real estate after the Tet holiday, with each of them needing US$30,000 to US$400 million, according to a representative of the Danang Investment Promotion Agency.

Half of the 44 projects are in the information-technology and hi-tech sectors and will be executed in Danang Hi-Tech Park.

The city is seeking investors for a solar energy project which needs US$150 million to US$400 million, and a US$200-million project to manufacture semiconductor materials for electronic parts and circuits. A 60-hectare urban area project and Truoc Dong Lake ecological zone covering 100 hectares of land are also in need of investment capital.

Apart from that, the city plans to resume work on the delayed projects that have yet to be licensed for investment, including a No.2 software park project covering over 50 hectares. Singapore's firm Sembcorp proposed injecting over US$90 million into the project long ago, but it has been awaiting word from the ministries of Foreign Affairs, Public Security, and National Defense as it is located in a maritime boundary area.

Meanwhile, Matrix Holdings Limited from Hong Kong wants to build a racetrack and horse training and multiplication center in the city, with total capital of US$200 million. An appropriate site is still being sought for it.

Further, Danang will prioritize foreign direct investment in digital, biotechnology, hi-tech agricultural projects, meaning that projects that apply outdated technologies and harm the environment will not be accepted. Investors from Japan, South Korea and Europe are preferred.

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Govt. approves six solar power projects in Binh Phuoc

HCMC – The Government has approved six solar power projects in Binh Phuoc, with total capacity reaching 850 megawatt peak (MWp), raising the planned solar power capacity in the southern province to the highest level in Vietnam, local news site Vietnam Plus reported, citing the provincial chairman, Nguyen Van Tram.

According the province’s solar power plan, Binh Phuoc will generate 4,775MWp by 2030, while over 2,700MWp will be produced from now until 2020.

To generate this volume of solar power, up to 6,000 hectares of land will be used for developing solar power projects, which are mainly located in the province’s Loc Ninh District.

Recently, Nguyen Anh Hoang, director of the provincial Department of Industry and Trade, said the provincial People’s Committee had given approval to two investors to execute solar power projects.

The projects are set to initially generate some 600MWp of solar power in the province in June next year. Also, they will be connected to the national grid and put on commercial sale.

However, power experts said that investing in solar power usually costs an arm and a leg. For instance, the generation of 1MWp of solar power requires US$1 million.

Thac Mo Hydropower Corporation in Phuoc Long provincial town, Binh Phuoc, has been approved to generate 50MWp, with a total investment of VND1.3 trillion, equivalent to over US$55 million.

The experts added that Binh Phuoc is among three provinces with the highest number of sunlight hours and thus holds great potential for solar power development, especially in the border district of Loc Ninh.

-saigontime-

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Toyota Vietnam opens new dealership in Ha Tinh

HCMC - Toyota Vietnam Motor Company (TMV) on March 4 announced the opening of a new service station in the central province of Ha Tinh.

Toyota Phu Tai Duc-Ha Tinh, located on Tran Phu Street in Ha Tinh City, began operations under the 3S model (sales, service and spare parts).

The launch of Toyota Phu Tai Duc increased the total number of TMV dealers/dealer branches and authorized stations nationwide to 56.

With US$7.5 million in investment, Toyota Phu Tai Duc-Ha Tinh fully meets Toyota’s standards in terms of human resources, factory facilities and infrastructure.

The new dealership has three main areas: a product showroom; a lounge area for customers; and service workshops with eight general repair compartments, five quick repair compartments and 23 repair-painting compartments. All have been built according to Toyota’s standards and use a painting and color mixing system to ensure environmental hygiene.

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HCMC to set up business support center

HCMC – The HCMC government intends to set up a business support center that will carry out a survey of business bottlenecks every six months, as one of the solutions to improve its Provincial Competitiveness Index (PCI).

The city last year moved down from the 6th to the 8th place in the PCI rankings of the Vietnam Chamber of Commerce and Industry (VCCI), says a report by the HCMC Department of Planning and Investment at a meeting on PCI improvement on April 11.

Five component indicators in the PCI reading of the city fell. Transparency fell from 6.51 to 6.5 points as businesses believed documents related to State management activities were not readily available, and the link between enterprises and State agencies was not strong enough.

The indicator of fair competition recorded a drop from 4.28 to 4.13 points, with respondents saying the municipal authorities still favor foreign-invested enterprises (FIEs) and State-owned enterprises (SOEs) over others.

The active government indicator declined from 4.19 to 4.17 points. Meanwhile, the indicator of business support services went down from seven to 6.82 points and that of the legal environment slid from 5.04 to 4.25 points.

In terms of transparency, many investors are now expressing their interest in the city, but municipal agencies are not really helpful, said Nguyen Hoang Minh, deputy director of the Department of Planning and Investment.

For example, regarding access to land, when businesses need land to expand their production, they look for equal government support regardless of the type of enterprise. Thus, it is not right to let private firms say the municipal government favors FIEs or SOEs, Minh said.

HCMC vice chairman Tran Vinh Tuyen said that although the city’s access to land indicator improved in 2016, there is still the state of people asking or even giving bribes for land planning quotas. In the coming time, it should be all made public to citizens.

On informal charges, Tuyen suggested city departments and districts strengthen their dialogues with enterprises, encourage them to abandon corrupt practices, since a healthy clean government needs joint efforts from both authorities and society.

In addition, the city will accelerate online public services that reduce direct contact between civil servants and citizens as well as businesses in an attempt to prevent harassment and bring down informal costs.

Meanwhile, to better the indicator of fair competition, the city is looking to build a center for entrepreneurship that will assist enterprises in investment and guide them to do business in all fields. This center will also offer consultancy, help foreign enterprises directly contact the city’s policies and planning to facilitate their investment, and act as a bridge between investors and policies as well as planning in an open and transparent manner.

Moreover, the city will study the formation of its own survey with the criteria suitable for the city. The survey will be conducted every six months, starting early this June (by the HCMC Institute of Economics), which will poll both domestic and foreign investors concerning the issues of their concerns such as taxation, publicity and transparency of planning and procedures.

“We should make State agencies a place for enterprises to rely on rather than their obsession when they want to do business here,” Tuyen said at the meeting on April 11.

- Saigontime- 

How ANT Lawyers Could Help Your Business?

Please click here to learn more about ANT Lawyers Foreign Investment Practice or contact our lawyers in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529

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