The Vietnamese economy is stable and dynamic despite the pandemic of Covid-19. Vietnam’s economy has a system of open and transparent investment policies, a young labor force, and a highly competitive workforce with the completion of the legal system and policies. This means that investment and business opportunities in Vietnam are open and welcoming foreign investors around the world.
I. These are issues which are needed to be considered and prepared before setting up a company in Vietnam
1. Office space
Find office space then for your business to have a place to work and as a specific office address is required by the government for the business license application.
2. Legal representative
Shareholder/Owner can be the legal representative. A company can have more than 1 legal representative.
3. Business license and sub-license
You need to register a business license for your company, expect a 5-day-waiting period for a Vietnamese-owned company, and a 45-day-waiting period for a foreign-owned company. Talk to your lawyer to know which sub-licenses you should obtain for your business activities.
4. The investor’s charter capital
Depending on each business line that Viet Nam law regulated about ratio charter capital of the foreign investor. Therefore, the investor needs to check carefully in “Guide to Vietnam commitment on trade in services in the WTO” to know the intended business line allow to establish company 100% foreign investor or being limited under a certain ratio.
5. The conditions of the business line
The foreign investor notes if it is the conditional business line, the clients need to make sure the conditions according to law. For example, the conditions about charter capital, sublicense, practicing certificate..etc.
The conditional business line researching commonly through 2 main documents: “Guide to Vietnam commitment on trade in services in the WTO” and “specialized legal documents”. Understanding the conditions carefully is an essential step to help the investors not “ losing money”. Besides, the investors need to check carefully if it is allowed to invest or not. If it is a new business line, has not allowed investing, the procedure will be more complicated and time-consuming for an investment certificate. Because this case, the investors shall consult with the Ministry of Planning and Investment and relevant Ministries;
6. Range of activities
With the same business line but having a difference about a range of activities between the foreign investor and domestic investor. Therefore, the investors need to research and know their range of activities to avoid being fine for getting over a range of activities.
For example, for the foreign investor conduct on the real estate trading, they are not allowed to purchase buildings for sale, for lease, or lease-purchase..etc.. or with the business line construction works, Viet Nam law has just allowed the investor is an organization, not personal.
7. Foreign investors can start their own business in different ways:
By setting up an economic organization( Limited liability companies, Joint-stock companies, Sole proprietorships, A partnership ); Capital contribution, purchase of shares or capital contribution in an existing business; Invest based on commercial contracts( PCC, PPP ) or implement an investment project. Depending on the needs and certain cases of the investor, they decided their form suitably.
8. Choose a name for your company
The name should be short, easy to remember and pronounce. It is not allowed to resemble other companies’ available names. Learn more information about available companies’ names at the “ National business registration portal” ( dangkykinhdoanh.gov.vn ).
II. Provided clients documents
1. The foreign investor is personal
– Copies of the ID card or passport of the investor;
– The legalization of the bank account balance of the investor;
2. The foreign investor is an organization
– The legalization of Business Certificate or relative documents;
– The legalization of the Audited financial statement of the company at least 2 years. In the case of the company operate under 1 year, the investor needs to prepare the extra legalization of the bank account balance
III. The procedure of establishing the foreign-invested company
1. The procedure for issuance of Investment Registration Certificate
The first step that the investor needs to do is carry out the procedure for issuance of the Investment Registration Certificate.
A project dossier consists of:
– A written request for permission for execution of the investment project;
– The investor is personal: notarized copy of the ID card or Passport
The investor is an organization: notarized copy of Business Registration Certificate or relative documents;
– An investment proposal;
– Notarization translation of any of the following documents: financial statements of the last two years of the investor; commitment of the parent company to provide financial support; commitment of a financial institution to provide financial support; guarantee for investor’s financial capacity; description of investor’s financial capacity;
– Demand for land use or lease office principle agreement;
– The explanation for the application of technologies to the project that uses technologies on the List of technologies restricted from transfer prescribed by regulations of law on technology transfers;
– BCC contract.
Time: about 30-35 working days from the date of receipt valid dossier
2. The procedure for issuance of Business Registration Certificate
After receiving the Investment Registration Certificate, the investor will carry out the procedure for issuance of the Business Registration Certificate
A project dossier consists of:
– An application form for business registration;
– Company’s charter;
– List of members;
– List of founding shareholder and shareholder is a foreign investor;
– List of copy ID card, passport of the owner and the legal representative;
– The decision on Establishment, Certificate of Business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of members being organizations;
– A copy of the Investment Registration Certificate.
Time: 3-5 working days from the date receipt of the valid dossier
Competent authorities: Department of planning and investment
IV. The procedures need to do after receiving the business registration certificate
1. Check the proposed company name, obtain the certificates of business, tax registration and publish the registration contents on the National Business Registration Portal.
When the application file for enterprise registration fully satisfies the conditions for issuance of an enterprise registration certificate, the relevant information is transferred to the database of the Department General of Taxation (Ministry of Finance). The Department General of Taxation is responsible, within two working days from the date of receipt of information from the national database of information, to create an enterprise code number and to transfer it to that national database for the provincial business registration office to issue it to the enterprise. Each enterprise is issued one unique enterprise code number. This code number is both the business registration code number and the tax code number of that enterprise.
Business registrations are free of charge if applied online. The certificates of business and tax registration are either sent by post or collected at the Business Registration Office.
2. Make a company seal
The company has the right to decide on the design, content, and quantity of its seal and can have several seals with the same design and content. Before using the seal, the enterprise must send a notification to the Business Registration Office
3. Open a bank account
To open the account, the bank requires a bank-issued application form, a copy of the notification on use of the seal with a confirmation stamp of the Business Registration Office, the Charter of the Company, the Enterprise Registration Certificate, and relevant documents as required by each bank
4. VAT invoices from the Municipal Taxation Department or obtain and print self-printed VAT invoices
Companies shall use self-printed VAT invoices or purchase VAT invoices. The applicant must contact a publisher to order the printing of VAT Invoice Books and must register the self-printed invoices with the Municipal Taxation Department.
In total, it takes about 10 days to obtain the self-printed VAT invoices and have them registered with the Municipal Taxation Department.
5. Pay business license tax
The business license tax must be paid to the tax authority where the enterprise registers its tax reports or through designated commercial banks. This license tax is paid annually and in the first month of a year and the month when the newly established enterprise obtains the tax code. A new company established during the first 6 months of the year shall pay the entire annual business license tax. If it was established during the last 6months, it must pay 50% of the annual license tax.
6. Register with the local labor office to declare the use of labor
Agency: Municipal Department for Labor, Invalids and Social Affairs
Within 30 days of starting operations, employers must register all employees and their qualifications with the Labor Office (in conformity with set forms). The relationship between the employer and its employees is regulated by the Labor Code and outlined in labor contracts.
7. Register employees with the Social Insurance Fund for the payment of health insurance and social insurance
The company must register employees with the Social Insurance Fund.
The Social Insurance Office must, within 30 days from the date of receipt of the application file, issue an insurance registration book for each new employee that was not issued such book by the previous employer. The employer is responsible for paying social and health insurance contributions for each employee. Since the health insurance merged with the social insurance funds, payment is made (monthly or quarterly) directly to the Social Insurance Fund. Health insurance certificates are issued during the first month of the year.
By experience, capacity, and professional skill, Luat Phuc Cau shall deserve to be a trustworthy partner and be the leading choice for you.
Please don’t hesitate to contact us if you require any further information!