1/ Can a Foreigner Own a Business in Vietnam?

YES, foreigners can fully own businesses in Vietnam with 100% ownership in many sectors. While foreign investors are allowed to establish and operate fully foreign-owned companies, there are certain exceptions. Industries such as tourism and advertising may require joint ventures with Vietnamese partners, as dictated by local regulations.

Vietnam’s business framework is aligned with international standards, particularly the guidelines set by the World Trade Organization (WTO), making the process relatively smooth for foreign investors. However, if there is any ambiguity in applying WTO regulations alongside local laws, approval from the relevant ministry is needed.

2/ Requirements for Setting Up a Company in Vietnam
When starting a business in Vietnam, foreign investors must navigate specific regulatory requirements. This section outlines key factors like capital obligations, legal duties, and compliance requirements that are essential for a successful business setup.

  • Capital Requirements: There is no strict minimum capital requirement for most sectors, but the Department of Planning and Investment will assess registered capital to ensure it covers business expenses. Specific industries may impose additional capital requirements.
  • Charter Capital and Total Investment Capital: Two types of capital need to be registered: Charter Capital (owner’s contribution) and Total Investment Capital (including loans). Both must be officially recorded and can be adjusted with approval from local authorities.
  • Capital Contribution Schedules: Investors must contribute their capital within 90 days after establishing a Foreign Invested Enterprise (FIE), unless otherwise approved.
  • Bank Account for Capital Transfer: Investors must open a capital bank account in Vietnam to facilitate fund transfers for business operations.
  • Company Legal Address: A valid, physical legal address in Vietnam is necessary, although service-based businesses may opt for virtual office spaces.
  • Legal Representative: Every company must appoint at least one Legal Representative, such as a company president or director. The representative must have a Vietnamese residential address.
  • Accounting and Tax Compliance: Regular compliance with accounting and tax regulations is required, including corporate income tax, value-added tax, and personal income tax.

3/ How to Start a Business in Vietnam as a Foreigner
Starting a business as a foreigner in Vietnam involves several steps. While the process may seem complex, AZTAX can guide you through it smoothly. Here’s a simplified six-step approach:

  • Secure a Business Location: Find a suitable location for your business operations.
  • Document Preparation: Gather all the required documents for company registration.
  • Company Registration: Complete the necessary paperwork to officially register your company.
  • Bank Account Setup: Open the required company bank accounts.
  • Post-Incorporation Compliance: Ensure compliance with post-registration legal obligations.
  • Obtain Additional Licenses/Permits (if necessary): Apply for any additional licenses or permits depending on your business activities.

4/ What Does it Cost for a Foreigner to Start a Business in Vietnam?
Starting a business in Vietnam involves registration and operational costs that vary by company type. Here’s an overview of the potential expenses:

  • Limited Liability Company (LLC):
    • Timeline: 4 to 6 weeks
    • Registration Costs: Approximately USD 2,500
    • Add-On Services: Virtual Office (USD 600), Work Permit & TRC Processing (USD 1,500 per person), Business Visa (USD 1,000 per person)
  • Joint Stock Company (JSC):
    • Timeline: 2 to 3 months
    • Registration Costs: From USD 2,500
    • Add-On Services: Similar to LLC, including Virtual Office, Work Permit, and Business Visa
  • Representative Office (RO):
    • Timeline: 2 to 4 weeks
    • Registration Costs: Approximately USD 2,500
    • Add-On Services: Business Address (USD 100/month), Tax & Accounting Services (USD 1,500), Payroll Service (USD 150/month)

5/ Post-Establishment Costs:

  • Office Rental: Starts from 5,275,000 VND (USD 230) per month
  • Employee Salaries: Average of 6,800,000 VND (USD 295) per month
  • Communication/Internet: High-speed internet costs approximately 1,119,000 VND (USD 48.65) per month

6/ How Long Does it Take to Open a Company in Vietnam?
Establishing a fully foreign-owned enterprise (FIE) in Vietnam generally takes around 3 to 4 months. However, setting up a Representative Office is faster, taking only 2 to 4 weeks, though it comes with limitations on the range of activities that can be conducted.

7/ Restrictions on Foreign Business Setup in Vietnam
Foreign investors must be aware of certain restrictions under the Law on Investment (2020) when considering business ventures in Vietnam. These prohibitions include:

  • Narcotic substances
  • Toxic chemicals, precursors, and certain minerals
  • Endangered wildlife
  • Illegal activities such as human trafficking
  • Firecracker-related businesses
  • Debt collection services

In addition to these prohibited areas, the Law on Investment (2021) has introduced new sectors under “conditional business investment,” meaning that while certain industries are not prohibited, they require foreign investors to meet specific conditions to operate.

The above information is provided by Mys Law. For any questions regarding the content of this article, please contact 0969.361.319 or email: [email protected] for further clarification. Best regards!

Compiler: Nguyen Anh Quan