10 steps to fully open a foreign-owned company in Vietnam

New incorporation

10 steps to setup and manage business in Vietnam you need to know

Is it easy to start a business in Vietnam?

In fact, starting a business in Vietnam can be complicated, especially if you are unfamiliar with the country (language, people, laws, and culture). Here’s a step-by-step guide on How to Open a Foreign-Owned Company in Vietnam to help you understand the process thoroughly. The guide walks you through the entire process, from planning to preparation to registration and getting the entity ready to go.

Step 1 – Check conditions for business

The first step you always need to do first is to check if the business you intend to open has to satisfy any additional conditions or not. Because the registration can only be successful if the prerequisites are met.

There are two minimum conditions that every business needs to have: Having a business address and Having a resident legal representative. Besides these, according to a new decree starting effect from 2021, a few conditional businesses impose further requirements such as minimum capital, the maximum foreign ownership allowed, the qualifications and credentials of the business founder or manager, etc. Ensure that you check and know what additional conditions apply to your intended business. If you need help, contact us for a free consultation on this.

Step 2 – Obtain a business address

The majority of business lines permit the use of a virtual office as the registered business address. However, some conditional businesses (such as training, coaching, manufacturing, and so on) require a physical address with a minimum amount of space, size, and lease term. The residential address cannot be used to register a company in any circumstance. As a result, if someone offers you to use their home or apartment for your business, you should think twice before accepting. VNBG provides services to arrange business addresses (Virtual Office or actual office) for our clients. Contact us if you are looking for one.

Step 3 – Appoint a resident legal representative

Any company established in Vietnam must have at least one legal representative residing in the country. This individual may be Vietnamese or non-Vietnamese. If the appointed person is a non-Vietnamese, the company must obtain a Work Permit for him in the future.

In addition, to prove his residency, the individual must provide a permanent address in Vietnam along with his name. And a minimum of 183 days in the country per year.

The presence of a resident legal representative is required during the registration process. Fortunately, even if the investor cannot appoint someone right away, he can seek a temporary arrangement of this role just to complete the registration process, and then replace the right person whenever he wants.

Step 4 – Apply for Investment Certificate

Once all of the conditions are met, the company can file the necessary paperwork to establish itself. Business registration is a two-step process in terms of administration. The first step is to obtain the Investment Certificate, followed by the Business Certificate.

First, the investor must demonstrate the viability of his business, as well as the benefits it will bring to Vietnam and how it will benefit society. Second, the Department of Planning and Investment (DPI) will decide on the investment proposal, either approval or disapproval. The approval will be displayed in the form of an Investment Certificate. It usually takes 3-5 weeks to complete this task.

Furthermore, all documents must be written or translated into Vietnamese before they can be submitted. Even though some cities now allow online application submission, the vast majority of work is still done by hand. As a result, if you are unfamiliar with the language, you will need someone (preferably a local) to handle the submission on your behalf. The individual would need to maintain close contact with the official in charge of the application. As a result, he can explain or provide additional information as needed.

Step 5 – Apply for Business Certificate

After receiving the Investment Certificate, the company can apply for a Business license, which is also issued by the same authority (DPI). This process takes about 7-10 days. Once the Business license/certificate is issued, the company is officially open for business.

Step 6 – Make the company stamp/seal

Though the most critical aspects of company formation have been completed, there are a few more steps to take before the company is fully operational. To begin, create the company seal or stamp/chop.

Every official document issued by the company bears the company seal/stamp. The company stamp, along with the legal representative’s signature, contributes to the legitimacy of the company’s documents. The business license must be ready to make this cut. The total time frame is between 2 and 5 days.

Step 7 – Open the bank account for the company

After the company chop is made, it can start applying for a bank account. There are no restrictions on the bank with which a foreign-owned company must open an account. It will work as long as the bank has a presence in Vietnam.

A foreign-owned company always has to open 2 types of bank accounts: a Capital account and a Current account.

The capital account: used for capital investment injection (only).

The current bank account: used for all other business transactions of the company.

As a result, when the company receives a capital injection into its capital account, the capital must be transferred to the current account for use. It is unable to pay bills directly from the capital account.

Step 8 – Inject committed capital

Following the establishment of the company, the investor must inject capital. He has 90 days under the law to complete this task. The capital can be injected several times, but it must be fully contributed before the deadline. If the company fails this step, it will face a penalty or be forced to close.

The capital injection should be done via bank transfer to the capital bank account which was established in Step 7 above.

Step 9 – Tax registration

If you are here, you’re almost done.

The company’s business license number is the same as its tax code. To begin your tax compliance responsibilities, you must first create an account to file and submit tax reports through the tax online system. The first step is to purchase an e-token. Then, to complete the procedure with the Tax department, a simple registration step should be added.

Step 10 – Other operational tasks (recruitment, office setup, tax, accounting, and payroll)

From here, the company is fully operational and ready to fly. As with any new business in its post-establishment phase, you will consider issues such as hiring your team, office setup, and other operational issues. Following that, you may wish to hire someone to assist you with tax compliance and monthly payroll. It is always preferable to hire someone in-house to handle all of the tasks. However, costly-wise, there are many outsourcing services available for your consideration.

The complete guide on how to open a foreign company in Vietnam above has explained all necessary steps for the incorporation process. Following this instruction, one can totally establish a business for himself and get it ready to run. If you need any further support at any step along the way, feel free to contact our consultant for assistance.

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