Reasons for setting up a business entity in Vietnam

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Reasons to open a competitive business entity in Vietnam

To do business in Vietnam – Many investors and companies overseas have decided to open their own business entities in Vietnam in the last few decades. Here are the reasons why.

MAIN REASONS FOR BUSINESS INCORPORATION IN VIETNAM

The first step of the long-term business plan

Any long-term business plan must be carried out through an entity. An entity enables the investment to be legally recognized and protected. In addition, for the sake of legality or tax ease, most Vietnamese enterprises choose to associate with another firm that is also registered in the same nation.

Freedom in business

Many foreign companies may have previously been indirectly involved in business in Vietnam through a network of partners or nominee ownership.
However, this approach was not cheap, and it also limited the scope of activities. The decision-making process and business results become time-consuming and vulnerable to a slew of external factors.
The solution to this problem is to establish their own entity in Vietnam to handle their affairs directly. This reduces the number of intermediary steps, lowers the cost of nominee services, and gives them more freedom in running their business.

Client’s preferences

A large number of foreign companies have decided to set up offices in Vietnam simply because their Vietnamese clients want to. In fact, it is always easier for a Vietnamese company to do business (sign a contract, make payment, obtain invoices, etc.) with an entity registered here rather than one from another country.

This bureaucratic hassle, in turn, compelled companies to form a legal entity in Vietnam in order to continue doing business with their clients/partners in the country.

MINIMUM CONDITIONS FOR BUSINESS INCORPORATION IN VIETNAM

Having a business address

To be established, all business entities must obtain a business address in Vietnam. For most business lines, investors can use a virtual office – VO as their registered address.

However, for some businesses that have restrictions on their physical address, size, and location, Virtual Office is inapplicable. The key is to understand which business lines allow and do not allow VO, which will save you a lot of time and money during the setup process.

The business address can be changed and updated at any time, and the business license must be amended or updated with each change.

Having a person representing the entity in Vietnam

All business entities require a person in Vietnam to play the role of the legal representative. The person taking this role must obtain a permanent address in Vietnam or stay in Vietnam minimum of 183days/year.

In many cases, this person is also called the “Resident Legal Representative”. Both Vietnamese or non-Vietnamese can take this role, but in case a non-Vietnamese is assigned, he must obtain a Work Permit.

Additional business conditions

Aside from a Business Address and a Resident Director, the entity must meet some additional conditions for certain business lines, such as capital investment, business facilities, human resource qualification, and so on. For more information, please contact our consultant.