Registering a company in Vietnam: 15 things to consider

Vietnam continues to establish itself as an interesting Southeast Asian destination for foreign investment and entrepreneurship. There is a growing middle class, a relatively low cost of living, and the country is more and more integrating into the global economy. Vietnam offers various interesting opportunities for those who are looking to start a business. However, registering a company in Vietnam, especially as a foreigner, involves legal-, financial-, and procedural complexities. In this info post, we explore 15 important things to consider when registering a company in Vietnam. We have grouped them for you into five categories: legal framework, documentation and registration, financial planning, compliance and taxation, and ongoing operations. May this post be a helpful starting point for you to understand what is involved in registering a company in Vietnam.

Legal framework for registering a company in Vietnam

The most common legal structure for businesses in Vietnam, particularly those involving foreign investors, is the limited liability company (“LLC”). This structure provides a balance of flexibility and protection, with clear guidelines on ownership and liability. Unlike joint stock companies (“JSCs”), which are more complex and suitable for larger enterprises, LLCs are ideal for small to medium-sized businesses.

While foreign company ownership is often possible in Vietnam, some fields of business are still only open for Vietnamese ownership. Furthermore, it is worth noting that registering a 100% Vietnamese-owned company tends to be significantly easier, faster, and cheaper. For entrepreneurs with a Vietnamese spouse or a trusted local partner, this can be a strategic route to simplify the process. For example: the Vietnamese partner is the legal owner, and the foreign spouse is an employee of the company.

Appointing a legal representative for your company is another crucial part of registering a company in Vietnam. Each company must have at least one legal representative, but there could be more. Legal representatives may sign contracts, represent the company in official matters, and interact with Government authorities. If a company appoints more than one legal representative, it must clearly define the authority and responsibility of each one of them.

Documentation and registration

The company registration process in Vietnam involves several administrative steps and a number of documents. Authorities will typically ask for notarized copies of identification documents such as passports or national ID cards, as well as proof of residence. For foreigners who are married with a Vietnamese citizen: a notarized copy of the marriage certificate may also be useful. Because it may serve to support the exemption from the standard work permit requirement.

A key requirement for registering a company in Vietnam is to register an official business address. While it might be tempting to use a residential apartment or a virtual office for convenience, these options often do not satisfy local regulations. Furthermore, authorities may conduct on-site inspections to verify that the company operates at the stated address. Therefore in practice, using a real office or house with a designated person available to receive official mail is often the most secure option.

Another important step is selecting and registering one or more so – called “business lines“. These are essentially your company’s permitted areas of activity. They must align with Vietnam’s official business classification list. And your business may only offer and invoice services that match these registered activities. While it is possible to update or add new business lines later on, this involves additional paperwork and fees. It is also worth noting that not all business lines are available to foreign owned companies.

Financial planning when registering a company in Vietnam

Financial planning is of course a key element of registering a company in Vietnam. One of the first decisions you’ll make is the amount of registered capital. This is the initial sum of money that the investor contributes to the company. The law requires that the owner deposits the full amount into the company’s bank account within 90 days of business registration. One way to go about this is to calculate the company’s expected costs over the first 6 – 12 months, including salaries, rent, insurance, and accounting fees. You could then base your registered capital on that estimate.

Opening a corporate bank account (even two for foreign owned companies) is mandatory, but not always straightforward. Some banks are more foreigner-friendly than others. From personal experience, we know that for example SHB and Vietcombank work relatively well with businesses. Others, for example Techcombank or HSBC, may pose more challenges or higher fees. Vietnamese banking regulations normally require two authorized individuals to operate the account. One who initiates transactions, and another who approves them.

Business startup costs in Vietnam are generally affordable. The official Government fees for obtaining the key licenses are not very high. They range from USD 100 to USD 200. However, many foreign investors choose to engage legal- or consulting firms to streamline the process for them. Depending on the service provider, prices typically range from USD 1,500 to USD 3,000 for a foreign – owned company and USD 150 – 350 for a Vietnamese owned company. Seal carving, notarization, and bank account setup may add another USD 100 to USD 300 to the total costs. Sub – licenses, if you need them, may cost around USD 500 – 1,000 each.

Compliance and taxation

If you plan to be employed by your company, whether as an “independent” foreigner or as the spouse of a Vietnamese owner, you must have a signed labor contract and register for social insurance. In many case you will also need to obtain either a work permit or an proof of work permit exemption. Your salary must of course be above the legal threshold, and it must be proportionate to your position. Social insurance contributions are split between the employee (~10.5%) and the employer (~21.5%).

Something else to consider are business – related tax in Vietnam. Keep in mind that salaries above VND 11 million per month are subject to personal income tax (PIT), which then goes from 5% to 35%. Planning your compensation structure in advance is important to ensure cash flow and tax efficiency. In terms of company taxes, Vietnam levies a flat 20% corporate income (CIT) tax on profits. Dividends are taxed at a flat rate of 5%. Value added tax (VAT) is currently 8% under a temporary reduction (normally 10%).

Working with an accountant is not only advisable in Vietnam, it is essential. Vietnam’s tax and accounting regulations require monthly, quarterly, and annual filings. A good accountant will ensure timely reporting, and help with many other things. However, the business owner still needs to remain engaged. For example, you may need to notify your accountant when you receive payments, or request that they issue invoices on the correct dates.

Ongoing operations

Running a company in Vietnam carries some ongoing compliance obligations and maintenance costs. On average, small companies spend around USD 50 – 100 per month for accounting services. Additionally, you’ll pay a yearly business license renewal fee (approximately USD 100), and costs for maintaining your digital signature, which is typically around USD 40 per year.

Altogether, the recurring monthly cost of maintaining a compliant, Vietnamese – owned company is estimated at USD 40 – 60. For foreign – owned companies this number is around USD 75 – 125. These numbers do not yet include rent, salaries, marketing, or other operational expenses. Because these are of course very dependent on your specific company. However, these numbers do covers the baseline for legal compliance.

Of course time is another factor to keep in mind. The entire registration process, from preparing documentation to obtaining all necessary approvals, typically takes around 3 to 6 months. Meaning 3 months when you do not need any sub – licenses. And 6 months when you need 2 or even 3 such sub – licenses. For 100% Vietnamese – owned companies, the procedure is generally 1 – 2 months quicker.

VNHL is here to support you

Registering a company in Vietnam is not overly complicated, but it does require thoughtful planning and some patience. Whether you’re launching a restaurant, a product-manufacturing business, or a service company: we are here to help. For example: you may need help with choosing an accountant, registering your business, or understanding your tax obligations. In all those cases: do not hesitate to let us know. Our team has built a network of reliable service providers across Vietnam. And we would be happy to offer recommendations or provide hands on support, depending on your needs. You can reach out to us via the chat button on the right of this page, or via our contact us page. Our three main services are: (i) consulting, (ii) networking, and (iii) supporting. We look forward to hearing from you and to supporting you.

*Dear reader, even though our VNHL Consulting team always tries its very best to provide its Clients with correct and complete info: we are not a Vietnamese law firm. The information in this post is therefore not meant to, and should also not be construed to, constitute legal advice. For specialized advice in the fields of law, accounting, tax, etcetera: we always recommend our Clients to speak with qualified specialists in those fields. We have several such specialists in our nationwide network, and we are always happy to introduce our Clients to them, when appreciated.