Business Registration Certificate in Vietnam: All Detailed Steps

Vietnam is now one of the emerging countries with open market policies that attract a large number of investors. According to evidence, the flow of FDI into Vietnam has expanded considerably in the last five years as a result of foreign investor investment. The procedure for founding a corporation in Vietnam is straightforward; nevertheless, there are some constraints for foreign-owned businesses. 

Understanding the rules and procedures for starting a foreign-owned company in Vietnam is crucial. Our article on all steps of getting a Business Registration Certificate in Vietnam will make it easy for you to do it. 

>> Learn more: Doing Business In Vietnam: Overview, Advantages And Challenges 

Overview of legal entities in Vietnam

In Vietnam, the two most popular types of legal entities are:

• Limited liability company (LLC)
• Joint-stock company (JSC).

A limited liability company (LLC) can have anywhere from one to fifty members, often known as founders or owners. It's worth noting that in Vietnam, LLCs don't have stockholders. A JSC, on the other hand, must have at least three shareholders. The number of shareholders a JSC can have is unrestricted. 

Requirements for setting up a company in Vietnam

Foreign ownership regulations in Vietnam

In most industries, Vietnam allows 100 percent foreign ownership of a company. Trading, manufacturing, information technology, and education are among them. 

Some industries, however, have restrictions on foreign ownership. Advertising, logistics, and tourism are only a few examples. Foreign investors will need a Vietnamese joint venture partner in such circumstances. Most business lines are governed by World Trade Organization (WTO) accords that regulate foreign ownership. However, some business categories are not covered by WTO accords or local legislation. 

In such circumstances, you will require permission from the relevant ministry.

Minimum capital requirement

In most business lines in Vietnam, there are no minimum capital requirements. It must, however, be sufficient to cover expenses until the company becomes self-sufficient. Your capital contribution will be evaluated by the Department of Planning and Investment to see if it is appropriate for your firm. Many enterprises start with a capital of USD 10,000. 

However, based on our experience, a commercial service company can be started with just USD 3,000. It's worth noting that some business lines have low capital needs. These are some of them:

• Vocational schools
• Language centers
• Real estate companies
• Insurance
• Banking
• Finance and Fin-tech

It's important to remember that your capital should outweigh your setup and equipment costs. The amount of your capital will be stated on your Business Certificate. This will necessitate changes to your company's papers.

Registered address

A business address is required to start a business in Vietnam. Service-based businesses, such as consulting firms, can benefit from a virtual office location.  Some company lines, however, require a physical facility or office. Manufacturing, restaurants, and retail business are just a few examples. 

During the incorporation process, the Department of Planning and Investment may inspect the address. You can provide proof of your address by submitting papers. It must state that following incorporation, you will use the location for your business. 

Resident director

In Vietnam, every company must have at least one resident director. At the moment of incorporation, he or she does not need to be a resident of the United States. They will, however, require a Vietnamese address. Note that if the director is also a founder, a work visa is not required. He or she will need to seek a work permit exemption instead. A foreign national who is not the company's founder will require a work permit in Vietnam. 

Company registration procedure to get the business registration certificate in Vietnam 

Vietnam is now one of the emerging countries with open market policies that attract a large number of investors. According to evidence, the flow of FDI into Vietnam has expanded considerably in the last five years as a result of foreign investor investment. As a result, we would like to share some important business registration information below:

Step 1: Register the Investment Registration Certificate

The Investment Registration Certificate is issued by the authorities

• The management boards of industrial parks, hi-tech zones, export-processing zones, and economic zones must receive, issue, revise, and revoke investment registration certificates for investment projects located within their boundaries.
• Except in the situation described below, the Services of Planning and Investment shall zones shall receive, issue, revise, and revoke investment registration certificates for investment projects outside industrial parks, hi-tech zones, export-processing zones, and economic zones.
• The Service of Planning and Investment of the province in which the investor plans to establish a head office or operational office to carry out the investment project should receive, issue, revise and revoke Certificates of investment registration of: +Any investment project spanning many provinces; + Any investment project carried out both within and outside of industrial parks, high-tech zones, export processing zones, and economic zones.

Complete a dossier

• A written request for approval to proceed with the investment proposal;
• If the investor is an individual, a copy of the ID card or passport; in case the investor is an organization, a copy of the Certificate of Establishment or an equivalent paper that verifies the legal status of the investment;
• Copies of any of the following documents: the investor's financial statements for the previous two years; the parent company's commitment to providing financial support.The financial institutions' commitment to providing financial support; the guarantee for the investor's financial capacity; the description of the investor's financial capacity.
• Lease agreement and paperwork for office proof of the lessor's right (land use certificate, building permit, certificate of business registration with the function of the lessor's real estate business, or analogous documents);
• A copy of the lease agreement or other documentation showing that the investor has the right to use the premises to carry out the project must be submitted if the project does not use property allotted, leased out by the State, or is not permitted by the State to change land purposes.
• The explanation for the application of technologies to the project that is listed in the List of technologies prohibited from transfer under the law on technology transfer, which includes: names of technologies, origins, technology process diagrams, primary specifications, machinery, equipment, and primary technological line;
• The contract for business collaboration (if the project is executed under a business cooperation contract).

Continue with the registration of the Investment Registration Certificate

To begin, the investor must register with the National Foreign Investment Information System by stating online information about investment proposals. The investor must submit the application file for the Investment Registration Certificate to the Investment Registration Authority within 15 days after the date of online filing. 

Following receipt of the application, the investor is given an online account to access the National Foreign Investment Information System to track the application's processing and results. If a successful investment registration certificate is obtained, the investment registration agency will issue a code to the investment project through this account; if the application form is rejected, the investment registration agency must notify the investor in writing and explain the reason.

Step 2: Register for the Enterprise Registration Certificate

Some below documents should be prepared in the dossier for the company registration procedure:

• A business registration application;
• The charter of the company;
• A membership list (for a limited business) or a list of stakeholders (for a joint-stock company);
• Certified reproductions of:
• Copies of members' ID cards or other identification papers if they are individuals; + The organization's Decision on Establishment, Enterprise Registration Certificate, or equivalent document, and the letter of authorization; and the authorized representatives' ID cards or other identification papers if they are organizations. + If a member is a foreign organization, consular legalization of a copy of the company registration certificate or an equivalent document is required. + The foreign investor's investment registration certificate, as required by the Investment Law

To authorize Viet An Law Firm to undertake the business establishment service, a legal service providing contract (Authorization contract) was signed. Within 3–5 days of submitting the application dossier through the National Business Registration Portal to the Business Registration Authority, the business registration agency will provide an enterprise registration certificate. 

You must make public notice on the website in accordance with the regulations and procedures within 30 days of receiving your Business Registration Certificate.

Step 3: Register the Bussiness License for conditional business lines

If the company sells items or opens a store to sell things

Retailing is the sale of goods to other individuals, households, and organizations for consumption, according to Decree 09/2018/ N-CP, which regulates goods trading and activities directly related to the sale and purchase of goods by foreign investors and economic organizations with foreign investment capital in Vietnam. 

As a result, there is no requirement for the investor to issue a business license to export, import, or wholesale commodities (not belonging to the categories of goods: oil, rice,  lubricant, sugar; books; video items; magazines and newspapers). When retailing items and setting up goods in retail outlets, investors must provide business licenses.

• Foreign investors are only allowed to operate international travel business (inbound) if the company performs international travel business in the scope of bringing foreign tourists to Vietnam.
• Investors must acquire the Department of Education and Training's approval before issuing Investment Registration Certificates if the company performs business training in foreign languages. Before beginning operations, the company must get a Foreign Language Training Center License from the Department of Education and Training.

>> Learn more: Everything about business license in Vietnam you need to know

Tax registration and payment of the business license tax

The company's tax number is the same as the business license certificate number. All businesses must use an internet system to pay their taxes. Companies can also use this system to send tax declarations and reports. Businesses must obtain an electronic signature in order to gain access to this system.

>> Learn more: Vietnam Tax Identification Number Format and Meaning

>> Learn more: Vietnam Tax Rate: List Of Tax Rates In Vietnam And Why Need To Pay 

>> Learn more: Vietnam Withholding Tax: Detail Information 

Capital contribution

You have 90 days after receiving the BRC to make the capital contribution. Fines will be imposed if this is not done.

Apply for sublicenses or permits, if applicable

In Vietnam, forming a business takes around a month. Depending on the field, certain businesses may need to apply for sublicenses. The registration process will take longer in such instances. Sublicenses are required in the following business lines:

• Manufacturing
• Recruitment
• Logistics
• Lodging
• Specialized product or service trading

Certain enterprises require additional permits to operate. Cosmetics companies, for example, must register their items before selling or distributing them. This could take anywhere from a few weeks to several months to complete.

Corporate compliance in Vietnam 

In Vietnam, corporate compliance entails the following:

• Accounting and taxation. Corporate income tax, personal income tax, and value-added tax are all included.
• The annual business licensing tax payment: Companies are required to pay this starting in their second year of operation.
• Audited annual report: At the end of each fiscal year, an independent Vietnamese auditing business must analyze your financial accounts.
• Reports on foreign investment: Profits, losses, and expenses for the entire year must be included in the report.
• Observance of employment laws: Employees must be registered for social insurance, for example. You must also ensure that all international employees have the required work permits in Vietnam.

Setting up a special purpose vehicle in Vietnam

Due to foreign ownership restrictions, international investors may be unable to start a business in some instances. Some form a partnership with a local nominee to carry out their desired business ideas. Some overseas investors utilize nominee corporations to get around industry limitations. The Vietnamese government, on the other hand, is cracking down on nominee firms. With the new Investment Law, the government would impose harsher penalties on nominee firms. 

In January 2021, it will take effect. Conducting business through a special purpose vehicle is a safer option. It would enable you to secure and govern your investment without having to establish a corporation in Vietnam.

Alternatives to Company Registration in Vietnam

In some circumstances, forming a business in Vietnam is unnecessary. There are other options for breaking into the Vietnamese market.

Representative Office in Vietnam

A foreign parent company's representative office in Vietnam can act on its behalf. A representative office cannot produce revenue on its own, but it can assist the parent company with responsibilities. It's a way to break into the Vietnamese market without forming a business.

Employer of Record in Vietnam

You can hire staff in Vietnam without creating a corporation or a representative office if you have an employer of record. We will put your staff on our payroll as your official employer. We'll also make sure that we're following all of the local labor regulations.

Importer of Record in Vietnam

Certain certificates and approvals are required before items can be imported into Vietnam. Business operations will be delayed if you wait for this paperwork before importing your items. You can instantly begin importing items into Vietnam through a registered importer. In this article, we have provided you with some fundamental legal information on how to get Business Registration Certificate in Vietnam. 

>> Learn more: Business In Vietnam for Indians: Potential And Opportunities

For more detailed assistance with the company registration service in vietnam, including compliance, special purpose vehicles, and other market entry options, contact Efex service to ensure a smooth and successful venture in this promising business landscape.