Field of investment
Based on the scope of market opening commitments of Vietnam, the needs to establish foreign-owned companies in Vietnam and the ability to invest, foreign investors should invest in sectors / industries that have been clearly committed by the Government in bilateral or / and multilateral international treaties to avoid the risk of rejection when applying for license. Each investment field / business line is associated with the requirements of the corresponding feasible investment capital for implementation, specific investment conditions / business licenses. Therefore, the elimination of unregistered or unnecessary business lines will help investors save maximum time and costs used to carry out arising legal procedures when registering and implementing business investment activities in Vietnam.
Investment capital & Charter capital for establishing foreign companies in Vietnam
Currently, Vietnam’s market opening commitments and Vietnamese laws only stipulate the conditions for investment limits of projects to set up foreign-invested companies in certain fields such as education, real estate sales, travel, payment intermediaries. The other normal business lines do not have a limit on the level of investment, so investors only need to ensure the feasibility of the investment capital commensurate with the scope and scale of the project. In order to determine the appropriate amount of investment capital and charter capital, investors need to determine the aggregate of investment limit conditions for all investment sectors / industries (if any) and make a specific financial plan to ensure the feasibility of project implementation, avoiding the need to make adjustments that cost time and money.
Contributing investment capital, charter capital after establishing foreign-owned companies in Vietnam
It is important to note that the contribution of investment capital and charter capital must be made in accordance with the registered time limit shown in the Investment Registration Certificate, the company’s charter and Vietnamese law. Accordingly, it should be noted that the time limit for investors’ investment capital contribution (for both Limited Liability Company and Joint Stock Company) is decided by investors, but should not be more than 90 days from the date of being granted enterprise registration certificate. Investors will have to contribute investment capital via wire transfer to the investment capital account opened by the foreign-invested company in Vietnam at the request / guidance of the State Bank of Vietnam.
Place of investment and establishment
Investors should select locations to invest in and establish foreign-owned companies in Vietnam with a clear address. It is best to choose lessors with all papers proving their ownership or / and the lease / sublease right, if any. The location / office must be allowed to be leased, designed and built in accordance with the law of Vietnam, not in a state of dispute. Rental offices should be located in areas designed and built to serve office functions on the basis of being licensed by a competent Vietnamese State agency.
The legal representative of a company in Vietnam is an individual who represents the company to exercise rights and obligations arising from the company’s transactions, represents the company as plaintiff, defendant, person with related rights and obligations before the Arbitration, Court and other rights and obligations as prescribed by law. Limited liability companies and joint stock companies in Vietnam may have one or more legal representatives. Companies must ensure that at least one legal representative resides in Vietnam. In case the Company has only one legal representative, that person must reside in Vietnam and must prepare an authorization letter giving another person to exercise the rights and obligations of the legal representative upon exit from Vietnam. In this case, the legal representative is still responsible for the exercise of the authorized rights and obligations.
Fulfill tax obligations
Every year, each company in Vietnam will have to pay license fees (from 2 to 3 million VND depending on the registered charter capital), pay corporate income tax when it is profitable, and declare and pay VAT. Depending on the business investment sector, companies in Vietnam may also have to pay taxes such as export tax, import tax, special consumption tax, etc.
Vietnam also has many provisions for investment incentives on corporate income tax when investing in industries eligible for investment incentives or investment in areas with difficult socio-economic conditions.
Source: Courtesy Henry Tran – VietnamCredit