Benefits and problems of registering a company in Vietnam
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Benefits and problems
Benefits of Vietnam company registration
- A Vietnam limited liability company can be completed within 12 weeks, with a minimum of one shareholder and one director of any nationality. The minimum paid up share capital is US$10,000 and our Client will not need to travel to complete the engagement;
- Our Clients will be allowed to conduct business in Vietnam with 100% foreign ownership in selected sectors. For more information, visit our Vietnam 100% foreign-owned company page;
- Required for Vietnam business registration in industries restricted to foreign investment, a joint venture is also an ideal strategy to gain ready access to local markets. For more information, visit our Vietnam Joint Venture page;
- A representative office is a cost-effective option for global companies looking to expand to the Vietnamese market. For more information, visit our Vietnam Representative Office page;
- Vietnam joined the World Trade Organisation (WTO) in January 2007, obliging it to reform its legal system, strengthen intellectual property rights protection and lift trade barriers;
- Following company registration, Healy Consultants can open a corporate bank account with one of the world’s leading retail banks, including HSBC, Standard Chartered and Citibank;
- Vietnam has the lowest labor rates in the region which is US$40 monthly, followed by Cambodia (US$45 monthly) and Thailand (US$70 monthly);
- Vietnam is a member of ASEAN, meaning free trade access such as no import duty with Indonesia, Malaysia, the Philippines, Thailand, Brunei, Burma, Cambodia, Laos and Singapore;
- Vietnam has newly created free zones and industrial zones that offer exemptions on corporate income taxes for up to 8 years, and exemptions on customs duties, excise and VAT taxes. The free zones include the Saigon High Tech Park, Amata Vietnam, Vietnam Singapore Industrial Park, My Phuoc Industrial Park, Sonadezi, Thang Long, NoiBai Industrial Zone and BinhXuyen Industrial Park and finally the Pho Noi A park.
Problems with Vietnam company registration
- Vietnamese companies must pay corporate tax on their global earnings at a standard rate of 20%. The Vietnam business tax applicable to business establishments conducting exploration and exploitation of oil and gas and other valuable and rare natural resources is between 32% and 50%. Preferential corporation tax of 20% and 10%, in the form of incentives, apply if the enterprise meets specific criteria;
- Minimum capital requirements for foreign-invested companies in Vietnam vary from one industry to another and depend on the exact nature of our Client’s business. The minimum required will be at least US$10,000 and will have to be remitted to a capital account in Vietnam before company incorporation;
- Examples of the challenges of doing business in Vietnam include i) to obtain a Vietnam branch office license, the foreign company must have been in operation for three years ii) all foreign documents must be translated into Vietnamese and notarized by a Vietnamese state notary or Vietnamese Embassy or Consulate. For more information, visit our Branch Office page;
- Starting a business in Vietnam is complex, and this is reflected in Vietnam’s low ranking of 90th in the World Bank’s Doing Business 2015-16 Survey. The survey measures factors including business startup procedures, time, cost and minimum capital required to start a business;
- Vietnam is negatively ranked 56th in the Global Competitiveness Report 2015-2016, by the World Economic Forum, one of the world’s most comprehensive and respected assessment of countries’ competitiveness, offering invaluable insights into the policies, institutions, and factors driving productivity;
- Vietnam suffers from a poor international business reputation. For example, Vietnam is negatively perceived as the world’s 119th least corrupt country in the 2014 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians;
- Vietnam has higher shipping costs compared to other Southeast Asian countries. Shipment of a 40 foot container costs an average of US$400 – US$500, more than from Thailand or China.
Best uses for a Vietnam companyUse a Vietnamese company as a vehicle to buy property in Vietnam, with 50-year leaseholds being available to foreign-owned companies from July 1st 2015. Without a company, foreigners need to be resident in Vietnam to hold property.