Benefits and problems

Benefits and problems of registering a company in Vietnam

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  • Benefits and problems

    Benefits of Vietnam company registration

    advantages for registering business in Vietnam

    1. Vietnam has witnessed a strong economic growth of around 6% per year since the early 2000s, and it is expected to continue with such in the following decade;
    2. It has also been able to increase the quality of life of its citizens; around 30 million Vietnamese came out of poverty in the last 20 years and the capita income increased from around US$100 in 1980s to US$2,100 in 2015;
    3. Yet, the country still has one of the lowest labor costs in the region, with an average monthly wage of US$ 210 a month. Furthermore, most of its population is young, with almost 60% of its 1.128 million population being between the ages of 25 to 49 years old;
    4. Vietnam offers several tax benefits depending on the location, industry and business project, such as:
      • Vietnam’s free zones and industrial zones offer exemptions on corporate income taxes for up to 8 years, and exemptions on custom duties and VAT taxes;
      • Large manufacturing projects can apply for preferential tax incentives for up to 15 years;
      • Project dealing with socialized sectors, such as education and health, are entitles to four years of tax exemption and 50% tax reduction for the sequential 5 years.

    5. Vietnam has signed several free trade agreements with countries worldwide:

    Problems with Vietnam company registration

    1. The standard corporate tax rate in Vietnam is 20%. A rate of 32% to 50% applies for businesses conducting exploration and exploitation of oil and gas and other valuable and rare natural resources. However, certain tax incentives can be obtained if requirements are met, as described above;
    2. There are several requirements for opening a company in the country:
      • The minimum paid up capital required to establish a company in Vietnam is US$10,000 and must be remitted to a capital account in Vietnam before incorporation;
      • All business entities in Vietnam are required to appoint a resident legal representative. If the chosen legal representative is a foreigner not yet resident in Vietnam, he/she must i) travel to Vietnam; ii) obtain a work permit and iii) show evidence of 12 months of experience on a managing position;
      • In order to be able to establish a branch offices in the Southeast Asian country, the Vietnamese legislation requires that the foreign company must have been doing business abroad for at least five years.

    3. Conducting business in Vietnam require Clients to overcome many challenges, such as:
      • Corruption is on of the main obstacles for business activities in the country. Vietnam ranks low in Corruption Perception, and Ethics and Corruption ranking;
      • The country also performs very poorly in protection of property rights, which negatively effects the country’s reputation as a location to conduct business;
      • Although progress has been made in the past few years, Vietnam still has an inadequate infrastructure, especially when compared with other Southeast Asian countries like Thailand. Singapore and Malaysia;
      • Overall, according to the World Bank, the country is negatively ranked in 82nd from 190 countries worldwide in its Ease to do Business 2017 ranking.

  • Best uses for a Vietnam company

    1. With low labor costs and a corporate tax rate of only 10%, Vietnam’s free zones are a good location for the establishment of a manufacturing company. Especially, manufacturing companies that import/export to other ASEAN countries will fully benefit of the low tax agreements within the region;
    2. Establishing a Vietnamese company is a good way to buy a property in the country, as a 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.

Contact us

For additional information on our business registration services in Vietnam, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Simon Guidecoq, directly:
client relationship officer - Simon