Business entities in Vietnam

Business entities in Vietnam

Because of the dynamism of the Vietnamese economy, Vietnam business setup has become an appealing option for many multinationals. However, entrepreneurs should be prepared for inconsistent regulations, bureaucratic challenges and licensing delays. Healy Consultants will assist our Clients with incorporating the optimal corporate structure for their company: there are several ways of doing business in Vietnam, the most common being the setting up of a limited liability company. In some industries still restricted to investment by foreigners, our Clients may however be required to setup a joint venture company with a Vietnamese shareholder. Our corporate Clients may also open a representative office in Vietnam, or even a branch if they are already ready to expand to this Southeast Asian market.

Doing business in Vietnam with a local entity

The Vietnam limited liability company (wholly foreign-owned LLC)

Vietnam business entity types and company setup

  • A limited liability company in Vietnam can be setup with only 1 shareholder, who can be of any nationality and does not need to be resident in Vietnam. Our Clients will also need to appoint 1 director as the company’s legal representative, who can be a foreigner but will then be required to i) travel to Vietnam ii) obtain a work permit and iii) show evidence of 12 months of experience on a managing position. Healy Consultants highly recommends to appoint to such role a staff member residing or often travelling to Vietnam. If needed, our Firm may also provide our Clients with i) nominee resident director services and/or ii) assistance to apply for a work permit in Vietnam;
  • In order to complete incorporation, foreign-owned LLCs will be required to i) open a capital account with a local bank, required for share capital injection and transfers of future earnings abroad and ii) obtain approval for a foreign investment certificate (FIC), required by the Vietnam government to allow foreigners to invest in Vietnam. Approval of the FIC requires a minimum investment, commonly set at US$10,000 but which may be higher in some industries;
  • All Vietnamese LLCs are also required at incorporation to provide the authorities with i) a registered address in Vietnam, which may be provided by Healy Consultants if needed and ii) a bank certificate of deposit for the amount of share capital, which will need to be transferred no later than 12 months after incorporation is complete;
  • Post incorporation, all foreign-owned LLCs must i) provide the authorities with an annual return and ii) submit annual audited financial statements, which are a prerequisite for any remittance of earnings to their parent company;
  • Best uses: A limited liability company is fit for most uses. The company can both trade with Vietnam and foreign customers, have local manufacturing operations and/or render services.

The Vietnam free zone company

  • Foreigners can register a company in a Vietnam free zone provided they plan to manufacture and export a majority of their products. The company can then be registered within an industrial park or a special economic zone after review and approval by the relevant authority.
  • Criteria for free zone registration will significantly vary according to the project. They usually include a minimum investment (at least US$200,000 recommended) and at least some job creations in Vietnam. Projects eligible for free zone registration and also usually eligible for tax benefits. See this page for further details.

The Vietnam joint venture company (partly foreign-owned LLC)

  • A Vietnam joint venture company is commonly a standard Vietnam limited liability company incorporated by i) 1 foreigner (our Client) and ii) 1 Vietnamese shareholder. Such legal structure usually corresponds to a Government requirement for foreigners to do business in many industries, including but not restricted to i) transportation services ii) conventional and online advertisement iii) agriculture and forestry iv) electronic games businesses and v) most storage services. In such case, foreign ownership will be subject to a maximum level, from 49% to up to 99%. Joint venture company setup may also be requested by some of our Clients, willing to benefit from the specialist local knowledge of their Vietnamese partner;
  • Like foreign-owned LLCs, Vietnam joint venture companies will be required to i) appoint a resident legal representative ii) open a capital account with a local bank, required for share capital injection and transfers of future earnings abroad and iii) obtain approval for a foreign investment certificate (FIC), required by the Vietnam government to allow foreigners to invest in Vietnam. Setting up a Vietnam joint venture company will however be more complex than an LLC, as our Client will face i) higher share capital requirements and ii) longer licensing delays;
  • All Vietnamese joint ventures are also required at incorporation to provide the authorities with i) a registered address in Vietnam, which may be provided by Healy Consultants if needed and ii) a bank certificate of deposit for the amount of share capital, which will need to be transferred no later than 12 months after incorporation is complete. Post incorporation, our Clients will have to submit i) an annual return for license renewal and ii) annual audited financial statements, which are a prerequisite for any remittance of earnings to their parent company;
  • Best uses: A joint venture company is usually used when our Clients want to invest in an industry partially closed to foreign investment. It can also be beneficial when our Clients already have an existing business partner in Vietnam.

The nominee Vietnam company (local limited liability company)

  • A nominee Vietnam company is a limited liability company with a local nominee appointed as sole shareholder. Such entity is used mainly to i) reduce capital requirements and/or ii) provide services and products in industries closed to foreign ownership;
  • Best uses: To limit legal risk and protect our Client’s interests, we usually do not recommend to setup such entity except in a very limited range of cases where this is the only legal solution for our Client’s business plan.

The Vietnam public limited company (JSC)

  • A Vietnam public limited company can be setup with i) 3 shareholders, who can be of any nationality and does not need to be resident in Vietnam. Our Clients will also need to appoint 1 director must also be appointed as the company’s legal representative. If this individual is a foreigner, he will be required to i) travel to Vietnam ii) obtain a work permit and iii) show evidence of 12 months of experience on a managing position;
  • Like those of a LLC, Vietnam public limited company setup requirements by foreigners include i) provision of a bank certificate showing the availability of funds to be invested in Vietnam ii) the opening of a capital bank account and iii) issuance of a foreign investment certificate and iv) submission of an annual return and audited financial statements, without which our Client will not be able to remit abroad his subsidiary’s earnings;
  • Public limited companies are not required to list in Vietnam. To do so, a PLC must have i) a share capital of over US$475,000 ii) over 100 shareholders iii) been profitable for the previous year and iv) no overdue debt. If needed, Healy Consultants will be pleased to assist our Clients with listing their company on the Ho Chi Minh City Stock Exchange;
  • Best uses: A joint stock company can be a better alternative than a limited liability company if our Client is planning to form a business with several partners or plans to finance its business through the issuance of equity. In other cases, a limited liability company will usually do just as fine.

Doing business in Vietnam with a foreign entity

The Vietnam branch office

  • The Vietnam Law on Commerce stipulates that foreign companies can open branch offices in Vietnam, provided they have been doing business abroad for at least five years. The Vietnam branch office must also i) appoint a resident representative and file ii) audited financial statements with the Companies Registrar and ii) an annual return with the Industry and Trade Department office;
  • Because incorporating a branch office in Vietnam i) follows complex procedures and ii) exposes our Clients to unlimited liability, Healy Consultants recommends to setup a Vietnam limited liability company instead of a branch, excepted in a few industries where branches, but not wholly foreign-owned LLCs, are allowed by the Government;
  • Best uses: Registering a branch is usually not recommended, except in regulated industries such as banking, finance and insurance where registration of a foreign reputable entity instead of a subsidiary can ease up the licensing process.

The Vietnam representative office

  • The Vietnam Law on Commerce stipulates that foreign companies can open representative offices in Vietnam, provided they have been doing business abroad for at least 1 year. While the Vietnam representative office can be 100% foreign owned, it is not allowed to pursue production-related or commercial activities in Vietnam. Consequently, this entity can only engage in i) market research and ii) promotion of its parent company’s business. It will also have to i) appoint a resident representative and ii) to submit annual returns to with the Industry and Trade Department office;
  • Best uses: Registering a representative office is a good option to have a local presence in Vietnam, without being subject to local tax and while benefitting from lower reporting requirements. However, such entity is not allowed to trade or conduct manufacturing operations in Vietnam.

Table of comparison between Vietnam entities

Operations and logisticsLLCFree zone companyJoint ventureNominee companyJSCBranchRO
Travel required for setup?NoNoNoNoNoNoNo
Doing business in Vietnam permitted?YesYesYesYesYesYesNo
Allowed to sign contracts with local Clients?YesYesYesYesYesYesNo
Allowed to invoice local Clients?YesYesYesYesYesYesNo
Can rent local office premises?YesYesYesYesYesYesNo
Allowed to import raw materials?YesYesYesYesYesYesNo
Allowed to export goods?YesYesYesYesYesYesNo
Accounting and taxLLCFree zone companyJoint ventureNominee companyJSCBranchRO
Corporate tax on sales income?20%20%20%20%20%20%0%
Corporate bank account?Citibank VietnamStandard Chartered VietnamHSBC VietnamVietinbankStandard Chartered VietnamVietcombankHSBC Vietnam
Statutory audit requiredYesYesYesYesYesYesYes
Annual tax return to be submitted?YesYesYesYesYesNoRO
Access to DTAAs?YesYesYesYesYesNoNo
Company lawLLCFree zone companyJoint ventureNominee companyJSCBranchRO
Issued share capital required?US$10,000US$50,000US$50,000US$500US$10,000NoneNone
Resident director required?YesYesYesYesYesYesYes
Vietnam shareholder required?NoNoYesYesNoNoNo
Minimum number of directors?1111111
Minimum number of shareholders?11111Parent companyParent company
Individual shareholders allowed?YesYesYesYesYesNoNo
Corporate director(s) allowed?NoNoNoNoNoNoNo
Corporate shareholders allowed?YesYesYesYesYesYesYes
Public register of shareholders and directorsYesYesYesYesYesYesYes
ImmigrationLLCFree zone companyJoint ventureNominee companyJSCBranchRO
Can the entity hire expatriate staff?YesYesYesYesYesYesYes
How long to get work permit approved?3 months3 months3 months3 months3 months3 months3 months
Fees and timelinesLLCFree zone companyJoint ventureNominee companyJSCBranchRO
How long to set the entity up?8 weeks12 weeks12 weeks2 weeks8 weeks12 weeks8 weeks
How long to open corporate bank account?4 weeks4 weeks4 weeks4 weeks4 weeks4 weeks4 weeks
Estimate of engagement costsUS$15,640US$16,490US$18,240US$11,700US$19,120US$19,920US$16,700
InvoiceVietnam LLC invoiceVietnam FZ invoiceVietnam JV invoiceVietnam nominee company invoiceVietnam JSC invoiceVietnam BO invoiceVietnam RO invoice

Frequently asked questions

Contact us

For additional information on our business setup 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