Setting up a company in Vietnam free zones in 2023

Since 2003, Healy Consultants Group assist our Clients with setting up their business in Vietnam industrial zones (IZs) to benefit from reduced taxes and enjoy other numerous Government investment incentives. Vietnam industrial zones are ultimate spots for foreign entities looking to set up manufacturing companies in Southeast Asia with intent to distribute their products globally.

• Advantages of setting up in a Vietnam free zone

  • Vietnam has a massive network of more than 250 industrial and export processing zones. The major zones are i) the Northern Vietnam Key Economic Region ii) Southern Key Economic Zone iii) Central Vietnam Key Economic Region and iv) Mekong River Delta Economic Zone. Each zone specialises in different sectors, thereby offering multinational Clients a wide range of choice.
  • Vietnamese free zones offer a wide range of tax benefits, including:
    • A 10% reduction in corporate income tax for up to 15 years for all projects.
    • A 10% reduction in corporate income tax for up to 30 years for high-tech projects.
    • A 10% reduction in corporate income tax for social projects such as health and education for the life of the project.
    • 100% corporate income tax exemption for up to four years for approved projects, followed by 50% corporate income tax reduction for up to nine years once the initial four-year exemption is complete.
    • A five-year exemption on import duties on raw materials for manufacturing.
    • A 50% reduction in personal income tax for both local and foreign employees.
  • Vietnamese free zones are especially attractive for manufacturing, because:
    • Manufacturers are exempt from paying import duties on raw materials for up to five years after production starts.
    • Manufacturers are also exempt from VAT and excise tax for goods processed or manufactured within an Industrial Zone.
    • Low labour costs compared with other Asian countries. Vietnam’s current minimum wage ranges from US$96-US$138 per month.
    • Lower utility costs compared to other Asian countries. For example, in a Vietnamese free zone, electricity prices average US$0.082 per kilowatt hour (kWh), compared with US$0.101 in Indonesia or US$0.112 in Thailand.
  • Vietnamese Industrial Zones are also attractive to trading companies because:
    • Industrial Zone companies benefit from reduced or zero tariffs on goods traded within ASEAN (of which Vietnam is a member).

• Major industrial zones in Vietnam

  Vietnam Singapore Industrial Park (VSIP)

  • VSIP has projects located in Southern (Bac Ninh, Hai Phong) and Northern (Binh Duong) Vietnam.
  • Specialises in i) automotive components ii) electronics iii) pharmaceuticals and iv) consumer goods.

  Phuoc Dong Industrial Park (PDIP)

  • Specialises in i) logistics and supporting services ii) bio-fuel iii) construction materials iv) steel components and v) textiles.

  Hiep Phuoc Industrial Park (HPIP)

  • Specialises in i) leather processing ii) building materials iii) mechanics and iv) chemicals.

  Dinh Vu – Cat Hai Economic Zone

  • Specialises in i) electronics ii) telecommunications iii) machinery iv) electrical and science equipment and v) chemical industries.

• Table comparing different free zones in Vietnam

  Summary at a glance	VSIP Binh Duong	HPIP	PDIP	Dinh Vu – Cat Hai
  Average annual industrial space rent per 1000 sqm	US$26,500	US$31,200	US$35,000	US$29,000
  Company incorporation time	3 months	3 months	3 months	3 months
  How long to open company bank account	1 month	1 month	1 month	1 month
  Quality of utilities	Excellent	Good	Good	Excellent
  Allowed to sign sales contracts with Vietnamese Clients	Yes	Yes	Yes	Yes
  Allowed to invoice Vietnamese Clients	Yes	Yes	Yes	Yes
  Corporate tax payable in Vietnam	Dependent on activity	Dependent on activity	Dependent on activity	Dependent on activity
  Corporate bank account	HSBC	HSBC	HSBC	HSBC
  Physical office space required	Yes	Yes	Yes	Yes
  Industrial space availability	Many	Limited	Many	Many
  Allowed to import raw material?	Yes	Yes	Yes	Yes
  Allowed to export goods?	Yes	Yes	Yes	Yes
  Wholly foreign owned	Yes	Yes	Yes	Yes
  Can the entity hire expatriate staff in Vietnam	Yes	Yes	Yes	Yes
  Minimum number of directors	1	1	1	1
  Minimum number of shareholders	2	2	2	2
  Tax registration certificate required	Yes	Yes	Yes	Yes
  Individual shareholders allowed	Yes	Yes	Yes	Yes
  Corporate shareholders allowed	Yes	Yes	Yes	Yes
  Public register of shareholders and directors	Yes	Yes	Yes	Yes
  LLC company allowed	Yes	Yes	Yes	Yes
  Can apply for immigration visas	Yes	Yes	Yes	Yes
  Annual audited financial statements	Yes	Yes	Yes	Yes
  Annual tax return to be submitted	Yes	Yes	Yes	Yes