Setting up a company in Vietnam free zones in 2023
Since 2003, Healy Consultants Group PLC 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
