Guide to registering a Vietnamese company

More and more Chinese investors have registered companies in Vietnam or are prepared to go to Vietnam to set up factories in Vietnam, which makes Vietnam the current production base for foreign investors.

Types of registered companies in Vietnam
 There are many different types of companies registered in Vietnam, the following are some of them:

Limited Liability Company (LLC): This is one of the most popular types of companies in Vietnam, suitable for small and medium-sized enterprises, and can consist of 1-50 shareholders, whose liability is limited to the amount of their capital contribution.

-Joint Stock Company (JSC): This type of company can be composed of at least three shareholders, and the shares can be listed on the stock exchange, and is suitable for large companies and projects requiring large capital investments.

-Cooperative (COOP): This type of company consists of at least seven members who operate the business in a cooperative manner.

-Sole Proprietorship: This type of company is owned and operated by one person, with no difference between the personal property and the company’s property.

-Foreign Invested Company (FIC): This type of company is a company registered by foreign investors in Vietnam and is divided into two types: joint stock company and cooperative.

Establishment conditions
 1. Minimum registered capital: There is no restriction on the total amount of investment and registered capital for foreign-invested enterprises in Vietnam, but the authorized capital shall not be less than 30% of the investment amount, and the authorized capital shall be allowed to be reduced to 20% of the investment amount in the case of encouraging and larger investment. In practice, it is recommended to register a minimum of USD 100,000 (approximately TWD 3.1 million / RMB 710,000), and the local government will generally not grant approval if the amount is less than USD 100,000.
 Registered capital and time of availability for Sole Proprietorship / Factory

 
 The time and manner of capital contribution: The time and manner of capital contribution for wholly-owned factories/companies: The time of capital contribution for wholly-owned factories/companies is generally 0.5-1.5 years, which can be extended by up to half a year upon application to the government for the registered capital and time of capital contribution of the wholly-owned company/factory. Foreign investors may contribute capital in the form of machinery, cash and proprietary technology, unlike Chinese factories/companies where there is no restriction on the ratio of machinery to capital.
 Establishment Method
 Foreign companies/individuals can set up factories/companies in Vietnam in any of the following three ways
 1. directly in the name of a foreign company or individual
 2. indirectly through a holding company (single-level holding);
 3. indirectly through two holding companies (double-tier holding)
 Currently, most foreign investors use the second or third method to invest in Vietnam or abroad for the purpose of tax planning of the parent company. The following advantages can be achieved through a holding company:
 1. the retention of surplus for an indefinite period of time (Taiwan companies are required to pay 10% tax in advance, which will be deducted separately upon remittance) to facilitate future overseas transfer of investment;
 2. limited liability, which exempts the parent company from overseas lawsuits, debt limitation and even unlimited expansion of civil and criminal liability.
 If one holding company is used, once the overseas assets are disposed of, they need to be included in the parent company’s income tax signature immediately, such as the famous “Chan Kwan tax incident”. If two holding companies are used, the second holding company in Vietnam can be used for trading, and the profits and surpluses can be temporarily retained in the first holding company, so that there will be no immediate taxation of profits in the country, or the first holding company can directly remit the profits back to the parent company, such as a double reservoir for the freedom of regulation and release. If the investment is made in the first way, the foreign parent company and the individual will be directly exposed to unpredictable overseas risks and face double taxation problems. Therefore, it is recommended to use double-tier holding as much as possible. For Taiwanese companies, the use of a dual-holding investment structure abroad is the most ideal tax arrangement in response to the minimum tax levy.

Establishment Process
 01. Establishing an offshore holding company;
 02. Collection of holding company documents;
 03. Translation of company documents into Vietnamese and notarization by the embassy
 04. Pre-check of company name
 05. articles of incorporation and application form
 06. approval by approval authority
 07. issuance of investment permit
 08. publication of announcement in newspapers
 09. board meetings, public security registration, official seal, bank account opening.
 10. tax registration, customs code registration, fire/environmental protection registration.

How to (how to) register a Vietnamese company
 (1) Application: Before establishing a company, the founder must submit an application for incorporation to the People’s Committee of the province or municipality directly under the Central Government or an administrative unit of the same level as the place where the company has its office.
 (2) Business Registration: The company must register its business with the provincial or central municipal economic extension organization or an administrative unit of the same level.
 (3) Establishment announcement: According to relevant laws and regulations, after the establishment of a foreign-invested enterprise in Vietnam, the company must publish three consecutive announcements in the central or local newspapers.

Information required for registration
 1、Registered capital (within 90 days of obtaining the certificate of incorporation, the capital verification will be in place);

2、Registered address (can be found locally with our assistance);

3、The scope of business;

4、List of legal persons (1 is sufficient);

5、List of directors (no nationality restriction, foreigners must obtain work permit and temporary residence permit in the country);

6、List of shareholders, amount of shares and financial proof of shareholders (at least 1 shareholder, no maximum amount of shares);

7、Scanned copies of passports/addresses of all shareholders, directors and legal entities (if the shareholder is a company, please provide a certificate of incorporation,);

8、The identity and financial proof of shareholders must be notarized in China and certified by the Vietnamese embassy or consulate in China.

Process of registering a Vietnam company

1、Identify the foreign holding company and prepare related information

2、Notarization (translation of relevant documents into Vietnamese and notarization by the embassy)

3、Verify the name

4、Preparation of articles of incorporation and application form

5、Submitted materials

6, the approval of the authorities to approve

7、Obtain investment license, apply for business license and announce the use of seal

8、Apply for a tax ID and open a bank account

Advantages of establishing a company in Vietnam

Vietnam’s geographic location makes it easy for businesses to connect with other ASEAN economies, Vietnam allows 100% foreign ownership for most businesses, and Vietnam has one of the lowest labor costs in the region. As a member of the ASEAN Free Trade Area, the country has favorable trade agreements with other neighboring countries, and Vietnam has several economic zones that offer tax incentives and exemptions for companies operating in these areas.