Guide foreign investors on procedures for establishing a company with foreign capital in Vietnam

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1. What is a foreign-invested enterprise?

A foreign-invested enterprise is an enterprise invested in all or part of its capital by investors from a country. Established in the territory of another country to carry on profit-making business.
Thus, in the Vietnamese market, foreign-invested enterprises have full or partial capital investment from foreign investors.

2. Legal basis for establishing a company with foreign capital in Vietnam

WTO Commitment Schedule

Multilateral trade agreements have investment commitments.

Investment Law 2020, amended and supplemented in 2022 and implementation guidance documents.

Enterprise Law 2020, amended and supplemented in 2022 and guiding documents.

3. Conditions when establishing a foreign-invested company:

– General conditions when establishing a foreign-invested company:

Not subject to investment bans include:

Investing in projects that are harmful to national defense, national security and public interests.

Investing in projects that are harmful to historical relics, culture, ethics, and Vietnamese customs and traditions.

Investing in projects that harm people’s health, destroy resources, and destroy the environment.

Investing in projects to treat toxic waste brought into Vietnam from outside; producing toxic chemicals or using toxic agents prohibited by international treaties.

Foreign investors investing in Vietnam for the first time must have an investment project and complete investment registration or investment verification procedures at a competent state agency.

Foreign investors investing in conditional investment fields must ensure investment conditions according to regulations.

Conditions in specific areas:

– Conditions for establishing a foreign-invested enterprise in the manufacturing sector:

Foreign investors must ensure that there is a location to carry out the project in accordance with the local development planning.

Must have financial capacity to implement the project.

Ensuring environmental conditions, security and order

Conditions for establishing foreign-invested enterprises in the field of commerce.

Foreign investors must ensure there is a location to carry out the project.

Must have financial capacity and experience to implement the project.

The export, import and distribution of goods must have HS codes and are not subject to bans or restrictions on import, export and distribution and are consistent with the roadmap according to Vietnam’s commitments when joining the WTO.

Meet the conditions for practice certificates and conditions for investment capital and legal capital according to regulations for each specific field.

Meet the ratio of foreign investors in each specific project.

Conditions for establishing a foreign-invested enterprise in the service sector:

Foreign investors can only register service industries in which Vietnam has committed to open its market when joining the WTO.

Must ensure specific conditions according to Vietnam’s schedule of service commitments when joining the WTO.

Foreign investors must ensure there is a location to carry out the project.

Investors must prove their capacity and experience to implement the investment project.

Investors must demonstrate financial capacity to carry out the project.

4. Characteristics of foreign-invested enterprise activities.

4.1. About members, shareholders, business owners:

– Enterprises with foreign investment capital are also known as economic organizations with foreign investment capital. This requires the operation of enterprises with foreign investors as members or shareholders. They participate in investment to seek benefits and results of production and business activities.

– Foreign investors in foreign-invested enterprises are individuals with foreign nationality. That is, not activities carried out by domestic investors. Organizations established under foreign laws carrying out business investment activities in Vietnam. However, it must ensure compliance with basic activities according to Vietnamese law. Thereby ensuring management efficiency as well as positive impacts in the economy.

4.2. Organizational form of the business:

Pursuant to the Investment Law 2020, all types of domestic enterprises can participate in investment by foreign investors. Thereby obtaining capital to ensure effective mobilization and use of capital for production and business purposes.

Enterprises with foreign investment in Vietnam must be organized in corporate forms according to the provisions of Vietnamese law. This is a regulation to organize effective management. As well as determining the factors and investment characteristics of foreign investors. In addition, businesses must operate according to relevant regulations in our country’s market.

Foreign investors have the right to choose a type of enterprise that suits their needs to conduct business activities in Vietnam. Thereby, participate in investing if you see the potential and benefits found in business activities. Mobilizing foreign investment capital is sometimes more effective and faster in businesses.

Forms of enterprises with the participation of foreign investors include:

– Limited liability company with two or more members

A limited liability company with two or more members is an enterprise with from 02 to 50 members who are organizations and individuals. Members are responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise, except in the following cases:

In case there are members who have not contributed capital or have not contributed the full amount of capital as committed, the company must register to change charter capital, with the proportion of members’ capital contribution equal to the amount of capital contributed within 30 days from the date of registration. The last day to contribute the full capital contribution according to regulations (Capital contribution period is 90 days from the date of issuance of the Business Registration Certificate). Members who have not contributed capital or have not contributed the full amount of capital as committed must be responsible in proportion to the committed capital contribution ratio for the company’s financial obligations arising in the period before the date of company registration. Sign changes to charter capital and capital contribution ratio of members.

Members’ capital contributions can only be transferred according to the following regulations:

Buyback of capital contribution: A company member has the right to request the company to buy back his or her capital contribution if that member has voted against the resolution or decision of the Board of Members on the following issues: :

Amending and supplementing contents in the Company’s Charter related to the rights and obligations of members and the Board of Members.

Reorganize the company.

Other cases as prescribed in the Company’s Charter.

Transfer of capital contribution: Company members have the right to transfer capital contribution according to the following regulations:

Offer to sell that capital contribution to the remaining members in proportion to their capital contribution in the company with the same offering conditions.

Transfer with the same offering conditions for the remaining members specified in Point a of this Clause to non-members if the remaining members of the company do not buy or do not buy all within 30 days from the date of purchase. from the date of offering.

In addition, a member’s capital contribution can be handled in some special cases such as inheritance, donation, debt repayment, member being detained or temporarily detained…

A limited liability company with two or more members has legal status from the date of issuance of the Business Registration Certificate.

A limited liability company with two or more members is not allowed to issue shares, except to convert into a joint stock company.

Limited liability companies with two or more members may issue bonds according to the provisions of this Law and other relevant laws; The issuance of individual bonds must comply with the provisions of law.

– One-member limited liability company

A single-member limited liability company is an enterprise owned by an organization or individual (hereinafter referred to as the company owner). The company owner is responsible for the company’s debts and other property obligations within the company’s charter capital.

A one-member limited liability company has legal status from the date of issuance of the Business Registration Certificate.

A single-member limited liability company is not allowed to issue shares, except to convert into a joint stock company.

A one-member limited liability company may issue bonds according to the provisions of this Law and other relevant laws, issuance of individual bonds according to the provisions of law.

The charter capital of a one-member limited liability company when registering to establish a business is the total value of assets committed to contribute by the company owner and recorded in the company charter.

The company owner must contribute capital to the company with sufficient and correct types of assets as committed when registering to establish a business within 90 days from the date of issuance of the Business Registration Certificate, excluding operation time. Transfer and import capital contribution assets, carry out administrative procedures to transfer asset ownership. During this period, the company owner has rights and obligations corresponding to the committed capital contribution.

 

– Joint stock company

A joint stock company is an enterprise in which:

Charter capital is divided into equal parts called shares.

Shareholders can be organizations or individuals; The minimum number of shareholders is 03 and there is no limit to the maximum number.

Shareholders are only responsible for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise.

Shareholders have the right to freely transfer their shares to others, except in the following cases:

Within 03 years from the date the company is granted the Business Registration Certificate, common shares of founding shareholders are freely transferable to other founding shareholders and can only be transferred to persons who are not founding shareholders if approved by the General Meeting of Shareholders. In this case, the founding shareholders intending to transfer common shares do not have the right to vote on the transfer of those shares. (Clause 3, Article 120 of the Enterprise Law 2020)

Shares are freely transferable, except for the cases specified in Clause 3, Article 120 of the 2020 Enterprise Law and the Company Charter has regulations restricting the transfer of shares. In case the company charter has restrictions on the transfer of shares, these regulations are only effective when clearly stated in the shares of the corresponding shares. (Clause 1, Article 127 of the Enterprise Law 2020)

A joint stock company has legal status from the date of issuance of the Business Registration Certificate.

A joint stock company has the right to issue shares, bonds and other securities of the company.

– Partnerships

A partnership is an enterprise in which:

There must be at least 02 members who are joint owners of the company, doing business together under a common name (hereinafter referred to as partnership members). In addition to general partners, the company may have additional capital contributing members;

General partners must be individuals, responsible with all their assets for the company’s obligations;

Capital contributing members are organizations and individuals and are only responsible for the company’s debts within the amount of capital committed to contributing to the company.

A partnership company has legal status from the date of issuance of the Business Registration Certificate.

Partnership companies are not allowed to issue any type of securities.

Partnership members and capital contributing members must contribute the committed capital amount in full and on time.

A general partner who fails to contribute the committed capital in full and on time, causing damage to the company, must be responsible for compensating the company for damages.

In case a capital contributing member fails to contribute the committed capital amount in full and on time, the not yet fully contributed capital is considered that member’s debt to the company; In this case, the relevant capital contributing member may be expelled from the company according to the decision of the Board of Members.

– Private enterprise

A private enterprise is a business owned by an individual who is solely responsible for all activities of the business with his or her entire assets.

Private enterprises are not allowed to issue any type of securities.

Each individual is only entitled to establish one private enterprise. The owner of a private enterprise cannot simultaneously be the owner of a business household or a general partner of a partnership.

Private enterprises are not entitled to contribute capital to establish or purchase shares or capital contributions in partnerships, limited liability companies or joint stock companies.

The investment capital of a private business owner is registered by the business owner himself. Private enterprise owners are obliged to accurately register the total investment capital, clearly stating the capital amount in Vietnam Dong, freely convertible foreign currencies, gold and other assets; For capital in other assets, the type of asset, quantity and remaining value of each type of asset must also be clearly stated.

All capital and assets, including loans and leased assets, used in the enterprise’s business activities must be fully recorded in the enterprise’s accounting books and financial reports according to the provisions of law.

4.3. Legal status:

Foreign-invested enterprises in Vietnam have legal status or do not have legal status depending on the type of enterprise they register to establish under Vietnamese law. Because legal status must be determined corresponding to the type of business. In there:

+ Foreign investors choose the type of private enterprise without legal status. Because an individual who owns a business must be a domestic investor according to the provisions of the Enterprise Law 2020.

+ Foreign-invested enterprises established in the form of limited liability companies, joint stock companies, and partnerships all have legal status. At that time, investors can be members contributing capital, buying shares, etc. in the enterprise.

4.4. Capital ownership ratio:

Foreign investors are allowed to own unlimited charter capital in economic organizations. Except for the following cases:

– Ownership ratio of foreign investors in listed companies, public companies, securities trading organizations and securities investment funds according to the provisions of securities law.

– The ownership ratio of foreign investors in equitized state-owned enterprises or other forms of ownership conversion shall comply with the provisions of law on equitization and conversion of state-owned enterprises.

– The ownership ratio of foreign investors not falling into the above two cases shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is a member.

4.5. Investment registration certificate:

Foreign investors must have an investment project and carry out procedures for granting an Investment Registration Certificate according to the provisions of Article 38 of the Investment Law 2020. Only then can they proceed to establish an enterprise with investment capital. foreign investment. To determine the right subjects to be managed and granted the right to establish businesses in Vietnam.

When foreign-invested enterprises change the business registration content and that content is also the investment registration content, they must adjust the investment registration content recorded in the Investment Registration Certificate. at a competent state agency. Implement the correct nature of investment, investment object and related rights and obligations.

4.6. Business:

Foreign-invested enterprises are not allowed to conduct business investment activities in the industries and professions specified in Article 6 and Appendices 1, 2 and 3 of the Investment Law. This is a regulation, as well as specific benefits determined for domestic investors. From there, it brings effective access and ensures economic activities of a number of specific industries in national activities.

For service sectors and sub-sectors that have not yet committed or are not specified in Vietnam’s Schedule of Commitments in the WTO and other international investment treaties for which Vietnamese law has regulations on investment conditions for For foreign investors, the provisions of Vietnamese law apply. Identify relevant rights and obligations for foreign-invested enterprises operating in our country’s market.

Foreign investors in territories that are not WTO members conducting investment activities in Vietnam are subject to the same investment conditions as prescribed for investors in countries and territories that are WTO members. Except where laws and international treaties between Vietnam and that country or territory have other provisions.

5. What content does a foreign investor who wants to establish a foreign-invested company in Vietnam need to provide for advice?

To have specific consulting information for investors establishing foreign-invested companies in Vietnam, investors need to provide lawyers with the following information for advice:

First, it is necessary to provide the expected business line in Vietnam.

This is important information that determines the conditions and documents for establishing a foreign-invested company in Vietnam. Accordingly, based on the industry that customers provide, Quoc Bao Law will advise customers on the business conditions of the industry in accordance with Vietnamese law and WTO commitments as well as conditions according to the provisions of the trade agreement. relevant commercial regulations (if any).

Second, provide information related to the investor’s nationality.

The investor’s nationality in which country greatly affects investment conditions in Vietnam. Normally, investors who are members of the WTO or have signed a trade agreement with Vietnam will have advantages in investing in Vietnam.

Third, how much charter capital does the investor intend to contribute when establishing a company in Vietnam?

Depending on the industry as the first requirement, there will be regulations corresponding to the legal capital requirements for foreign investors. However, for industries that do not require legal capital or a specific capital level, investors who want to be licensed to invest also need to invest a minimum capital of 50,000 USD. In case investors want to come to work and live in Vietnam without having to apply for a work permit, they need to invest a minimum capital of 3 billion VND.

Fourth, in which province in Vietnam should we provide a location to establish a company?

According to the information provided by customers, Quoc Bao Law will send consulting lawyers to provide comprehensive customer support and accompany customers during the process of establishment and operation in Vietnam.

Fifth, is the investor establishing a company in Vietnam an individual or a foreign company establishing a subsidiary in Vietnam?

An investor is an organization or individual related to the investment conditions and documents that need to be prepared. Who is the founder of your company? Is it an individual or an organization? Regarding this issue, Quoc Bao would like to send customers the following instructions:

Investors can be individuals (foreign individuals and individuals contribute capital to establish a company in Vietnam) or organizations (contribute capital and invest capital to become a company based in a foreign country). establish a company in Vietnam). For example, some industries are only allowed to investors who are companies allowed to establish in Vietnam such as: construction, design, …

For each subject of the application to establish a foreign-invested company, different documents are required.

6. What do you need to prepare to establish a foreign-invested company?

Depending on the business line, Vietnamese law will require different conditions and documents. However, for industries without special conditions, foreign investors who want to establish a foreign-invested company in Vietnam need to prepare the following basic documents:

Documents need to be prepared for individual investors establishing foreign-invested companies in Vietnam.

Passport (Notarized translated copy);

Confirmation of bank account balance corresponding to the amount invested in Vietnam (Original and notarized translation).

Head office lease contract, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Business registration certificate with real estate business function of the lessor or equivalent documents).

Documents need to be prepared for corporate investors/legal entities establishing foreign-invested companies in Vietnam.

Business registration certificate (Must be consular legalized and notarized translation).

Confirmation of bank account balance corresponding to the amount invested in Vietnam (Original, notarized translation) or financial statement with profit corresponding to the amount of capital contributed to the company established in Vietnam (Must be legal) consular legalization and notarized translation);

Charter of operations of the foreign parent company (Must be consular legalized and notarized translation).

Head office lease contract, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Business registration certificate with real estate business function of the lessor or equivalent documents).

Passport of the legal representative, capital contribution manager – Director of the company in Vietnam (Notarized translated copy)

7. Forms of establishing foreign-invested enterprises/companies

– Establish a foreign-invested company in the form of investors contributing capital from the beginning

Accordingly, foreign investors will contribute capital right from the beginning of establishing a company in Vietnam. Accordingly, foreign investors’ capital contribution, depending on the field of activity, can range from 1% to 100% of the company’s charter capital.

– Establishing a company with foreign investment capital in the form of capital contribution and share purchase

With this form, foreign investors will contribute capital to a Vietnamese company that already has a Business Registration Certificate. Foreign investors, depending on the field of activity, can contribute capital from 1% to 100% of capital into Vietnamese companies. Foreign investors will carry out procedures for purchasing capital contributions and shares of Vietnamese companies. After that, the Vietnamese company became a foreign-invested company.

7.1 Procedures for establishing a foreign-invested company/enterprise when investors contribute capital from the beginning

Procedures for establishing a company with foreign investment from 1% to 100% of capital contributed by foreign investors immediately upon establishment are carried out according to the following steps:

Step 1: Prepare documents for Investment Registration Certificate

Dossier to request issuance of Investment Registration Certificate includes:

Document requesting implementation of investment project.

Documents proving legal status:

For institutional investors: copy of the Certificate of Establishment or other equivalent document certifying the legal status of the institutional investor.

For individual investors: Copy of ID card/ID card or passport for individual investors.

Investment project proposal includes the following contents: investor implementing the project, investment objective, investment scale, investment capital. and capital mobilization plan, location, deadline, investment progress, labor needs, proposals for investment incentives, and assessment of the project’s socio-economic impact and efficiency.

Document proving the investor’s financial capacity:

For institutional investors: the investor’s 02 most recent financial statements. Or commit to financial support from the parent company. Or commit to financial support from a financial institution. Or guarantee the investor’s financial capacity. Or documents explaining the investor’s financial capacity.

For individual investors: confirm account balance, savings book.

Head office lease contract, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Business registration certificate with real estate business function of the lessor or equivalent documents).

Propose land use needs; In case the project does not request the State to allocate land, lease land, or allow change of land use purpose, submit a copy of the location lease agreement or other documents certifying that the investor has the right to use the location for implementation. current investment project.

Explanation on the use of technology in investment projects for projects using technology on the List of technologies restricted from transfer according to the provisions of law on technology transfer, including the following contents: name of technology, technology origin, technology process diagram; Main technical parameters, usage status of main machinery, equipment and technological lines..

Step 2: Submit application for Investment Registration Certificate

Procedures for granting Investment Registration Certificates to investment projects that are not subject to investment policy decisions are as follows:

Online declaration of information about investment projects on the National Information System on Foreign Investment

Before carrying out the procedures for granting the Investment Registration Certificate, the investor declares information about the investment project online on the National Information System on Foreign Investment. Within 15 days from the date of online declaration, the investor submits the application for an Investment Registration Certificate to the Investment Registration Authority.

After the Investment Registration Authority receives the application, the investor will be granted an account to access the National Information System on Foreign Investment to monitor the application processing status.

The investment registration agency uses the National Information System on Foreign Investment to receive, process, and return results of investment registration dossiers, update dossier processing status, and issue project codes. investment project.

Submit application directly for Investment Registration Certificate

Investors submit applications for Investment Certificates at the investment registration agency according to their authority as follows:

Department of Planning and Investment of the province where the company is headquartered:

Investment projects outside industrial parks, export processing zones, high-tech zones, and economic zones.

Investment projects to develop infrastructure of industrial parks, export processing zones, high-tech zones and investment projects in industrial parks, export processing zones, and high-tech zones in localities that have not yet established a Management Board industrial park, export processing zones and high-tech zones.

Investment projects implemented in many provinces and centrally run cities.

Investment projects are implemented simultaneously inside and outside industrial parks, export processing zones, high-tech parks and economic zones.

Management board of industrial parks, export processing zones, high-tech zones and economic zones of the province where the company is headquartered.

Investment projects to develop infrastructure of industrial parks, export processing zones, and high-tech zones.

Investment projects implemented in industrial parks, export processing zones, high-tech zones, and economic zones.

Step 3: Issue Investment Registration Certificate

Within 15 days from the date of receiving complete documents, the investment registration agency shall issue an Investment Registration Certificate. In case of refusal, the investor must be notified in writing and clearly state the reason.

 

Step 4: Prepare documents and submit application for Business Registration Certificate

After a foreign-invested company is granted an investment registration certificate, the investor carries out the procedures for granting a Business Registration Certificate similar to the procedures for establishing a Vietnamese capital company.

Application dossier for issuance of Business Registration Certificate

Application for business registration.

Company rules.

List of members (for LLCs with two or more members) or List of founding shareholders and shareholders who are foreign investors (list of authorized representatives if there are institutional shareholders).

Copies of the following documents: Citizen identification card, ID card, passport or other legal personal identification of individual members.

Establishment decision, Business registration certificate or other equivalent documents of the organization and authorization documents; Citizen identification card, ID card, passport or other legal personal identification of the authorized representative of the organizational member

For members that are foreign organizations, a copy of the Business Registration Certificate or equivalent document must be consular legalized.

Decide to contribute capital and appoint managers; List of authorized representatives (for organizational members);

Investment registration certificate for investors has been issued.

Authority to issue Business Registration Certificate:

Department of Planning and Investment of the province where the company’s headquarters is located.

Step 5: Announce the content of business registration information.

After being granted a Business Registration Certificate, an enterprise must make a public announcement on the National Business Registration Portal. At the same time, the publication fee must be paid according to the provisions of law. The published content includes the contents of the Business Registration Certificate and the following information:

Business.

List of founding shareholders; List of shareholders who are foreign investors for joint stock companies (if any).

Fee for publishing business registration content:

The request for publication of business registration contents and payment of fees for publication of business registration contents are made at the time the enterprise submits its business registration dossier.

Step 6: Engrave the company seal

Stamps include stamps made at a seal engraving facility or stamps in the form of digital signatures in accordance with the law on electronic transactions.

The enterprise decides the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise.

The management and storage of seals is carried out in accordance with the provisions of the company charter or regulations issued by the enterprise, branch, representative office or other unit of the enterprise with the seal. Enterprises use seals in transactions according to the provisions of law.

Step 7: Issue a business license or operating license

Business License issuance only applies to companies doing business in the field of retailing goods to consumers or setting up retail establishments.

For some industries, after completing procedures for establishing a company, foreign investors must apply for licenses related to operating conditions. For example: a food business applies for a food hygiene, safety and environmental license. Education business: Training license. Travel business: Travel license…

General conditions for being granted a business license in the field of retail goods for foreign investors

In cases where foreign investors belong to countries or territories participating in international treaties to which Vietnam is a member and commit to opening the market for goods purchase and sale activities and activities directly related to purchase and sale, goods.

Meets market access conditions in international treaties to which Vietnam is a member.

Have a financial plan to carry out the activities requested for a Business License.

No overdue tax debt in case established in Vietnam for 1 year or more.

In case the foreign investor does not belong to a country or territory participating in an international treaty to which Vietnam is a member.

Meets market access conditions in international treaties to which Vietnam is a member.

Have a financial plan to carry out the activities requested for a Business License.

No overdue tax debt in case established in Vietnam for 1 year or more.

Conditions by industry to be granted a retail business license

In accordance with specialized legal regulations.

Consistent with the level of competition of domestic enterprises in the same field of operation.

Ability to create jobs for domestic workers.

Ability and level of contribution to the state budget.

Application for a retail business license for foreign-invested enterprises

Application for Business License (Form No. 01 in Appendix issued with Decree 09/2018/ND-CP).

The explanation contains:

Explanation of the conditions for granting the corresponding Business License according to the provisions of Article 9 of Decree 09/2018/ND-CP.

Business plan: Describes the content and methods of implementing business activities; present business plans and market development; labor needs; Evaluate the socio-economic impact and efficiency of the business plan.

Financial plan: Report on business performance results on the basis of audited financial statements of the most recent year in case established in Vietnam for 01 year or more; explanation of capital, capital sources and capital mobilization plans; Attached are financial documents.

Business situation of buying and selling goods and activities directly related to buying and selling goods. The financial situation of the foreign-invested economic organization as of the time of application for a Business License.

Tax authority documents proving no overdue tax debt.

Copy: Business registration certificate; Investment registration certificate for projects selling and buying goods and activities directly related to buying and selling goods (if any).

Authority to grant retail business licenses to foreign-invested enterprises

Department of Industry and Trade where the enterprise is headquartered.

Processing time: about 30-45 working days.

Step 8: Open a foreign direct investment capital account

After completing the procedures for establishing a foreign-invested company, the investor opens a foreign direct investment capital account. The investor transfers capital to this capital account according to the capital contribution period recorded in the Investment Certificate.

In addition, foreign-invested companies need to open additional transaction accounts to receive money from the investment capital account to carry out revenue and expenditure procedures in Vietnam.

Step 9: The foreign-invested company carries out the following procedures for establishing the company

After the company is established, investors need to follow the same post-establishment procedures as a Vietnamese company. Specifically:

Hang signs at headquarters.

Register for a digital signature to pay taxes electronically and report taxes via the Internet

Buy electronic digital signatures to make electronic tax payments

Proposal to issue electronic invoices.

Report on project implementation status according to regulations in the Investment Registration Certificate.

Declare and pay taxes according to regulations

7.2 Procedures for establishing a foreign-invested company in the form of capital contribution and share purchase

Step 1: Establish a company with Vietnamese capital

Foreign investors can only contribute capital to buy shares when there is a Vietnamese company. In case the company establishment procedures have not yet been completed, the Vietnamese partner must proceed with establishing a company with 100% Vietnamese capital.

Step 2: Prepare documents to register to purchase capital contributions and shares from foreign investors

Application for registration of capital contribution, purchase of capital contribution, purchase of shares of foreign investors in Vietnamese enterprises

Document to register capital contribution, share purchase, capital contribution. The registration document for capital contribution, share purchase, or capital contribution includes the following contents: information about the economic organization to which the foreign investor intends to contribute capital, buy shares, or contribute capital. Charter capital ownership ratio of foreign investors after contributing capital, purchasing shares, or capital contributions to economic organizations.

Copy of ID card, ID card or passport for individual investors. Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors.

Written agreement on capital contribution, share purchase, capital contribution purchase between the foreign investor and the economic organization receiving capital contribution, stock purchase, capital contribution;

Declaration document (attached with a copy) of the Certificate of land use rights of the economic organization receiving capital contributions, shares, or capital contributions from foreign investors.

Step 3: Submit application to register to purchase capital contributions and shares from foreign investors

Foreign investors submit applications at the Investment Registration Office – Department of Accounting and Investment where the enterprise is headquartered.

Within 15 working days from the date of receipt of valid documents, the Department of Accounting and Investment shall issue a Notice of meeting the conditions for capital contribution, share purchase, capital contribution and Vietnamese enterprises.

Step 4: Foreign investors contribute capital, buy shares, capital contributions and Vietnamese enterprises.

In case the foreign investor contributes more than 51% of capital, the Vietnamese Company will open a direct investment capital account. Investors make capital contributions and transfer capital through direct investment capital accounts.

Members and shareholders transferring capital must declare and pay taxes upon transfer according to the law on personal income tax and corporate income tax (if any).

 

Step 5: Change the business registration certificate

After the foreign investor completes the capital contribution, the company carries out procedures to change business registration. Changing business registration to record capital contribution and share purchase by foreign investors in business registration documents at competent state agencies.

Application for change of business registration certificate

Notice of change in business registration content;

Deciding on company changes;

Minutes of meetings about changing companies;

Transfer contract and documents certifying that the transfer has been completed, certified by the company’s legal representative;

List of capital contributing members or List of foreign shareholders;

Notarized copy of investor’s passport/Business registration certificate.

Authority to issue changes to the Business Registration Certificate:

Department of Planning and Investment of the province where the company’s headquarters is located.

Step 6: Issue Business License and Operating License

Similar to step 7 above.

 

*** Advantages of procedures for foreign investors to contribute capital and buy shares into Vietnamese companies
Advantages of procedures for foreign investors to contribute capital and buy shares into Vietnamese companies compared to establishing a foreign-invested company where foreign investors contribute capital from the beginning are as follows:
Even if a foreign-invested company has members who are foreign investors, it is not required to carry out procedures for issuance of an Investment Certificate. When an enterprise does not have an Investment Certificate, procedures will be minimized when there is a change in the contents of business registration with state agencies.
Simple change procedures: When a business only has a Business Registration Certificate, it only has to be done when there is a change in company name, company address, owner information, etc., follow the same procedures as Vietnamese company;
You do not have to carry out procedures to update investment information on the investment management system.
Procedures for proving financial capacity are also simpler and easier.
In cases where foreign investors contribute capital or buy shares in a Vietnamese company that already has a Business Registration Certificate (including cases of purchasing up to 100% of the company’s capital contribution), they do not have to carry out procedures. issuance of an Investment Registration Certificate, except in the case of a company doing business in the field of education and training, if a foreign investor purchases from 1% of the capital contribution, it is also necessary to carry out procedures for issuance of an Investment Registration Certificate. 

8. In some business fields, foreign investors can establish foreign-owned companies

TWU	Industry name	CPC Code
1.	Production
2.	Accounting services, tax services	862, 863
3.	Architectural Services	8671
4.	Technical consulting services, synchronous technical consulting	8672, 8673
5.	Urban planning and urban landscape architecture services	8674
6.	Computer services and related services, business, software production	841-845, 849
7.	Research and development services for natural sciences	851
8.	Market Research Services	864
9.	Management consulting services	865
10.	Services related to management consulting	866
11.	Production-related services	884, 885
12.	Services related to scientific and technical consultancy	86751, 86752, 86753
13.	Repair and maintenance services of machinery and equipment (excluding repair and maintenance of ships, aircraft, or other means and equipment of transport)	633
14.	Delivery services	7512
15.	Construction and related engineering services	511-518
16.	Import and export services, wholesale distribution, retail sale of goods	621, 622, 631, 632
17.	Franchising Services	8929
18.	Educational services	923, 924, 929
19.	Wastewater and garbage treatment	9401, 9402
20.	Hospital, dental, medical examination services	9311, 9312
21.	Hotel accommodation arrangement service, Food and beverage service	64110, 642, 643
22.	Warehousing services, freight agencies	742, 748
23.	Reservation service by computer
24.	Aircraft maintenance and repair services	8868

9.Who has the right to establish a foreign invested company?

Persons with the right to establish foreign-invested companies are listed and clearly defined in the law below:

The current Enterprise Law stipulates: Right to establish, contribute capital, buy shares, purchase capital contributions and manage enterprises

1. Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of this Law, except for the cases specified in Clause 2 of this Article.

2. The following organizations and individuals do not have the right to establish and manage businesses in Vietnam:

a) State agencies and people’s armed forces units use state assets to establish business enterprises to make private profits for their agencies and units;

b) Cadres, civil servants and public employees according to the provisions of law on cadres, civil servants and public employees;

c) Officers, non-commissioned officers, professional soldiers, workers, and defense officials in agencies and units of the People’s Army; Professional officers and non-commissioned officers in agencies and units of the Vietnam People’s Police, except those appointed as authorized representatives to manage the State’s capital contribution in enterprises;

d) Leaders and professional managers in state-owned enterprises, except those appointed as authorized representatives to manage the State’s capital contribution in other enterprises;

d) Minors; people with limited civil act capacity or lost civil act capacity; organizations without legal status;

e) People who are being prosecuted for criminal liability, serving prison sentences, administrative handling decisions at compulsory detoxification facilities, compulsory education establishments or are banned from practicing business or holding positions. perform certain tasks or jobs related to business according to the Court’s decision; Other cases as prescribed by law on bankruptcy and anti-corruption.

If requested by the Business Registration Authority, the person registering to establish a business must submit a criminal record card to the Business Registration Authority.

3. Organizations and individuals have the right to contribute capital, purchase shares, and purchase capital contributions to joint stock companies, limited liability companies, and partnerships according to the provisions of this Law, except for the following cases:

a) State agencies and people’s armed forces units use state assets to contribute capital to enterprises to gain private profits for their agencies and units;

b) Subjects who are not allowed to contribute capital to the enterprise according to the provisions of law on officials and civil servants.

4. Gaining private profits for your agency or unit according to Point a, Clause 2 and Point a, Clause 3 of this Article is the use of income in any form obtained from business activities, capital contributions, share purchases, Purchase capital contributions for one of the following purposes:

a) Divided in any form to some or all of the people specified in Points b and c, Clause 2 of this Article;

b) Adding to the operating budget of agencies and units contrary to the provisions of law on state budget;

c) Establish a fund or add to it to serve the private interests of agencies and units.

10. Some notes before establishing a foreign-invested company in Vietnam

Foreign investors, including foreign individuals and foreign companies, can establish companies in Vietnam with capital ownership from 1 to 100% capital depending on the investment field.

Conditions for establishing a foreign-invested company depend on the field in which the investor is establishing: According to WTO commitments and Vietnamese law, some fields can be easily established in Vietnam such as: trade, import-export, investment consulting, management consulting, software, real estate, construction, restaurants, tourism, manufacturing (needs a factory in an industrial park),…

Except for industries requiring legal capital, the capital contributed by investors does not have a minimum level but must be consistent with the scale of operation of the registered company. However, the amount of capital contributed affects the application for a work permit and temporary residence card for the investor, accordingly the investor and the representative managing the capital contribution are only exempted from the work permit and issued a card. For temporary residence, if the capital contribution is 3 billion VND or more, and the investor contributes a high capital contribution, the temporary residence card period will also be granted longer.

If foreign investors contribute capital right after establishment, they need to prove their finances through savings book, deposit balance, etc. For individuals, deposit balances, tax reports, profitable financial reports, etc. for companies. But if a foreign investor contributes capital to buy shares, it is not necessary to provide these documents.

For procedures to establish a foreign-invested company, it is necessary to provide a house or office rental contract or loan contract and real estate documents of the rented house or office to submit with the establishment documents. Meanwhile, for Vietnamese companies or capital contribution purchase procedures, this condition is not required.

The director, legal representative, and capital contribution manager of a foreign-invested company can be a foreigner or Vietnamese.

Foreign-invested companies are also granted Enterprise Registration Certificates (ERC) by the Business Registration Office – Department of Planning and Investment where the company is headquartered as Vietnamese capital companies.

For companies with foreign investors contributing capital from the beginning from 1% and foreign-invested companies operating in the field of education, the procedure for issuance of an Investment Registration Certificate (IRC) must be carried out.

The biggest difference between a foreign-invested company and a Vietnamese-invested company is that the company needs to open an investment capital account to contribute capital and transfer profits back to the country later.

Unlike Vietnamese-invested companies, which are responsible for capital contributions, foreign-invested companies are required to make capital contributions to their capital account and are supervised on capital contributions through investment reports. capital contribution period.

The capital contribution period of a foreign-invested company is clearly recorded in the Investment Registration Certificate. Accordingly, if the investor has not yet contributed capital by the due date, the bank opening the investment capital account will not accept late capital contributions. To be able to carry out capital contribution procedures as committed, the company needs to make adjustments to the Investment Registration Certificate to extend the capital contribution deadline.

Tax declaration procedures, VAT rates, and Corporate Income Tax of foreign-invested companies are similar to those of Vietnamese-invested companies. However, foreign-invested companies must audit their year-end financial statements.

In addition, foreign-invested companies that are granted Investment Registration Certificates must annually carry out investment reporting procedures, investment monitoring and evaluation reports, and report on project implementation status to the public. investment registration agency.

11. Frequently asked questions about Establishing a foreign invested company/enterprise

What are the forms of foreign investors investing in Vietnam?

Establish a 100% foreign-owned company in Vietnam.

Contribute capital to establish a joint venture company with Vietnamese investors.

Buy shares and capital contributions of Vietnamese companies.

Investment under business cooperation contracts.

Do foreign-invested companies receive investment incentives?

Foreign-invested companies receive investment incentives but only similar to Vietnamese enterprises.

What taxes do foreign invested companies need to pay?

The taxes that need to be paid will be similar to those of Vietnamese companies, including: license tax, VAT, import-export tax, and corporate income tax.

For foreign workers, personal income tax is calculated based on global income.

When to establish a company with foreign capital, must an investment certificate be issued?

After a foreign-invested company registers its establishment (according to Article 22 or Article 24 of the Investment Law 2020), it is necessary to carry out procedures for granting an Investment Registration Certificate.

What types of companies can be established with foreign capital?

Normally, establishing a foreign-invested company will be established in the following 3 types:

One member LLC

LLC with 2 or more members

Joint stock company with 3 or more shareholders

Can a foreign-invested company establish a representative office, branch, or business location?

Establishing foreign-invested enterprises is allowed to establish representative offices in Vietnam for the following purposes:

Market research

Trade promotion in Vietnam

Why should you use the service of establishing a foreign invested company?

Establishing a foreign-invested enterprise is a complex issue, involving many steps and requiring a lot of specialized legal knowledge to avoid confusion between procedures. Especially for foreign investors, it is even more difficult to carry out these procedures themselves. Therefore, to reduce time and effort but still get good results, you should choose consulting services for establishing foreign-invested companies at reputable law units such as Quoc Bao Law to carry out the implementation. presently.