Establishing a company with foreign investment in Vietnam. Currently, foreign-invested enterprises are growing very strongly and creating many opportunities for the Vietnamese economy. So, in what ways do foreigners contribute capital to establish companies in Vietnam? What are the conditions for establishing a company with foreign capital contributions? What are the documents and procedures? What issues should parties involved in establishing a business pay attention to in this case? If you are a foreign investor or a partner looking to learn about the procedures for establishing a foreign-invested company? Are you wanting to invest in Vietnam but don’t know where to start? Are you wondering how to establish a foreign-invested company? Let’s find the answer with Quoc Bao Law in the analysis based on practical experience below. If you have any procedural problems during the implementation process, please contact Quoc Bao Law for free consultation!
If you need advice or support on what you are looking for, contact Quoc Bao Law in Vietnam for assistance with business establishment, investing, applying for temporary residence cards and visas, immigration and legal documents. work permit in Vietnam.
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Mục lục
- 1 1. Legal basis for establishing a company with foreign investment in Vietnam
- 2 2. Characteristics of foreign-invested enterprise operations
- 3 3. form of foreign investment in Vietnam
- 3.1 3.1. Form 1: Investing in establishing economic organizations
- 3.2 3.2. Form 2: Invest in capital contribution, buy shares, buy capital contribution
- 3.3 3.3. Form 3: Implement investment projects
- 3.4 3.4. Form 4: Investment in the form of BCC contract
- 3.5 3.5. New forms of investment and types of economic organizations according to Government regulations.
- 4 4.Some notes before establishing a foreign-invested company in Vietnam
- 5 5. Conditions for establishing a foreign-invested company
- 6 6. Procedures for establishing a foreign invested company
- 7 7. Advantages and disadvantages of procedures for foreigners investing in Vietnam
- 8 8. Fields of preferential foreign investment in Vietnam
- 9 8.2. Industry with investment incentives
- 10 9. Some related questions
- 11 10. Service of establishing foreign invested companies of Quoc Bao law firm
1. Legal basis for establishing a company with foreign investment 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 implementation guidance documents;
Trade agreements with foreign investors’ nationalities.
2. Characteristics of foreign-invested enterprise operations
2.1. 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.
2.2. 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:
+ Private enterprises;
+ Partnership company;
+ One-member limited liability company;
+ LLC with two or more members;
+ Joint stock company.
2.3. 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.
2.4. 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.
2.5. 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.
2.6. 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.
These regulations aim to clarify ways to resolve and access the rights of investors and foreign-invested enterprises. From there, they can stably participate in the market, as well as be proactive in their business.
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.
These regulations aim to clarify ways to resolve and access the rights of investors and foreign-invested enterprises. From there, they can stably participate in the market, as well as be proactive in their business.
3. form of foreign investment in Vietnam
Currently, according to the Investment Law 2020, there are 5 forms that foreign investors can choose when investing in Vietnam. For each form there will be different characteristics and regulations. Investors choose the form that suits their investment needs to achieve the highest investment results.
3.1. Form 1: Investing in establishing economic organizations
There are 4 popular forms of business:
One-member limited liability company
Limited liability company with two or more members
Joint stock company
Partnerships
This is a type of direct investment in which investors directly invest capital and directly participate in management activities. This type is relatively complicated, requiring more strict investment procedures than other types of investment. Each type of business has its own advantages and disadvantages that investors consider when choosing, including the following aspects: Ability to mobilize capital, ability to make decisions autonomously, ability to bear property responsibility, tax incentives…
Currently, foreign investors mainly choose limited liability companies and joint stock companies when investing in Vietnam.
If a foreign investor’s economic organization falls into one of the following cases, it must meet the conditions and carry out investment procedures according to regulations for foreign investors when investing in establishing an economic organization. other:
(i) There are foreign investors holding more than 50% of the charter capital or the majority of partners are foreign individuals for economic organizations that are partnerships;
(ii) There is an economic organization specified in point a of this clause that holds more than 50% of the charter capital;
(iii) There are foreign investors and economic organizations specified in Point a of this Clause holding more than 50% of the charter capital.
Thus, with the above 3 procedures, foreign investors who want to invest in establishing economic organizations need to take the following steps:
Carry out procedures for approval of investment policy (if required by law;
Carry out procedures for issuance of Investment Registration Certificate according to the Investment Law 2020;
Carry out procedures for establishing a business according to the Enterprise Law 2020.
In other cases, if the economic organization does not fall into the above cases, it is only necessary to comply with the investment conditions and procedures as prescribed for domestic investors when investing in establishing another economic organization.
Note:
Foreign investors establishing economic organizations must meet market access conditions for foreign investors in terms of ownership ratio of charter capital of foreign investors in economic organizations; investment form; scope of investment activities; investor capacity; partners participating in investment activities; Other conditions as prescribed in laws, resolutions of the National Assembly, ordinances, resolutions of the National Assembly Standing Committee, decrees of the Government and international treaties to which the Socialist Republic of Vietnam is a member pellets.
Before establishing an economic organization, foreign investors must have an investment project and carry out procedures for granting and adjusting the Investment Registration Certificate, except in the case of establishing innovative small and medium-sized start-up enterprises. creation and innovative start-up investment fund according to the provisions of law on supporting small and medium-sized enterprises.
a) Form of capital contribution investment
Investors contribute capital to economic organizations in the following forms:
Buy shares issued for the first time or additional shares issued by a joint stock company;
Contribute capital to limited liability companies and partnerships;
Contribute capital to other economic organizations.
b) Forms of buying shares and purchasing capital contributions
Investors buy shares and capital contributions in the following forms:
Buy shares of a joint stock company from the company or shareholders;
Buy the capital contribution of a member of a limited liability company to become a member of a limited liability company;
Buy the capital contribution of a capital contributing member in a partnership company to become a capital contributing member of a partnership company;
Buy capital contributions of members of other economic organizations.
Investors are required to carry out procedures for registering capital contribution, purchasing shares, and purchasing capital contributions in the following cases:
Contributing capital, purchasing shares, purchasing capital contributions increases the ownership ratio of foreign investors in economic organizations doing business in sectors and trades with conditional market access for foreign investors.
Capital contribution, share purchase, capital contribution leads to foreign investors holding more than 50% of the charter capital of the economic organization in the following cases: increasing the charter capital ownership ratio of foreign investors from below or equal to 50% to above 50%; Increase the charter capital ownership ratio of foreign investors when foreign investors own more than 50% of the charter capital in economic organizations.
Foreign investors contribute capital, buy shares, and purchase capital contributions from economic organizations that have land use rights certificates on islands and border communes, wards, and towns; coastal communes, wards and towns; other areas that affect national defense and security.
If they do not fall into the above cases, foreign investors make capital contributions, buy shares, or purchase capital contributions according to the same procedures as domestic investors.
3.3. Form 3: Implement investment projects
An investment project is a collection of proposals to invest medium-term or long-term capital to conduct business investment activities in a specific area, within a specified period of time. Depending on the nature, scale and conditions of each project, investment projects are implemented according to one or more of the following procedures:
Decide on investment policies and issue Investment Registration Certificates according to regulations;
Establishment of economic organizations according to regulations for foreign investors investing in the form of establishing economic organizations;
Carry out procedures for land allocation, land re-allocation, land lease, land sub-lease, and permission to change land use purposes according to the provisions of land law (if any);
Carry out construction procedures according to the provisions of construction law (if any).
Investors who win the auction of land use rights or win the bid for an investment project using land carry out the investment project according to the provisions of the decision approving the auction winning results and the document approving the results. Investor selection and regulations on investment, construction and related laws without having to carry out procedures to decide investment policies.
3.4. Form 4: Investment in the form of BCC contract
BCC contract (business cooperation contract) is a contract signed between investors to cooperate in business, divide profits, and divide products according to the provisions of law without establishing an economic organization. . (Investment Law 2020).
BCC contracts are signed between domestic investors and foreign investors or between foreign investors carrying out procedures for issuance of Investment Registration Certificates as prescribed in Article 38 of the Investment Law 2020.
This is considered a flexible and cost-effective form of investment, so recently, more and more investors are choosing it in the process of business operations and cooperative development.
The parties to the BCC contract have the right to agree on the contents according to the actual business needs of their enterprises. The contents of cooperation must be within the legal framework. At the same time, according to Article 27 of the Investment Law 2020, the parties participating in the BCC contract establish their own coordination committee to implement the BCC contract. The functions, tasks, and powers of the coordination board are agreed upon by the parties.
3.5. New forms of investment and types of economic organizations according to Government regulations.
Above are 4 popular forms of foreign investment in Vietnam. In addition, Clause 5, Article 21 also stipulates “New forms of investment and types of economic organizations according to government regulations”. This provision shows that lawmakers have further contemplated new forms of investment and types of economic organizations, demonstrating initiative, openness, and readiness to receive new forms of investment and types of business. The new economy in the future will face the continuous development of the economy, no longer being stereotyped and limited to investment forms as before.
4.Some notes before establishing a foreign-invested company in Vietnam
Notes on investment fields
• Depending on the investment field, investors can determine their capital contribution ratio in companies established in Vietnam. For each specific field, investors need to meet specific conditions and determine the corresponding investment capital to demonstrate financial capacity in the appropriate investment field for the project to be licensed. At the same time, ensure correct and sufficient capital contribution according to the committed schedule.
• For investment fields that are not included in WTO commitments, when investors want to invest, they must seek approval and opinions from the Ministry of Industry and Trade. Therefore, the ability to successfully register these professions is not high, and depends largely on the investor’s ability to explain, experience, and financial capacity.
Note the value of investment capital contribution and investment capital contribution progress
Investment capital not only proves the investor’s financial capacity when investing in Vietnam but is also the basis for determining whether the investor must apply for a work permit or not. For investors who contribute investment capital in Vietnam of less than 3 billion VND, they are not exempted from work permits. Investors still have to apply for a work permit and when having a work permit, they will only be granted a temporary residence card. maximum 02 years. The investor’s investment capital ratio is also related to the duration of the temporary residence card issued to investors and representatives of foreign organizations investing in Vietnam, specifically:
• For investors with contributed capital worth from 03 billion VND to less than 50 billion VND, temporary residence cards are issued for a term of not more than 03 years;
• For investors with contributed capital worth from 50 billion VND to less than 100 billion VND, temporary residence cards are issued for a term of not more than 05 years;
• For investors with contributed capital worth 100 billion VND or more, temporary residence cards are issued for a period of no more than 10 years.
In addition, investors must pay attention to contributing investment capital on time according to the progress recorded in the Investment Certificate. In case the investor does not contribute enough capital on time as committed, he or she must extend the investment capital contribution (if there is a legitimate reason). In case of late extension, there will be a penalty for late capital contribution.
Note about investment subjects
• Investment entities in each field have specific regulations. In some industries, foreign investors can only establish a company in Vietnam as a legal entity, even a registered legal entity. operating in the field of investment in Vietnam. Therefore, in many cases foreign investors cannot invest as individuals in some investment fields in Vietnam.
• For investors with nationalities that are not WTO members, investing in Vietnam must also seek verification from the Ministry of Industry and Trade. The ability to register for these investors is not high, and at the same time, the possibility of registration for these investors is not high. The time depends largely on the investor’s ability to explain, experience, and financial capacity.
Note about investment capital contribution accounts
In fact, many foreign-invested enterprises come to Viet An Law in a state of “half crying or half laughing” because during the establishment process they were not consulted about the need to contribute capital through an investment capital account. foreign direct. This leads to a situation where capital is contributed incorrectly and sometimes the capital has already been used up, so overcoming incorrect capital contribution is extremely difficult. Not only that, but there are also penalties for not contributing capital correctly. When a company wants to change or adjust its investment certificate, it must prove that it has fulfilled its capital contribution obligations, facing many difficulties. In many cases, even if it wants to dissolve, the procedure cannot be carried out. Therefore, companies with foreign capital need to pay special attention to opening a foreign direct investment capital account and making timely capital contributions to this account.
Note about renting company headquarters and locations for implementing investment projects
Unlike Vietnamese-invested companies, when establishing a foreign-invested company, foreign investors must have documents proving the company’s headquarters and the location of the public project implementation right after submitting the application to establish the company. ty. Accordingly, the company headquarters is not allowed to use an apartment building. Company establishment documents must be submitted with the headquarters lease contract, project location and legal documents (notarized copies) of the lessor. . The location of a production project must have the function of leasing real estate on the land use right certificate and business registration certificate of the lessor and must be located in an industrial cluster or park.
Notes on choosing the form of establishing a foreign-invested company
Investors who establish a company with foreign investment capital also choose the form of investment as in this article (ie the investor contributes capital from the beginning). Investors who want simpler procedures, especially if foreign investors combine with Vietnamese investors to do business together, should choose to invest in the form of purchasing capital contributions or shares of the company. Vietnam. In this form, the procedure for establishing a company is simpler, proving the company’s headquarters is not required, especially the investor can reduce the procedure for granting an Investment Registration Certificate. Accordingly, during the operation process, many legal procedures and costs will be saved when changes and additions arise.
5. Conditions for establishing a foreign-invested company
According to the provisions of Vietnamese law as well as the WTO Schedule of Commitments and related international treaties, the general conditions for foreign investors to establish companies in Vietnam are as follows:
– Conditions on subject and nationality of foreign investors
Be an individual over 18 years old, an organization or enterprise with a nationality that is a member of the WTO or has signed a bilateral treaty related to investment with Vietnam. However, in Vietnam, some industries only allow foreign investors who are legal entities to invest in Vietnam). Currently, individual investors holding passports with the “cow tongue line” will not be able to contribute capital to invest in Vietnam or act as a representative to manage the capital contribution of the organization or representative according to the law. the law of the company established in Vietnam.
Conditions on financial capacity of foreign investors
Have financial capacity to invest and prove financial capacity to invest in Vietnam.
– Conditions regarding the company’s headquarters and project location
Have a location to carry out an investment project in Vietnam through a location lease contract, house lease contract, land lease contract and legal real estate documents of the lessor to serve as the company headquarters and project implementation location. judgment.
For investment projects in the manufacturing sector, investors must demonstrate eligibility to rent factories and have factory lease contracts in industrial clusters and zones.
– Conditions on capacity, experience and specific conditions according to the investment field
Meet specific conditions for conditional business lines for foreign investors.
For some fields such as trade, wholesale and retail of goods, investors need to prove that they have experience in the investment field.
6. Procedures for establishing a foreign invested company
Establishing a foreign-invested company is carried out through detailed steps with specific documents and processes as follows:
Step 1: Prepare documents to establish a foreign invested company
For individual investors
For individual investors making investments in Vietnam, they need to meet the following conditions and prepare the following documents:
A certified copy of the investor’s identity card or identification card or passport (In case the investor’s passport from abroad is sent to Vietnam, it must be notarized and consular legalized at the agency). Vietnamese diplomatic representative in foreign countries.);
Confirm the investor’s bank account balance corresponding to the amount of capital expected to be invested in Vietnam (If a foreign bank confirms, it is necessary to provide a notarized copy and consular legalization at the representative agency). Vietnamese diplomatic representatives abroad);
Lease contract for the company headquarters and project location, Documents proving the lessor’s leasing rights (Certificate of land use rights, Construction permit, Certificate of functional business registration real estate business of the lessor or equivalent documents).
For institutional investors
For investors who are organizations investing in Vietnam, they need to meet the following conditions and prepare the following documents:
Copy of Certificate of Establishment or other equivalent document confirming the legal status of the investor (Copy must be notarized and consularly legalized at Vietnamese diplomatic missions abroad );
Copy of one of the following documents: the investor’s 02 most recent financial statements; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Confirm the investor’s bank account balance corresponding to the capital expected to invest in Vietnam. (Notarized copy, consular legalization at Vietnamese diplomatic missions abroad);
Notarized passport of the legal representative of the company abroad (The copy must be notarized and consularly legalized at the Vietnamese diplomatic representative agency abroad);
Notarized passport of the company’s legal representative in Vietnam (If the representative is abroad, the copy of the passport must be notarized and consular legalized at a Vietnamese diplomatic mission agency). abroad);
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).
If the project uses technology, it must be accompanied by an explanation of technology use for the specified project, including the following contents: technology name, 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
Implementation process:
– 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 documents, update the status of application processing and issue codes to investment projects.
Dossier for issuance of Investment Registration Certificate is as follows:
Document requesting implementation of investment project;
Copy of identity card/ID card or passport for individual investors; Copy of Certificate of Establishment or other equivalent document certifying legal status for institutional investors;
Investment project proposal includes the following contents: investor implementing the project, investment objective, investment scale, investment capital and capital mobilization plan, location, term, investment progress , labor needs, proposals for investment incentives, assessment of impact and socio-economic efficiency of the project;
Copy of one of the following documents: Financial statements of the investor for the last 2 years; commitment to financial support from the parent company; commitment to financial support from financial institutions; guarantee of the investor’s financial capacity; Documents explaining the investor’s financial capacity;
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.
Where to submit application for Investment Certificate
The Department of Planning and Investment receives and issues Investment Registration Certificates for investment projects:
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 parks, export processing zones and high-tech zones.
The Management Board of industrial parks, export processing zones, high-tech zones and economic zones receives, issues, adjusts and revokes Investment Registration Certificates for investment projects in industrial parks and economic zones. export processing zones, high-tech zones, and economic zones, including:
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.
The Department of Planning and Investment where the investor locates or plans to locate its headquarters or executive office to implement the investment project receives, issues, adjusts, and revokes the Investment Registration Certificate for the project. following investment projects:
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.
Issuance of 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 3: Submit application for Business Registration Certificate
Companies with foreign investment, including projects located in industrial parks or projects outside industrial parks, after being granted an Investment Registration Certificate, will carry out procedures for issuance of a Business Registration Certificate at Business Registration Office – Department of Planning and Investment where the company’s headquarters is located.
Documents for establishing a foreign invested company:
According to the provisions of the Enterprise Law 2020, Chapter IV of Decree No. 01/20121 on the order and procedures for business registration for various types of business. Similar to a company with Vietnamese capital, a company with foreign investment depends on the type of company the customer wants to establish: limited liability company, joint stock company, or other type of business, Luat Viet An will draft the corresponding documents, usually the company establishment documents include the following documents:
Application for business registration.
Draft corporate charter;
List of members for a two-member LLC or list of founding shareholders for a joint stock company;
Valid copy of one of the following personal identification documents:
For individuals: Valid ID card or passport or citizen identification card;
For organizations: Business registration certificate for organizations and attached personal identification documents of the organization’s authorized representative.
Decision on capital contribution, Document on appointment of authorized representative for company members, company shareholders who are organizations;
Other documents in special cases (Viet An Law Firm will advise customers to prepare according to the provisions of law);
Contract to provide legal services (Authorization Contract) to authorize Viet An Law Firm to perform business establishment services.
Submit documents to establish a company and pay the business information disclosure fee
After fully preparing the application for a Business Registration Certificate, Viet An Law Firm submits the application for a Business Registration Certificate via the National Business Registration Portal.
Unlike before, the procedure for paying fees for publishing business registration information will be carried out in parallel with the procedure for submitting documents to establish a company.
Therefore, as soon as the company is granted a Business Registration Certificate, it will also have its business information published on the National Business Registration Portal.
Issuance of Business Registration Certificate:
Within 03 – 05 working days from the date of receiving complete documents, the business registration agency will issue a Business Registration Certificate.
Step 4: Engrave the company seal (circle).
As soon as there is a Certificate of Business Registration which is also the company tax code, the company will proceed to engrave the legal entity mark.
Implementation time: 01 day.
Similar to companies with Vietnamese capital, foreign-invested companies engrave their own seals and are responsible for the use of the company’s legal seal. Therefore, the company does not have to post a notice announcing the seal sample as before. This is also a very new point of the Enterprise Law 2020, but it is also a concern of many businesses in the issue of self-management and use of corporate seals without supervision from relevant state management agencies. to the seal.
Step 5: Open a foreign direct investment capital account
After being granted an Investment Certificate or Business Registration Certificate, a foreign-invested company must open a direct investment capital account in foreign currency at 01 (one) licensed bank to carry out the implementation. Legal revenue and expenditure transactions in foreign currency related to foreign direct investment activities in Vietnam.
Step 6: Make capital contributions according to the capital contribution commitment schedule in the Investment Certificate
Foreign investors and Vietnamese investors in foreign-invested companies are allowed to contribute investment capital in foreign currency and Vietnamese Dong according to the investor’s capital contribution level in the Investment Registration Certificate. into the foreign direct investment account.
Cash investment capital contributions of foreign investors and Vietnamese investors in foreign-invested companies must be made through transfer to a direct investment capital account.
The foreign direct investment capital account is also an account later when the company operates a profitable business through which investors can transfer profits to pay investors abroad.
Step 7: Apply for a business license or sub-license for some conditional business lines
For conditional business lines, in addition to immediately carrying out the procedures for granting the Investment Registration Certificate, the investor must prove and submit the conditions to be granted the Investment Certificate. Complete procedures for granting investment certificates and business registration certificates. Foreign-invested companies need to apply for a license to qualify for operation. Eg:
For companies that retail goods or set up retail establishments: need to apply for a business license, license to establish a retail establishment,…
In case the company conducts international travel business (inbound): Foreign investors are only allowed to conduct international travel business with the scope of bringing foreign tourists into Vietnam (inbound).
In case the company conducts foreign language training business: The investor must seek approval from the Department of Education and Training during the process of granting the Investment Registration Certificate. Before going into operation, the enterprise applies for a License to operate a Foreign Language Training Center at the Department of Education and Training.
Step 8: Report on the status of investment project implementation
After being granted an Investment Registration Certificate, during the course of operation, a foreign-invested company must make periodic reports monthly, quarterly, the first 6 months of the year, and annually on the project implementation situation. investment project. Currently, the submission of reports by foreign invested companies to the Department of Planning and Investment will be through the national website: https://dautunuocngoai.gov.vn.
7. Advantages and disadvantages of procedures for foreigners investing in Vietnam
Advantage:
Rapid economic growth: Vietnam is experiencing significant economic growth and is one of the fastest growing economies in Southeast Asia.
Large consumer market: With more than 90 million people, Vietnam is a large and growing consumer market, creating opportunities to reach potential customers.
Cheap labor: Vietnam has cheap labor, making the country an attractive investment destination for industries with a lot of direct labor.
Strategic geographical location: Vietnam is located close to major markets such as China, India, Japan and Korea, making the country a strategic investment destination to expand business scale to other countries. neighboring market.
Developing infrastructure system: The infrastructure system in Vietnam is being upgraded and developed, including seaports, railways, roads, and airports.
Rights and protection of investors’ rights: Vietnamese law ensures the rights and freedom of legal operations of foreign investors in Vietnam and provides mechanisms to resolve disputes and conflicts invest.
Defect:
Complicated procedures: Foreign investment procedures in Vietnam can be complicated and require a lot of paperwork and time to complete.
Language and culture: Language and cultural differences can make transactions and project management difficult for foreign investors.
Legal conflicts: Handling legal and contractual conflicts can take a lot of time and money.
Political fluctuations: Political fluctuations can affect the business and investment environment in Vietnam.
Complex tax laws: The tax law system in Vietnam can be complex and requires an in-depth understanding of tax regulations.
Market risks: Like any other market, Vietnam also has business risks, including market, financial, and political risks.
Despite its disadvantages, Vietnam is still considered an attractive investment destination for foreign investors due to its growth opportunities and economic development potential.
8. Fields of preferential foreign investment in Vietnam
8.1. Industry with special investment incentives:
*High Technology, Information Technology, Supporting Industry:
High-tech applications in the High-tech List are given priority for investment and development according to the Prime Minister’s decision.
Production of products on the List of high-tech products encouraged for development according to the decision of the Prime Minister.
Production of supporting industrial products according to the Prime Minister’s decision.
Incubating high technology, incubating high-tech businesses; venture capital for high technology development; apply, research and develop high technology in accordance with the law on high technology; production of biotechnology products.
Producing software products, digital information content products, key information technology products, software services, information security incident recovery services, and information security protection according to regulations of the Government. information technology law.
Producing renewable energy, clean energy, energy from waste destruction.
Production of composite materials, light construction materials, and rare materials.
* Agriculture:
Plant, care for, nurture, protect and develop forests.
Cultivation, processing, and preservation of agricultural, forestry, and aquatic products.
Producing, multiplying and cross-breeding plant varieties, livestock breeds, forestry plant breeds and aquatic breeds.
Production, exploitation and refining of salt.
Offshore fishing combines the application of advanced fishing methods; fisheries logistics services; Construction of fishing shipbuilding and fishing shipbuilding facilities.
* Sea rescue service.
Environmental Protection, Infrastructure Construction:
Collect, process, recycle and reuse waste centrally.
Construction and business of infrastructure of industrial parks, export processing zones, high-tech zones, and functional areas in economic zones.
Investing in the development of water plants, power plants, water supply and drainage systems; bridges, roads, railways; airports, seaports, river ports; airports, railway stations and other particularly important infrastructure projects decided by the Prime Minister.
Develop public passenger transportation in urban areas.
Investment in construction, management and business of markets in rural areas.
* Culture, Society, Sports, Health:
Construction of social housing and resettlement housing.
Investing in business establishments implementing hygiene and disease prevention.
Scientific research on preparation technology and biotechnology to produce new drugs.
Production of medicinal materials and main drugs, essential drugs, drugs to prevent and control social diseases, vaccines, medical biological products, drugs from medicinal materials, oriental medicine; the drug’s patent or related exclusivity is about to expire; Applying advanced technology and biotechnology to produce human medicines meeting international GMP standards; Production of packaging in direct contact with drugs.
Invest in methadone production facilities.
Investing in the business of high-performance sports training and coaching centers and sports training and coaching centers for people with disabilities; building sports facilities with equipment, training and competition facilities that meet the requirements of organizing international tournaments; professional gymnastics and sports practice and competition facilities.
Investing in business centers for geriatrics, psychiatry, and treatment of patients infected with Agent Orange; Care centers for the elderly, people with disabilities, orphans, and homeless children.
Investment in business centers for Treatment – Education – Social Labor; drug addiction and smoking detoxification facilities; HIV/AIDS treatment facility.
Investing in the business of national museums and ethnic cultural houses; ethnic singing, dancing, and music troupes; theaters, studios, film production and film printing facilities; art and photography exhibition house; producing, manufacturing, and repairing traditional musical instruments; maintain and preserve museums, ethnic cultural houses and art and culture schools; establishments and craft villages to introduce and develop traditional trades.
8.2. Industry with investment incentives
* Science and Technology, Electronics, Mechanics, Materials Production, Information Technology:
Manufacturing products on the List of key mechanical products as decided by the Prime Minister.
Invest in research and development (R&D).
Producing steel billets from iron ore, high-grade steel, and alloys.
Production of coke and activated carbon.
Production of energy saving products.
Production of petrochemicals, pharmaceutical chemicals, basic chemicals, technical plastic and rubber components.
Manufacturing products with added value of 30% or more (according to instructions from the Ministry of Planning and Investment).
Manufacturing cars, auto parts, shipbuilding.
Producing accessories, electronic components, and electronic assemblies does not belong to the special investment incentive industries mentioned above.
Manufacturing machine tools, machinery, equipment, spare parts, machines serving agricultural, forestry, fishery, salt production, food processing machines, and irrigation equipment that are not included in special incentive industries investment mentioned above.
Production of materials to replace Asbestos materials.
* Agriculture
Raising, growing, harvesting and processing medicinal herbs; protect and preserve genetic resources and rare and endemic medicinal species.
Producing and refining animal, poultry and aquatic feed.
Scientific and technical services on planting, animal husbandry, aquaculture, crop and livestock protection.
New construction, renovation and upgrading of slaughterhouses; preserving and processing industrially concentrated poultry and livestock.
Build and develop concentrated raw material areas to serve the processing industry.
Seafood harvesting.
* Environmental Protection, Infrastructure Construction:
Construction and development of industrial cluster infrastructure.
Construction of apartments for workers working in industrial parks, export processing zones, high-tech zones, and economic zones; building student dormitories and housing for social policy beneficiaries; Invest in building functional urban areas (including kindergartens, schools, hospitals) to serve workers.
Handling oil spills, overcoming mountain landslides, dyke landslides, riverbanks, coastlines, dams, reservoirs and other environmental incidents; Apply technology to reduce greenhouse gas emissions that cause greenhouse effects and destroy the ozone layer.
Investment and business in commodity exhibition centers, logistics centers, warehouses, supermarkets, and trade centers.
Education, Culture, Society, Sports, Health:
Investment and business in infrastructure of educational and training establishments; Invest in the development of non-public education and training establishments at all levels: preschool education, general education, vocational education.
Producing medical equipment, building warehouses to preserve pharmaceuticals, reserve medicines for humans to prevent natural disasters, catastrophes, and dangerous epidemics.
Producing raw materials for making medicines, plant protection drugs, and pesticides; Prevention and treatment of diseases for animals and aquatic products.
Invest in biological testing facilities and evaluate drug bioavailability; Pharmaceutical facilities that meet good practice standards in drug production, storage, testing, and clinical trials.
Invest in research to prove the scientific basis of Oriental medicine and traditional medicines and develop standards for testing Oriental medicine and traditional medicines.
Investment and business in fitness and sports centers, gyms, sports clubs, stadiums, swimming pools; establishments that produce, manufacture, and repair equipment and facilities for physical training and sports.
Investing in the business of public libraries and cinemas.
Investing in construction of cemeteries, cremation and cremation service facilities.
Other Industry: Activities of People’s Credit Fund and microfinance institutions.
In addition, if the investor carries out special industries with preferential investment incentives in the area and also meets other conditions such as implementing the project in an area with difficult socio-economic conditions or In particularly difficult situations, many investment incentives will be applied and the incentive level that is most beneficial to investors will be chosen. During the investment registration process, investors need to base on legal regulations to determine the investment incentives they are entitled to and propose to the Investment Registration Authority.
*** What is the charter capital ownership ratio of foreign investors?
The current Investment Law stipulates that the charter capital ownership ratio of foreign investors is not restricted in economic organizations, except in cases where the economic organization is: a listed company; public company; securities trading organizations; securities investment funds; State-owned enterprises are equitized or converted to foreign ownership in accordance with relevant laws and international treaties to which Vietnam is a member. Currently, foreign investors mainly carry out licensed business activities according to the WTO commitments that Vietnam participates in.
*** Where should I register my business address in Vietnam?
Not every address can be used to register a company. The business address must be an address of a house with a rental agreement or an office building whose owner has a license to operate as an office building.
*** What special notes should I take when establishing a foreign-invested company in Vietnam?
Vietnamese law allows foreigners to own 1-100% capital in Vietnam.
Although the law does not stipulate a minimum capital, investors should declare a minimum capital of 50,000 USD or more to be able to be licensed to invest in establishing a foreign-invested company in Vietnam;
The company address must not be an apartment or collective house and must be accompanied by an office lease contract and real estate documents from the lessor;
The director and representative managing the capital contribution of a foreign-invested company can be Vietnamese or foreign;
Foreign-invested companies must apply for an investment certificate (IRC) upon establishment;
Applying for an Enterprise Registration Certificate (ERC) is similar to that for Vietnamese companies;
Foreign-invested companies declare and pay taxes similar to Vietnamese companies, but at the end of the year must have their financial statements audited.
Foreign-invested companies must make capital contributions via a capital transfer account on time and are not required to extend the capital contribution deadline and may be fined.
*** What taxes must foreign invested companies pay?
Similar to Vietnamese capital companies, foreign capital companies need to pay the following taxes:
License tax (according to registered charter capital), charter capital under 10 billion VND pays 2 million/year, from 10 billion or more is 3 million/year;
Value added tax (according to the company’s output and input balance);
Corporate income tax (only payable when the company is profitable, 20% of company profits);
Export and import taxes (if there are import and export activities);
Natural resources tax (if using natural resources);
Special consumption tax (if doing business in a special restricted business line).
*** What is the value added tax (VAT) rate in Vietnam?
There are three VAT rates: 0%, 5% and 10%, depending on the nature of the transaction.
The 0% tax rate applies to exported goods and services, international transportation and goods and services not subject to added value; overseas reinsurance services; providing credit, capital transfer and other financial services; postal and telecommunications services; and export products are exploited resources and unprocessed minerals.
*** What is the corporate income tax (CIT) rate in Vietnam?
The standard corporate income tax (CIT) rate is 20%,
Particularly for oil and gas search, exploration and exploitation activities in Vietnam, tax rates from 32% – 50% apply, and activities of searching, exploring and exploiting rare natural resources (including including: platinum, gold, silver, tin, precious stones, rare earths except oil and gas) tax rate of 50% applies.
*** Procedures for establishing a foreign invested company
Step 1: Apply for an investment certificate for business investment projects in Vietnam (Submit and request permission from relevant ministries)
Step 2: Carry out procedures for applying for a business registration license
Step 3: Receive results and complete investor tax procedures
7. What is the difference between foreign-invested enterprises and foreign enterprises?
Foreign enterprises are established according to procedures and processes according to foreign laws.
A foreign-invested enterprise in Vietnam is a company established and operating in accordance with Vietnamese law.
*** Can foreigners establish a business?
According to the provisions of the decree guiding business registration, subjects entitled to register business households are Vietnamese citizens at least 18 years old, with full legal capacity and civil act capacity; Households have the right to establish business households and are obliged to register business households according to regulations.
Therefore, foreigners cannot establish business households. If you want to invest in business in Vietnam, you need to ask someone with Vietnamese nationality to act on behalf of the business household or carry out investment procedures and business registration in Vietnam.
10. Service of establishing foreign invested companies of Quoc Bao law firm
Consulting on conditions for establishing foreign invested companies: capital contribution ratio of foreign investors in Vietnam; business conditions of various industries; project implementation location; Note the procedures before and after establishing a foreign invested company;
Consulting on choosing the appropriate company type for investors: Limited Company or Joint Stock Company;
Consulting on opening a capital transfer account, capital contribution deadline;
Consulting and guiding investors to prepare necessary documents to establish foreign-invested companies;
Consulting and drafting company establishment documents for investors;
Investor representative works with competent Vietnamese state agencies in the process of implementing company establishment procedures for investors (Application for Investment Registration Certificate, Registration Certificate Enterprise, Business License, License according to specialized requirements, legal stamp making, procedures after establishing a company, procedures for opening a direct investment capital account, reporting on the implementation of investment projects ,…;
Comprehensive, regular consulting, accounting services, tax law package of activities arising during the process of conducting business in Vietnam for investors.
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