Establishing a foreign company

Establishing a foreign company? How do I set up a foreign company? Please refer to the following articles for information on establishing a company/foreign-affiliated company. Quoc Bao Law is a division specializing in foreign investment consulting with over 20 years of experience. Our company specializes in assisting foreign investors with legal procedures related to applying for investment certificates and business registration certificates to carry out investment activities in Vietnam.

Foreign investors investing in Vietnam for the first time are still confused by legal procedures and the local language. Understanding this issue, our Quoc Bao Law attorneys advise investors directly in English and other common languages to help them understand the policies, procedures, legal and investment environment.

According to the provisions of the Investment Law 2020 and the Enterprise Law 2020, investors can take two general forms to carry out investment activities and establish a 100% foreign-owned company in Vietnam :

Begin your journey of discovery regarding investment procedures in Vietnam, where opportunities await and success is not far away !

Do you need advice or support on what you are looking for ? For help setting up a business in Vietnam, investing, applying for temporary residence cards and visas, entry permits and work permits, please contact Vietnam Contact Luật Quốc Bảo .

Please contact hotline /zalo : 0763387788 .

Address : 528 Le Van Sy , District 14 , District 3 , Ho Chi Minh City

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Establishment of a foreign company

Option 1: Invest in the establishment of an economic organization ( after August 18, 2023)

Competent authority :

• Management committees of industrial parks, export processing zones, high-tech parks and economic zones shall issue, adjust and cancel investment registration certificates for investment projects in industrial parks, export processing zones and industrial parks.
• Planning and Investment Department

Establishment of a foreign company

Documents to submit :

For foreign individual investors

• Certified copy of investor’s passport (all pages )
• A legal statement of a bank account balance at least equal to the amount invested in the company.
• Office rental contract and other related documents (copy 01 )

For foreign investors who are economic organizations

• Business license and director list (2 copies )
• Financial statements (audited) or bank certificate for the past two years (copy 01 )
• Passport of representative with investment authority in Vietnam (Copy 03 )
• Investment proposal (1 copy )
• Original copies of the office rental contract and land use right certificate for the rental location (if it is a first-floor residence) or a document proving the address of a business with office business functions (if the address is in a high-rise building) 01 copies )

Note:

• Foreign documents must be legalized at the consulate, translated into Vietnamese, and authenticated.
• Vietnamese documents must be certified as true copies.
• The above information and procedures apply to the professions engaged in by Vietnam on the WTO Schedule of Commitments.
• For investors in organizations with Hong Kong nationality => annual income required

Investment registration procedures for establishing an economic organization (from August 18, 2023 )

Register for direct investment

Step 1: Quoc Bao Law will advise the relevant procedures based on the customer’s situation.

Step 2: Quoc Bao Law prepares the documents and supports customers to sign on the spot

Required documents include:

• A written request to implement an investment project.
• Investment project proposal containing:
  • Investor or Investor Selection Form.
  • investment purpose;
  • Investment size.
  • investment capital and capital mobilization plans ;
  • Location, time and implementation progress at the project site.
  • Labor demand.
  • Investment incentive proposals.
  • Project impact and socio-economic efficiency.
  • Preliminary assessment of environmental impacts (if any).
• Investor authorization letter for representative to submit documents .
• Documents that must be submitted as described in the section above .

Step 3: Quoc Bao Law submits documents to the competent authority on behalf of the client

Step 4: Quoc Bao Law will deliver the result as an investment registration certificate.

Step 5: Submit your application for business registration certificate

Documents to submit :

1. For individuals who are owners, members, shareholders, or legal representatives
   • National identity card.
   • Passport.
2. For organizations where you are an owner, member or shareholder
   • legal documents;
   • National ID or passport of the authorized representative
3. If there is an external element
   • investment registration certificate

Profile composition :

• Business registration application
• Internal regulations
• Copy of investment registration certificate from step 4
• Member list (for limited liability companies with two or more members )
• Shareholder list (for joint stock companies )
• Capital contribution authorization (if the owner, member, or shareholder is an organization) .
• A list of authorized representatives (if the owner, member, or shareholder is an organization) .
• Approval letter to submit application .

Processing time : 3-5 business days

=> Submit your application on the National Business Registration Portal.

Step 6: Engraving the seal and creating your signature.

2014 Enterprise Law, according to the provisions of the 2020 Enterprise Law, enterprises are not required to notify stamp samples before use. The management and preservation of corporate seals shall be in accordance with the provisions of the company’s articles of association or the regulations promulgated by the company, branch, representative office, or other department of the company owning the seal.

Quoc Bao supports the installation of stickers and signs containing the following information:

• Company name
• tax law
• county, city
• Logo (if available)

Point c of Decree 122/2021/ND-CP on Article 2 => Failure to display a signboard at the head office will result in a fine of VND 30,000,000 to VND 50,000,000.

Step 7: Register to use digital signatures ( tokens ) .

Digital signatures are used for online tax filing and payment, electronic customs declaration, electronic banking transactions, electronic securities transactions, electronic social insurance declarations, electronic bill signatures, portals, national one-stop information, government agencies, etc. There is no need to print the tax return. And the company’s red seal.

⇒ Currently, business operators are required to use it.

If you need to register the use of digital signatures => Call 091.777.2934 – 0902.567.525 => Request quotation support from Quoc Bao

Step 8: Have an in-house accountant or use an accounting service

• Filing returns, managing and using invoices, tax reports, financial statements, etc. are obligations performed during the operation of a company .
• Tax administration violations may result in monetary penalties and/or violations of tax laws…

=> Therefore, it is very important for businesses to have an in-house accountant or use accounting services to file their tax returns on time, avoid violations, and have a good precedent to support their business.

Step 9: Register and open trading and investment accounts

Investors wish to transfer capital to carry out investment activities in Vietnam = > Open a direct investment account in accordance with the National Bank Circular 06/2019/TT-NHNN Guidance dated June 26, 2019 on foreign exchange management for foreign direct investment Activities in Vietnam that need to be done .

Points to note when opening an investment account

• Open a foreign currency direct investment capital account with a 01(1) licensed bank to make lawful receipts and payments in foreign currency related to foreign direct investment activities in Vietnam .
• Depending on the type of foreign currency in which the investment is made, direct investment capital accounts in that foreign currency can only be opened with 01(1) licensed banks .
• For investments in Vietnamese Dong, one direct investment capital account in Vietnamese Dong is allowed in licensed banks where Foreign Currency Direct Investment Capital Account is opened to carry out the following transactions: Legally in Vietnamese Dong Income and expenditure transactions related to foreign direct investment activities in Vietnam .

=> Contribution of investment funds by foreign investors, Vietnamese investors’ funds must be made through the form of direct transfer to investment capital account.

Step 10: Monitor and submit investment activity reports

The reporting system for investment activities is stipulated in Article 72 of the Investment Law and guided by Decree 31/2021/ND-CP .

Investors and economic entities implementing investment projects must report quarterly and annually to local investment registration authorities and statistical offices on the implementation of investment projects, including: Contains: investment funds carried out, business investment performance, information workforce, payments to the state budget, investments in research and development, environmental treatment and protection, targets specific to the field of activity. ”

There are two types of reports that businesses need to pay attention to :

Report online on the implementation of investment projects on the national portal on foreign investments

Account Granting Process.

• Download the account registration form from https://fdi.gov.vn/pages/huongdan.aspx .
• After entering all information in the form, the investor submits it to One Stop Group’s Planning and Investment Department to obtain a reporting account code .

Report on supervision and evaluation of investment performance

100 , Clause 8 of Government Decree No. 29/2021/ND-CP dated March 26, 2021 , stipulating the order and procedure for the evaluation of projects of national importance and the monitoring and evaluation of investment projects . .

Investors of projects using other sources of funds shall prepare and send various reports to investment registries and central authorities in order to supervise and evaluate investments in the region where the investment project is implemented. will do.

1. a) Regular monitoring and evaluation reports : 6 months and all year round.
2. b) Monitoring and evaluation report before adjusting the project.
3. c) Final evaluation report (if any)”

According to the provisions of Article 11 of Article 100 of Decree No. 29/ 2021 /ND-CP dated March 26 , 2021 on the deadline for investment monitoring and evaluation reports :

“ a) Program Owners, Investors and Investors :

–Reports must be submitted at least six months before July 10 of the reporting year .

–Please submit your annual report by February 10th of the following year .

–Submit the report before submitting project program adjustments. ”

=> Investors, economic organizations must prepare reports on investment supervision and evaluation, Form No. 12 and Form No. 14, Circular 22 / 2015 / TT_BKHDT

Please refer to the provisions regarding what happens if you violate reporting mode in the section below this article.

Option 2: Fund contribution by foreign investors, stock purchase, fund contribution through Vietnamese investors ( as of August 18 , 2023 )

In addition to the methods mentioned above, Quoc Bao offers other solutions that save time, reduce costs, and simplify the documentation provided:

100 % capital of Vietnamese investors , then foreign investors contribute further capital and buy back some or all of the invested capital (depending on the industry and business committed). ). / Members of this company.

Documents to submit :

*Investors are organizations.

1. Vietnamese identity card/ID card/passport (03)
2. Foreign company business license (2 copies )
3. Passport of representative with investment authority in Vietnam (Copy 03 )

*Investor is an individual

1. Vietnamese identity card/ID card/passport (03)
2. Investor passport (03 copies)

==> No :

• Bank certificate/ financial statement
• rental room contract

Note: 

• Foreign documents must be legalized at the consulate, translated into Vietnamese, and authenticated .
• Vietnamese documents must be certified as true copies .
• The above information and procedures apply to industries committed by Vietnam under the WTO Schedule of Commitments .

investment by foreign investors ( from August 18, 2023 )

Investor contributes capital, purchases shares, contributes capital

Step 1 : Company establishment with 100 % Vietnamese capital

Step 2: Perform your obligations after receiving the business registration certificate Step 1

Step 3: Register investment, purchase shares, and invest with foreign investors

Profile components include:

• Written registration of capital participation, purchase of shares or contributed capital .
• A contribution of capital, purchase of stock, or a written commitment to contribute capital between a foreign investor and a business owner or corporation .
• Foreign investor legal documents .
• Copy of business registration certificate;
• Approval letter to submit application .

processing time:

• 15 days from the date of receipt of a valid application , the investment registrar shall consider fulfilling the conditions for investment, share purchase, purchase of contributed capital and notify the investor .
• Must have a certificate of land use rights in the commune, district, town, and border commune, district, or town. maritime; and other areas affecting national defense and security, the investment registration agency shall carry out the following procedures :
  • Within three working days from the date of receipt of a valid application, the investment registration agency shall consult with the Ministry of Defense and the Ministry of Public Security .
  • The Ministry of Defense and the Ministry of Public Security shall, within 7 working days from the date of receipt of the written request from the investment registration agency, give an opinion on the fulfillment of the conditions for ensuring national defense and organizational security. When a foreign investor provides capital, purchases shares, or purchases an investment. If the request is not made within the request period, it will be deemed that the request has been agreed to meet the conditions to ensure national defense and the security of foreign-invested economic entities .
  • Within 15 days from the date of receipt of valid documents, the investment registration agency will consider fulfilling the conditions for investment, stock purchase, purchase of contributed capital and will notify the investor based on the opinion of the Ministry of Defense, Police. shall be taken as a thing .

Step 4: Result notification Notification that foreign investors meet the conditions for investment, stock purchase, and capital purchase

Step 5: Submit an application to change your business registration certificate

step 4 , the enterprise executes the corresponding change file. Example :

• Change of owner
• member change
• Transforming the type of business
• Change in shareholders
• Note :
• Remember to attach the results of step 4 to your business registration change file .
• Personal income tax return in case of transfer ⇒ Personal income tax return in case of transfer of invested capital

foreign -invested companies should know about ? ( As of August 18 , 2023 )

taxes that the company must pay

license fee

License fee levels are based on the company’s registered charter capital and are detailed below:

Note: Currently, according to the provisions of Decree 22/2020/ND-CP, small and medium-sized enterprises are exempted from license fees for one year after establishment.

Value-added tax

two forms of VAT declaration: deduction and direct calculation, specifically:

Tax deduction method :

payable = (Taxable price of goods and services sold x VAT rate ) – Amount of input VAT to be deducted

Depending on the product or service, the VAT rate varies from 0% to 5% to 10%.

direct calculation method

The tax base is the turnover for calculating value added tax and the percentage for calculating VAT on turnover.

of VAT paid = Taxable sales amount Added value x percentage to calculate VAT on revenue

Corporate tax

• According to Article 1, Section 6 of the Corporate Income Tax Law 2013, the tax rate applicable to all enterprises is 20% .
• Tax rates ranging from 32% to 50% apply to exploration, exploration, and development activities for oil, gas, and other rare and valuable resources in Vietnam.

paid = taxable income x CIT rate

Therefore,

• Taxable income = taxable income – non-taxable income – loss carried forward from previous year.
• Taxable income = (income – deductible expenses) + other income

import/export tax

For % taxable products

Export/import tax paid = Export/import actual item quantity x Taxable price x Tax rate

For products subject to absolute tax

Export/import tax to be paid = Quantity of actual goods exported /imported x Absolute tax rate x Tax rate

resource tax

Taxable natural resource tax = Taxable resource production x Taxable price x Tax rate

Applicable to businesses that utilize taxable resources.

environmental protection tax

The environmental protection tax payable is equal to the number of taxable units of goods multiplied by the absolute tax rate per unit of goods.

special consumption tax

Special consumption tax = special consumption tax calculation price x special consumption tax rate

land use tax

There are two types of land use taxes that foreign companies must pay: taxes on business land used solely for business purposes, and taxes on land used for non-agricultural land with no specified business purpose.

Are foreign-invested companies required to be audited ?

Legal basis :

Point a – Article 1 – Article 15 – Decree 17/ 2012 /ND-CP guiding the independent audit law :

Article 15 _ Departments subject to audit

1. Companies and organizations required by law to submit annual financial statements must be audited by an audit firm or a Vietnam branch of a foreign audit firm, including :
2. a) Foreign invested enterprises .

…

2. Other companies and organizations must be audited according to relevant laws .
3. Companies and organizations whose annual financial statements as referred to in paragraphs 1 and 2 of this article are required to be audited if required by law to prepare consolidated financial statements or financial statements as required by law. Audited.

Therefore, Annual audit is mandatory for foreign invested companies.

How do foreign investors send money to Vietnam?

Article 4, Paragraph 3 of Circular 06/2019/TT-NHNN on foreign exchange management in direct investment activities from abroad to Vietnam, Vietnamese investors must be able to carry out foreign exchange management in the following formats: Must: How to transfer money directly to investment capital account.

• The Company has opened a foreign currency direct investment capital account with a 01 (one) authorized bank to conduct legal receipt and payment transactions in foreign currency related to foreign direct investment activities in Vietnam .
• Depending on the type of foreign currency in which the investment is made, direct investment capital accounts in that foreign currency can only be opened with 01(1) licensed banks .
• If you want to invest in Vietnamese dong, you can open a Vietnamese dong direct investment fund account with a licensed bank where foreign currency direct investment capital accounts are opened.

Regulations regarding market access conditions

Article 9 of the Investment Law 2020, the list of industries and trades with restricted market access for foreign investors includes:

• Trade with sectors that do not yet have market access .
• Sectors and professions with conditional market access .

Conditions include:

• Ownership of charter capital by foreign investors in economic entities .
• Investment form;
• scope of investment activities;
• Investor Capabilities. Partners participating in investment activities .

Conditions for investment registration Procedures for establishing an approved economic organization

Article 3 – Article 36 of Decree 31/2020/ND-CP Guiding Investment Law , investor documents must meet the following conditions :

1. Does not belong to any industry or type of industry in which investment and business are prohibited as stipulated in Article 6 of the Investment Law and international treaties on investment .
2. To cause the location of an investment project to be determined on the basis of a valid copy of a land use right document or a valid copy of a site lease agreement or other document or document determining the right to use the premises .
3. Investment project according to plan .
4. Satisfy the conditions of investment rate for land area set by the provincial People’s Committee .
5. Meeting market access conditions for foreign investors .

Option 1: Violation of foreign-invested economic organization reporting regulations

Decree 122/2021/ND-CP, the regulations regarding violations of regulations regarding information and reporting on investment activities in Vietnam are dealt with as follows in accordance with Article 15 of Decree 122/2021/ND-CP:

“ In the beginning, any of the following acts will be subject to a fine of VND 20,000,000 to VND 30,000,000.

a) Reports on investment supervision and evaluation do not meet the stipulated deadlines or are incomplete ;

b) failure to comply with the prescribed regular investment monitoring and evaluation reporting regime ;

A fine of VND 30,000,000 to VND 50,000,000 will be imposed for any of the following acts :

a) Failure to comply with regulations regarding reporting of investment activities or failure to report on time as prescribed ;

b) Making fraudulent and inaccurate reports regarding investment activities.

…

Corrective action:

a) If the investment supervision and evaluation report does not contain sufficient content regarding the violations specified in Point a, Clause 1 of this Article, the missing content shall be compulsorily supplemented ;

b) Forcing the implementation of the regular investment monitoring and evaluation report system in accordance with regulations for the violations specified in Point b, Clause 1 of this Article .

c) Compel the implementation of the investment reporting system in case of non-compliance with the reporting system for the violations specified in Clause 2, Point a, of this article… ”

Investment registration authorities set binding conditions for project investors in the project’s investment registration certificate, and economic entities must follow a prescribed reporting regime. During the inspection, supervision or evaluation of registration applications for the coordination of investment projects. If investors or business organizations do not comply with the reporting system, they will be referred to the supervisory authority and subject to administrative sanctions in accordance with regulations.

Conditions for investment by foreign investors, amount of investment when purchasing shares

According to Article 24, Paragraph 2 of the 2020 Investment Law, investments and stock purchases by foreign investors, and investment purchases by economic organizations must meet the following regulations and conditions:

• Market access conditions including :
  • Ownership of charter capital by foreign investors in economic entities.
  • Investment form;
  • scope of investment activities;
  • Investor Capabilities. Partners participating in investment activities.
  • Laws and resolutions of the National Assembly, decrees and resolutions of the Standing Committees of the National Assembly, government decrees and other conditions stipulated in international treaties to which the Socialist Republic of Vietnam is a party.
• Ensuring national defense and security.
• Land law regulations regarding conditions for receiving land use rights, conditions for using land in islands, communes, districts, border towns, communes, districts and coastal townships.

Begin your journey of discovery regarding investment procedures in Vietnam, where opportunities await and success is not far away !

Do you need advice or support on what you are looking for ? For help setting up a business in Vietnam, investing, applying for temporary residence cards and visas, entry permits and work permits, please contact Vietnam Contact Luật Quốc Bảo .

Please contact hotline /zalo : 0763387788 .

Address : 528 Le Van Sy , District 14 , District 3 , Ho Chi Minh City

Facebook fan page : https://www.facebook.com