THE FOREIGN DIRECT INVESTMENT COMPANY ESTABLISHMENT SERVICES
According to data published by the Foreign Investment Agency and the Ministry of Planning and Investment, as of June 20, 2022, it is estimated that foreign investment projects have disbursed nearly 10.06 billion USD, an increase 8.9% over the same period in 2021 and an increase of more than 1 percentage point compared to the first 5 months of the year.
For foreign investors to access comprehensive information about procedures for establishing foreign-invested enterprises in Vietnam, please refer to the following article:
I. Forms of establishing foreign-invested enterprises/companies
► Establishing a company with foreign investment in the form of investors contributing capital from inception
Accordingly, foreign investors will contribute capital right from the beginning of establishing a company in Vietnam.
Depending on the field of activity, the capital contribution ratio of foreign investors 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
In this form, foreign investors will contribute capital to a Vietnamese company that already has an Enterprise Registration Certificate (ERC).
Depending on the field of activity, the capital contribution ratio of foreign investors can range from 1% to 100% of the company's charter capital.
Foreign investors will carry out procedures for purchasing capital contributions and shares of Vietnamese companies.
⇒ Afterwards, the Vietnamese company became a foreign invested company.
II. Step-by-step process of establishing a foreign-invested enterprise/company
Step | Establishing a company with foreign investment in the form of investors contributing capital from inception | Establishing a company with foreign investment capital in the form of capital contribution and share purchase |
1 | Prepare documents for issuance of Investment Registration Certificate. | Establish a company with Vietnamese capital. |
2 | Submit application for Investment Registration Certificate. | Prepare registration documents to purchase capital contributions and shares from foreign investors. |
3 | Issuance of Investment Registration Certificate. | Submit registration documents to purchase capital contributions and shares from foreign investors. |
4 | Prepare and submit documents requesting issuance of Business Registration Certificate. | Foreign investors contribute capital, purchase shares, capital contributions and Vietnamese enterprises. |
5 | Announcing the content of business registration information. | Change business registration certificate. |
6 | Engraved company seal. | Issue business licenses and operating licenses. |
7 | Issuance of bunsiess license/operating license. | - |
8 | Open a foreign direct investment capital account. | - |
9 | Carry out the following procedures to establish a company. | - |
III. A few points to consider before establishing a foreign-invested company
- Conditions for establishing a foreign-invested company depend on the field in which the investor intends to establish. According to WTO commitments and Vietnamese law, some popular fields have foreign investment elements: trade, import and export, investment consulting, management consulting, software sector, real estate, construction, restaurants, tourism, manufacturing,...
- Unless an industry requires legal capital, there is no minimum amount of capital contributed by investors. However, the amount of capital must be consistent with the scale of operations of the registered company.
Note: The amount of capital contribution affects the application for a work permit and temporary residence card for foreign workers who are management representatives of foreign investors, since this subject is only exempt from applying for a work permit and temporary residence card with a capital contribution of at least 3 billion VND. The higher the capital contribution, the longer the temporary residence card will be granted.
- For individual investors: if you contribute capital immediately upon establishment, you need to prove your finances through: savings book, deposit balance, etc.
- For orangnization investors: deposit balance, tax reports, profitable financial statements, etc. for companies.
Note: In case a foreign investor contributes capital to buy shares, it is not necessary to provide these documents.
- For procedures to establish a foreign-invested company, in order for the documents to be valid, the investor needs to provide a house or office rental contract or loan contract and related real estate documents.
- The director, legal representative, and capital contribution manager of a foreign-invested company can be a foreigner or Vietnamese.
- For companies with foreign investment, they will be issued an Enterprise Registration Certificate (ERC) by the Business Registration Office - Department of Planning and Investment where the company is headquartered as a Vietnamese capital company.
- For companies with foreign investors contributing capital from the beginning of 1% and foreign-invested companies operating in the field of education, they must carry out procedures for issuance of an Investment Registration Certificate (IRC).
- In particular, 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.
- The capital contribution period of a foreign-invested company is clearly recorded in the Investment Registration Certificate.
Note: If the investor has not yet contributed capital when the deadline is due, the bank that opens the investment capital account will not accept late capital contributions. In this case, in order to be able to carry out capital contribution procedures as committed, the company needs to make adjustments to the IRC to extend the capital contribution period.
- Tax declaration procedures for foreign-invested companies are similar to those of Vietnamese-invested companies.
Note: Companies with foreign investment must audit their year-end financial statements.
- Foreign-invested companies that are granted Investment Registration Certificates must annually carry out investment reporting procedures and project implementation status to the investment registration agency.
1/ What are the forms of foreign investors investing in Vietnam?
- Establishing a company with 100% foreign capital;
- Contribute capital to establish a company with Vietnamese investors;
- Buying capital contributions of Vietnamese companies;
- Make investments according to Business Cooperation Contract (BCC).
2/ Do companies with foreign investment receive investment incentives?
Investment incentives are also available to companies with foreign investments, such as Vietnamese companies..
3/ What taxes must foreign invested companies pay?
Similar to Vietnamese-invested companies, foreign-invested companies need to comply and pay some of the following basic taxes:
- VAT tax,
- Excise,
- Corporate income tax,
- Import and export tax (if any),
- Other (if any).
4/ What types of companies can be established with foreign capital?
- Established a one-member limited liability company
- Establishing a LLC with 2 or more members;
- Establishment of a joint stock company.
5/ Are foreign-invested companies allowed to establish representative offices, branches, or business locations?
According to the WTO Commitment Schedule and Vietnamese law, foreign-invested companies have the right to establish their own branches, representative offices, and business locations.
6/ What are the conditions for foreign-invested companies to operate trade and distribute goods in Vietnam?
Foreign-invested companies operating in trade and distribution of goods in Vietnam have the following conditions:
- Investors from countries and territories participating in international treaties to which the Socialist Republic of Vietnam is a member have committed to opening the market for goods purchase and sale activities.
- Distributed goods are not on the list of prohibited business items and are not entitled to be distributed according to international treaties, in this case must be distributed according to the roadmap committed to international treaties if it belongs to the list of goods with a distribution route.
- Scope of distribution: wholesale and retail.
- Issued with a Business License by a competent state agency.
7/ Can foreign investors establish business households?
According to Vietnamese law, foreign investors are not allowed to establish business households.
- Consulting on conditions for establishing foreign-invested companies for Investors according to each nationality and specific business field of the Investor;
- Consulting on the capital contribution ratio of foreign investors in Vietnam according to Vietnamese law and WTO commitments;
- Consulting on choosing the appropriate company type, headquarters address, capital, business lines, opening a capital transfer account, capital contribution period;
- Consulting on conditions and guiding investors to prepare necessary documents to establish foreign-invested companies;
- Consulting and drafting company establishment documents for investors;
- On behalf of the authorized investor, work with competent state agencies in Vietnam during the process of establishing a business for the investor, including applying for IRC, ERC, engraving legal entity seal, announcing the seal sample.
- Consulting on procedures after establishing a company;
- Providing legal consulting services on tax - accounting, transferring profits abroad, labor - insurance, issues related to intellectual property rights;
- Comprehensive consulting on activities arising during the process of conducting business in Vietnam for investors.
