In general, companies have the following options for business formation:
- Joint Venture – A foreign joint venture is understood as an economic entity with at least one foreign company partner.
- Representative Office (RO) – It is generally easy and inexpensive to establish, and is the most common option chosen by foreign companies. There are no specified capital requirements, however, companies are required to show that their capital contributions can fund their operations. The license is issued by the Department of Industry and Trade (DoIT) in the city or province where the representative office is to be established. A representative office may rent office space or residential accommodations, employ local staff along with a limited number of expatriate staff, and conduct a limited range of business operations.
- Branch Office – The term ‘branch office’ under the laws of Vietnam refers to an entirely foreign-owned business that operates in certain designated service sectors. These sectors, which are restricted and closely monitored by the Vietnamese government, include banking and finance, law, insurance, marketing and advertising, education, tourism, logistics, construction, and other types of services. Many foreign branch offices first enter Vietnam as representative offices and later apply for a branch office license. Branch status authorizes a foreign business to operate officially in Vietnam, including invoicing/billing on-shore in local currency and the execution of local contracts.
The Agency for Business Registration (ABR) is responsible for consulting the Minister of Planning and Investment in the state administration over business registration. Recently, the Government of Vietnam has launched the National Business Registration Portal (https://dangkykinhdoanh.gov.vn/vn/Pages/Trangchu.aspx) to simplify the procedures as well as to improve the transparency and efficiency of business registration.
The key steps to register a company in Vietnam is as follows:
- Obtain an Investment Registration Certificate (IRC) from the Department of Planning and Investment (DPI). Together with its application for an IRC, the company must submit a proposal that includes details of the investment project, and financial statements for the last two years.
- An Enterprise Registration Certificate (ERC), is the second mandatory document to be obtained during the registration procedure. Its application for an ERC should be accompanied by documents specifying its company charter, a list of board members and legal representatives, and letters of appointment and authorization.
- After receiving both certificates, investors are obliged to proceed with their tax registration, pay a business license tax and make their initial capital contribution. Processes at this stage include obtaining a seal, setting up a bank account, registration for labor, payment of business license tax and charter capital contribution, and an announcement of the establishment of the company.
As the process can be challenging, companies are encouraged to seek advice to evaluate the legal and tax implications of the various options and to review the most up-to-date regulatory information.
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