Vietnam’s growing economy and foreign investment focus make it an attractive destination for foreign investors. However, establishing a foreign-owned company in Vietnam involves navigating a complex regulatory landscape. This guide walks through the five key steps involved in establishing a foreign-owned company in Vietnam, offering practical advice from experienced professional advisors.

Step 1: Document Preparation and Choice of Structures

Choosing the Appropriate Business Structure

Before initiating the establishment process, it’s essential to select the appropriate business structure for your operations in Vietnam. The most common entity structures for foreign investors are:

1. Foreign Owned Enterprise: A company entirely owned by foreign investors.
2. Joint Venture Company (commonly known as a JV): A company formed and co-owned between foreign and local investors.

Document Preparation

1. Investment Proposal/Overview: A detailed document outlining the core business plan, investment capital to be brought to Vietnam, and projected benefits/outcomes for the Vietnamese economy. This is used to prepare the application in Step 2.
2. Charter: The company’s charter is to be drafted in line with the law, detailing the organizational structure, governance, and operational guidelines applicable for the company. 
3. Investor Documents: Proof of legal status and the financial capability of the foreign investor(s), such as incorporation certificates. Foreign documents generally need to be “legalised” through foreign government process and relevant Vietnamese Embassy/Consulate in that country, in order for them to be able to be used in Vietnam. 
4. Lease Agreement: Proof of a registered office address in Vietnam.

Step 2: Investment Registration Certificate (IRC) Application Submission

Preparing the IRC Application

The Investment Registration Certificate (IRC) is a critical document that authorizes foreign investment in Vietnam. The application process involves:

1. Completion of the Application Form: An official form provided by the Vietnamese authorities, detailing the investment project.
2. Submission of Required Documents: This includes the investment proposal, investor documents, charter, and lease agreement.

Submission Process

1. Submit to the Ministry of Finance (MoF): The IRC application is submitted to the MoF in the province where the company will be located.
2. Review and Approval: The MoF reviews the application for compliance with Vietnamese laws and investment policies. This process typically takes 15-20 working days.

Step 3: Enterprise Registration Certificate (ERC) Application Submission

Preparing the ERC Application

Once the IRC is obtained, the next step is to apply for the Enterprise Registration Certificate (ERC), which officially registers the company as a legal entity in Vietnam.

1. Completion of the ERC Application Form: Detailed information about the company, including its name, address, business activities, and charter capital.
2. Submission of Required Documents: This includes the IRC, charter, list of shareholders, and other relevant documents.

Submission Process

1. Submit to the Business Registration Office (BRO): The ERC application is submitted to the BRO, a division of the MoF.
2. Review and Approval: The BRO reviews the application for completeness and compliance with the Law on Enterprises. The review process usually takes 3-5 working days.

Step 4: Post-Establishment Activities

Tax and VAT Registration

1. Tax Code Registration: Register with the local tax department to obtain a tax identification number (TIN).
2. VAT Registration: Register for Value-Added Tax (VAT) with the local tax authorities, include VAT invoice registration.

Government Filings and Notifications

1. Labor Registration: Register employees with the local labor department and social insurance authorities.
2. Statistical Registration: Register with the General Statistics Office (GSO).

Bank Account Opening

1. Choose a Bank: Select a local or international bank operating in Vietnam.
2. Submit Required Documents: Provide the IRC, ERC, charter, and identification documents of the authorized signatories.
3. Account Activation: Complete the bank’s procedures to activate the account.

Appointment of General Director

1. Board Resolution: The board of directors must issue a resolution appointing the general director.
2. Notification to the BRO: Notify the BRO of the appointment, including submitting relevant documents such as the director’s resume and identification.

Step 5: Sub-Licenses and Activity-Based Registrations

Industry-Specific Licenses

Depending on the business activities, additional licenses may be required. Examples can include:

1. Import/Export License: Required for companies engaged in trading and distribution.
2. Food Safety License: Required for businesses involved in food production or processing.
3. Construction Permit: Required for companies in the construction sector.

Environmental and Safety Registrations

1. Environmental Impact Assessment (EIA): For businesses with significant environmental impacts, an EIA report may be required.
2. Fire Safety Certification: Obtain certification from the local fire department for businesses operating in physical premises.

Sector-Specific Authorities

Depending on the industry, registrations may need to be made with sector-specific authorities, such as:

1. Ministry of Industry and Trade (MOIT)
2. Ministry of Health (MOH)
3. Ministry of Agriculture and Rural Development (MARD)

Establishing a foreign-owned company in Vietnam involves several critical steps, from document preparation and registration to post-establishment activities and obtaining necessary sub-licenses. As a professional advisor, it’s essential to guide investors through each step, ensuring compliance with local regulations and facilitating a smooth setup process.

By following the outlined steps and leveraging local expertise, foreign investors can successfully establish their businesses in Vietnam, capitalizing on the country’s economic growth and investment opportunities.

Expert guidance on company incorporation, establishment, and formation in Vietnam: from registration through compliance.