2024 Updated Procedures and Formalities for Establishing a Foreign-Invested Company in Vietnam

Vietnam is currently attracting significant interest from foreign investors establishing companies in the country, thanks to its growing business environment and competitive labor costs. The process and procedures for establishing a foreign-owned company in Vietnam have been improved and optimized to ensure transparency and convenience for investors. With strict guidance from Vietnamese law and competent authorities, this process enables foreign companies to easily access the Vietnamese market and tap into its substantial business opportunities. The article below provides a detailed overview of the specific steps and requirements for establishing and operating a foreign-owned company in Vietnam in 2024.

Forms of Establishing a Foreign-Owned Company in Vietnam

Establishing a company with foreign investment through initial capital contribution:

Foreign investors contribute capital from the very beginning when establishing a company in Vietnam. Depending on the business sector, foreign investors may contribute from 1% to 100% of the company’s charter capital.

Establishing a company with foreign investment through capital contribution or share purchase:

Under this method, foreign investors contribute capital to an existing Vietnamese company that already has an Enterprise Registration Certificate. Depending on the business sector, foreign investors may contribute from 1% to 100% of the capital. Foreign investors will carry out procedures to purchase capital contributions or shares of the Vietnamese company. Afterward, the Vietnamese company becomes a foreign-invested enterprise.

Conditions for Foreign Investors to Establish a Company in Vietnam

Conditions for foreign investors contributing capital from the beginning

According to Article 22 of the Law on Investment 2020, companies established by foreign investors must satisfy market access conditions applicable to foreign investors as provided in Article 9 of this law.

Conditions for foreign investors purchasing capital contributions or shares:

According to Article 24 of the Law on Investment 2020, foreign investors must meet the market access conditions provided in Clause 3, Article 9 of this law and Articles 15, 16, and 17 of Decree 31/2021/ND-CP.

Conditions regarding the legal status and nationality of foreign investors

Foreign investors may be individuals aged 18 and above, organizations, or enterprises with nationality from WTO member countries or countries having signed bilateral investment agreements with Vietnam. However, certain business sectors require that only foreign investors who are legal entities (not individuals) may invest in Vietnam. Individual investors holding passports containing “nine-dash line” content will not be permitted to contribute capital in Vietnam or act as representatives managing capital in organizations or enterprises established in Vietnam as prescribed by law.

There are no specific restrictions on the nationality of foreign investors. Investors from any country may invest in Vietnam as long as they comply with Vietnamese law and international treaties to which Vietnam is a party.

Detailed provisions regarding the legal status and nationality of foreign investors can be found in the Law on Enterprises, the Law on Investment, and other legal documents governing foreign investment in Vietnam.

Conditions regarding the financial capacity of foreign investors

Foreign investors must have sufficient financial capacity and must be able to prove their financial ability in accordance with the business sector they intend to invest in.

Conditions regarding the registered company headquarters and project implementation location

Foreign investors must have a legitimate location for the investment project in Vietnam, demonstrated through lease contracts, house/land lease agreements, or lawful property ownership documents from the lessor to serve as the company headquarters and project implementation site.

For investment projects in the manufacturing sector, investors must demonstrate eligibility to lease factories and provide factory lease agreements in industrial parks or clusters.

Conditions regarding experience and specific industry requirements

Foreign investors must meet specific conditions applicable to conditional business sectors for foreign investors.

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Procedures for Establishing a Foreign-Invested Company in Vietnam When Investors Contribute Capital from the Beginning

Step 1: Prepare the application dossier for the Investment Registration Certificate

Step 2: Submit the application for issuance of the Investment Registration Certificate

Step 3: Issuance of the Investment Registration Certificate

Step 4: Prepare and submit the application for the Enterprise Registration Certificate

Step 5: Publish enterprise registration information

Step 6: Create the company seal

Step 7: Obtain a Business License or relevant operational license

Step 8: Open a direct foreign investment capital account

Procedures for Establishing a Foreign-Invested Company in Vietnam through Capital Contribution or Share Purchase

Step 1: Establish a company with 100% Vietnamese capital

Step 2: Prepare the application dossier for registration of capital contribution or share purchase by foreign investors

Step 3: Submit the application for registration of capital contribution or share purchase

Step 4: Amend the Enterprise Registration Certificate

Step 5: Obtain the Business License and other required operational licenses

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Important Notes When Establishing a Foreign-Invested Company in Vietnam

Do foreign-invested companies receive investment incentives?

These companies are eligible for investment incentives. However, they receive the same incentives as Vietnamese enterprises and must satisfy all conditions required by Vietnamese law to enjoy such incentives.

In what forms can foreign investors invest in Vietnam?

• M&A: purchase of shares, purchase of capital contributions, capital transactions
• Investment to establish an economic organization
• Investment in the form of BCC contracts
• Implementation of investment projects
• New forms of investment as prescribed by the Government

Can foreign-invested companies establish representative offices or business branches?

• Legal basis: WTO Commitments
• Foreign-invested companies have the right to establish representative offices, branches, and business locations.

What types of taxes must foreign-invested companies pay?

Similar to Vietnamese enterprises, foreign-invested companies must pay the following taxes:

• License tax
• Value Added Tax (VAT)
• Import and export tax (if conducting import-export activities)
• Corporate Income Tax (CIT)…

In which cases must foreign-invested companies apply for an Investment Registration Certificate?

Foreign-invested companies must obtain an investment certificate in the following cases:

• Investment projects of economic organizations
• Investment projects of foreign investors

Foreign-Invested Company Formation Services of BKC LAW

Using the foreign-invested company establishment services of BKC Law brings numerous benefits, including: high professional expertise from experienced lawyers, comprehensive legal and procedural consultancy, saving time and effort, and ensuring full compliance with Vietnamese law. Additionally, BKC Law provides post-establishment support to help enterprises operate efficiently and sustainably.

With a team of senior lawyers possessing extensive experience, solid legal knowledge, and strong bilingual consulting capabilities, BKC LAW is confident in being one of the best legal partners in supporting services related to establishing foreign-invested companies in Vietnam.

To receive free legal consultation at BKC Law, you may contact our lawyers using the following information:

Phone: 0901 3333 41

Email: info@bkclaw.vn

District 1 Office: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City

Binh Tan Office: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City

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