Conditions and Procedures for Establishing a Technology Company with Foreign Investment – Latest Update

Establishing a technology company with foreign capital in Vietnam has become an attractive trend amid the context of accelerating globalization and the strong development of information technology. However, this process is not simple and requires foreign investors to clearly understand the related legal conditions and procedures. With continuous changes in state regulations, staying updated with the latest information is essential to ensure a smooth and efficient establishment process. In this article, we will explore the necessary steps as well as important requirements when establishing a technology company with foreign investment capital in Vietnam.

General Regulations on Establishing a Technology Company in Vietnam

Selecting a Valid Company Name for an Information Technology Company

Before registering the enterprise establishment, businesses should refer to and search for previously registered enterprise names in the national enterprise registration database. When choosing a name for your information technology company, remember that the name must not duplicate any other registered business. This ensures the uniqueness and distinctiveness of your brand. In addition, note the following:

• The enterprise name must be displayed at the principal office, branches, representative offices, or business locations of the enterprise.
• The enterprise name must be printed or written on transaction documents, accounting records, and publications issued by the enterprise.

Declaring Charter Capital

One of the practical experiences when establishing a technology company is declaring charter capital when registering a business in the technology sector. In practice, Vietnamese law does not stipulate a mandatory minimum charter capital for enterprise establishment. However, in certain cases, if the registered business sector requires legal capital, the enterprise must declare charter capital at least equal to the legal capital amount.

Selecting a Reasonable Company Address

Selecting an appropriate address is extremely important when registering a technology information company. This address must be a precise location in Vietnam and virtual addresses are not permitted. Certain areas prohibit or restrict the use of business addresses for technology information companies. It is crucial to avoid selecting addresses from these restricted areas to prevent potential legal issues.

Choosing the Appropriate Type of Technology Information Company

Another useful experience in establishing a technology company is selecting the appropriate business structure. Common types include private enterprises, joint-stock companies, limited liability companies, and partnerships. Enterprises should choose the business structure that best suits their needs when registering with the competent authority. (See also: Advantages and disadvantages of each business structure.)

Selecting Suitable Business Lines

To commence operations in the information technology sector, you need to research and select appropriate business lines. Some suggestions include: computer system consulting and management; data processing and leasing, as well as similar contracts.

Selecting a Suitable Legal Representative

A technology company must select a legal representative who meets certain requirements regarding legal personality and capacity, with sufficient qualifications and experience to hold this important position within the company.

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Forms and Procedures for Establishing a Technology Company with Foreign Investment Capital in Vietnam

Establishing a Technology Company with Foreign Capital

**Step 1:** The investor applies for an Investment Registration Certificate

The dossier includes:

• Application for implementation of the investment project;
• Legal status documents of the investor: certified copy of citizen identity card, citizen identity card, or passport (if individual); certified copy of establishment certificate or equivalent document and passport of the capital manager (if organization);
• Investment project proposal including: investor implementing the project, objectives, scale and investment capital, capital mobilization plan, location, duration, investment progress, labor demand, proposed investment incentives, socio-economic impact assessment and efficiency of the project;
• Documents proving the investor’s financial capacity, including at least one of the following: financial statements for the two most recent years; commitment of financial support from the parent company; commitment of financial support from a financial institution; financial capacity guarantee from the investor; other documents proving financial capacity;
• Investment project proposal including the main contents: investor or form of investor selection, investment objectives, investment scale, investment capital and mobilization plan, location, duration, implementation progress, information on current land use status at the project location and proposed land use demand (if any), labor demand, proposed investment incentives, socio-economic impact and efficiency of the project, preliminary environmental impact assessment (if any) in accordance with environmental protection laws.

Where the construction law requires a pre-feasibility study report, the investor may submit the pre-feasibility study report in lieu of the investment project proposal;

• Where the investment project does not request land allocation, land lease, or land use purpose change by the State, submit a copy of land use right documents or other documents confirming the right to use the location for project implementation;
• Explanation of the technology used in the investment project for projects subject to technology appraisal or consultation under technology transfer laws;
• Other documents related to the investment project, requirements on conditions and capacity of the investor as prescribed by law (if any).

Submission location: Department of Planning and Investment where the principal office is planned to be located.

Processing sequence: Within 15 days from receipt of a complete and valid dossier, the Department of Planning and Investment shall issue the Investment Registration Certificate to the foreign investor. In case of refusal, the Department shall reply in writing and state the reasons.

**Step 2:** Establish a software company with foreign capital in Vietnam

Application for Enterprise Registration Certificate:
The enterprise establishment dossier includes:

• Application for enterprise registration;
• Company charter;
• List of founding shareholders and foreign investor shareholders (if joint-stock company); List of members (if two-member or more limited liability company);
• Certified copy of citizen identity card, citizen identity card, or passport (if individual); establishment decision, business registration certificate or equivalent document and citizen identity card, citizen identity card, or passport together with power of attorney for capital manager in Vietnam (if organization);
• Certified copy of the issued Investment Registration Certificate;

Submission location: Department of Planning and Investment where the enterprise’s principal office is located.

Time limit: 03–06 working days.

Public disclosure of enterprise registration information

• After being issued the Enterprise Registration Certificate, the enterprise must publicly disclose the information on the National Enterprise Registration Portal and pay the prescribed fee. The disclosure includes the contents of the Enterprise Registration Certificate and the following information:
• Business lines;
• List of founding shareholders; list of foreign investor shareholders in the case of a joint-stock company (if any).
• Disclosure fee: The request for public disclosure of enterprise registration contents and payment of the disclosure fee shall be made at the time the enterprise submits the enterprise registration dossier. If the enterprise is not granted registration, the disclosure fee shall be refunded.

The disclosure fee is VND 100,000 as prescribed in Circular 47/2019/TT-BCT.

Enterprise seal

• The seal includes seals made at seal engraving establishments or seals in the form of digital signatures in accordance with electronic transaction laws.
• The enterprise shall decide the type, number, form, and content of its seal, as well as those of its branches, representative offices, and other units.
• The management and storage of the seal shall comply with the company charter or regulations issued by the enterprise, branch, representative office, or other unit having the seal. The enterprise shall use the seal in transactions as prescribed by law.

Capital Contribution, Share Purchase, or Capital Contribution Purchase in a Technology Company in Vietnam

**Step 1:** The foreign investor registers capital contribution, share purchase, or capital contribution purchase in the economic organization

The dossier includes:

• Application for registration of capital contribution, share purchase, or capital contribution purchase including the following contents: enterprise registration information of the economic organization in which the foreign investor intends to contribute capital, purchase shares, or purchase capital contributions; business lines; list of owners, members, founding shareholders, list of owners, members, foreign investor shareholders (if any); ratio of charter capital ownership by the foreign investor before and after the capital contribution, share purchase, or capital contribution purchase in the economic organization; expected transaction value of the capital contribution, share purchase, or capital contribution purchase contract; information on the investment project of the economic organization (if any);
• Certified copies of legal documents of the individual or organization contributing capital, purchasing shares, or purchasing capital contributions, and of the economic organization in which the foreign investor contributes capital, purchases shares, or purchases capital contributions: passport (if individual); business license or equivalent document and passport of the person authorized to manage capital in Vietnam (if organization);
• Principle agreement on capital contribution, share purchase, or capital contribution purchase between the foreign investor and the economic organization in which the foreign investor contributes capital, purchases shares, or purchases capital contributions, or between the foreign investor and the shareholders or members of that economic organization;
• Certified copy of the land use right certificate of the economic organization in which the foreign investor contributes capital, purchases shares, or purchases capital contributions if that economic organization holds a land use right certificate for islands, border communes, wards, townships, and coastal communes, wards, townships; other areas affecting national defense and security, except for economic organizations implementing investment projects in industrial zones, export processing zones, hi-tech zones, and economic zones established under Government regulations.

Submission location: Department of Planning and Investment where the economic organization has its principal office.

Sequence and procedure: If the capital contribution, share purchase, or capital contribution purchase by the foreign investor satisfies the conditions on ownership ratio and investment form in accordance with WTO commitments and Vietnamese law, within 15 days from receipt of a complete dossier, the Department of Planning and Investment shall issue a written notice. In case the dossier does not meet the conditions, the Department shall issue a written notice stating the reasons.

**Step 2:** Carry out the procedure for transfer of shares, capital contributions, and change of shareholders, members, owners.

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Tax Incentive Policies for Foreign-Invested Technology Companies in Vietnam

Value-Added Tax

Pursuant to Article 4 guiding non-taxable objects for VAT in Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the implementation of the Value-Added Tax Law and Decree No. 209/2013/ND-CP dated December 18, 2013 of the Government detailing and guiding the implementation of certain articles of the Value-Added Tax Law, computer software including software products and software services as prescribed by law is not subject to VAT.

Corporate Income Tax

Enterprises producing software are entitled to corporate income tax incentives from the date of establishment as follows:

• From year 1 to year 4: Exempt from corporate income tax.
• From year 5 to year 13 (next 9 years): 50% reduction of corporate income tax at a tax rate of 10% (pay 5%).
• From year 14 to year 15 (tax rate 10% for 15 years): Tax rate of 10%.
• From year 16 onward: Pay normal corporate income tax.

Note: Enterprises engaged in trading software are not entitled to the above corporate income tax incentives.

Tax Incentive Policies

To implement policies encouraging the development of information technology and its application in life, software (regardless of production or trading) is exempt from value-added tax and import tax.

Important Notes Before Establishing a Foreign-Invested Company in Vietnam

• Experience in registering digital signatures: Registering a digital signature is essential. Enterprises should register to purchase digital signatures with the tax authority for online tax payment.
• Experience in public disclosure of technology information company information and enterprise seal engraving: Enterprises should publicly disclose establishment information on the National Enterprise Registration Portal in full within 30 days to avoid penalties. Then, engrave the enterprise seal as prescribed.
• Experience in opening a transaction bank account: Technology information companies need to open a bank account for company transactions. In this regard, the business owner should go to the bank (with citizen identity card, seal, and enterprise registration certificate) to register for account opening.
• Experience regarding taxes to be paid: Enterprises must declare and pay taxes such as business license tax, technology information corporate income tax, and value-added tax.
• Experience in hiring accounting services: If a technology information company has not yet recruited a suitable accountant, it may hire accounting services from TLDN VN to handle initial accounting matters.
• Experience regarding capital contribution to a technology information company: The technology information company must complete capital contribution within a maximum of 90 days to ensure validity.

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Investment Consultation Services for Foreign-Invested Enterprises at BKC Law

At BKC Law, we provide professional and comprehensive investment consultation services. Our experienced team of lawyers accompanies clients at every stage of the investment process—from market research, investment opportunity analysis, to strategy development and completion of necessary legal procedures. We are committed to delivering optimal solutions that maximize profits and minimize risks.

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

Telephone: 0901 3333 41
Email: info@bkclaw.vn
Branch in District 1: 9th Floor, Diamond Plaza Building, 34 Le Duan Street, District 1, Ho Chi Minh City
Branch in Binh Tan: 41 Ten Lua Street, Binh Tan District, Ho Chi Minh City

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