Foreign individuals establishing a company in Vietnam

In the current economic context, many foreign investors are seeking to establish businesses in Vietnam. Particularly, foreign individuals opening a company in Vietnam must strictly comply with current legal regulations. This is because Vietnam is increasingly becoming an attractive destination for foreign investors due to its stable political environment, high economic growth rate, and favorable investment policies. The following article provides a detailed analysis of the legal framework governing this issue.

Legal Basis

The establishment of a company by a foreign individual in Vietnam is governed by the following legal documents:

• Law on Investment 2020 (amended and supplemented in 2022)

• Law on Enterprises 2020

• Decree No. 31/2021/ND-CP guiding the implementation of the Law on Investment

• Decree No. 01/2021/ND-CP on enterprise registration

• International treaties to which Vietnam is a member (e.g., WTO, CPTPP, EVFTA)

Can a foreign individual establish a company in Vietnam?

According to Clause 19, Article 3 of the Law on Investment 2020, a foreign individual is considered a foreign investor and is therefore fully entitled to establish a company in Vietnam in the form of a foreign-invested enterprise.

However, foreign individuals are not allowed to set up a business in the form of a household business. Instead, they may choose one of the following types of enterprises:

• One-member Limited Liability Company (LLC) or Multi-member LLC

• Joint-stock Company (JSC)

• Partnership (less common among foreign investors)

Eligibility Conditions for Individual Foreign Investors

Although Vietnamese law allows foreign individuals to establish companies, specific legal requirements must be met:

• Must be at least 18 years old, have full legal capacity according to the law of their nationality, and not fall into prohibited categories under Vietnamese law

• Must not be under criminal investigation, serving a prison sentence, under probation, or subject to restrictions on civil rights

• Must demonstrate financial capacity to carry out the investment project, proven through financial documents such as bank statements, capital commitments, etc.

• Must not be under legal sanctions or residing illegally in Vietnam

• Citizens from countries or territories with no diplomatic/investment relations with Vietnam may face restrictions in accessing certain sectors or geographical areas

Steps for a Foreign Individual to Open a Company in Vietnam

Step 1: Prepare Documents and Choose the Type of Enterprise
The investor must determine:

• The business sector (and whether it is on the restricted list)

• The percentage of foreign ownership

• Type of company:

  • 100% Foreign-owned One-member LLC

  • Multi-member LLC

  • Joint-stock Company

  • Branch or Representative Office

Required documents:

• Passport or Certificate of Business Registration of the foreign investor

• Investment project proposal

• Lease agreement for the company’s office (if available)

• Financial statements of the investor (if available)

Step 2: Apply for the Investment Registration Certificate (IRC)
Submit the application to the Department of Planning and Investment of the province or city where the company’s office is located.
Processing time: 15–30 working days.

After the IRC is granted, the investor may proceed with business registration.

Step 3: Register the Business and Obtain the Enterprise Registration Certificate (ERC)
Required documents:

• Application for enterprise registration

• Company charter

• List of members or founding shareholders

• Valid copy of passport, ID card, or business license of the investor

After receiving the ERC, the foreign-invested company is officially established.

Step 4: Company Seal Engraving and Public Disclosure

• The company engraves its official seal and registers it on the National Business Registration Portal

• Business registration content must be publicly disclosed within 30 days of the ERC issuance

Step 5: Open Direct Investment Capital Account and Contribute Capital
The investor must open a direct investment capital account at a Vietnamese commercial bank to transfer capital into Vietnam.
Capital contributions must be made within 90 days of company establishment.

Step 6: Apply for Sub-licenses (if applicable)
Certain sectors such as education, finance, real estate, and e-commerce require additional licenses before commencing operations.

Step 7: Complete Tax and Labor Declaration Procedures

• Register the enterprise’s tax code

• Register for e-invoices and tax declaration accounts

• Register for social insurance for employees (if applicable)

Sectors with Restrictions for Foreign Investors

Foreign individuals cannot invest in all business sectors. According to the List of Conditional Business Lines (issued with the Law on Investment 2020 and its guiding decrees), foreign investors are restricted or prohibited from investing in sectors such as:

• Press and publishing services

• Trade of weapons, military equipment

• Public postal services

• Some sectors require Vietnamese partners to hold a minimum capital share (e.g., advertising, logistics, education, telecommunications)

Failing to understand these sectoral restrictions may lead to denial of investment licensing or suspension of business operations after establishment.

Related Articles

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Important Considerations When Establishing a Foreign-Invested Enterprise (FDI) in Vietnam

Post-establishment Obligations of Foreign-invested Enterprises

A foreign-invested company established by an individual must fulfill the following duties:

• Pay license tax, VAT, and corporate income tax (CIT)

• Submit periodic financial and tax reports

• Register and use electronic invoices

• Comply with labor and social insurance regulations (if employing workers)

Legal Risks in Investing in Vietnam

Investing in a country with an evolving legal framework like Vietnam poses several risks:

• Policy changes in conditional investment sectors may affect market access

• Administrative barriers and legal overlaps in some localities can delay licensing

• Difficulty in proving financial capacity due to unclear financial records or foreign banks without branches in Vietnam

• Intellectual property risks if trademarks or trade names are not registered early

• Disputes with local partners, especially without clear contracts and arbitration clauses

• Changes in visa and work permit regulations may affect residence and employment

Investment Consulting Services for Foreign Individuals at BKC Law

• In-depth, legally sound consultation by experienced lawyers in foreign investment

• Fast and accurate procedure handling to save time and cost

• Representation with government agencies, eliminating the need for direct involvement

• Strict confidentiality of client information, ensuring maximum investor benefits

For free legal consultation at BKC Law, contact:

Phone: 0901 3333 41

Email: info@bkclaw.vn

Head Office (District 1): 9th Floor, Diamond Plaza, 34 Lê Duẩn, District 1, HCMC

Branch Office (Bình Tân): 41 Tên Lửa, Bình Tân District, HCMC

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