Foreign Individuals Opening a Company in Vietnam

In the current economic landscape, many foreign investors wish to establish businesses to operate in Vietnam. Particularly, when opening a company in Vietnam as a foreign individual, investors must strictly comply with current legal regulations. Vietnam is increasingly becoming an attractive destination for foreign investors thanks to its stable political environment, high economic growth rate, and preferential investment policies. The following article provides a detailed analysis of the legal framework governing this matter.

Legal Basis

The establishment of businesses by foreign individuals in Vietnam is governed by the following legal documents:

• The Law on Investment 2020 (amended and supplemented in 2022)
• The 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, etc.)

Can foreign individuals open a company in Vietnam?

According to Clause 19, Article 3 of the Law on Investment 2020, foreign individuals are considered foreign investors and therefore have the full right to open a company in Vietnam in the form of a foreign-invested economic organization.

However, foreign individuals are not allowed to establish businesses in the form of individual household businesses (hộ kinh doanh cá thể), but can only choose from the following types of enterprises:

• Single-member or multi-member Limited Liability Company (LLC)

• Joint Stock Company (JSC)

• Partnership (less common for foreign investors)

Subject-matter conditions for individual investors

Although Vietnamese law allows foreign individuals to establish enterprises, there are specific conditions regarding legal status as follows:

• Must be at least 18 years old, possess full civil act capacity according to the law of their nationality, and not fall into the categories prohibited from investing under Vietnamese law.

• Must not be undergoing criminal prosecution or serving a prison sentence, under probation, or subject to restriction of civil rights.

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

• Must not be illegally residing or facing legal handling in Vietnam.

• If the investor is a citizen of a country or territory that does not have diplomatic/investment relations with Vietnam, they may be restricted from accessing certain business lines or investment areas.

Steps for a foreign individual to open a company in Vietnam

Establishing a foreign-invested enterprise in Vietnam requires following these steps:

Step 1: Prepare the dossier and select the enterprise type

The foreign investor needs to clearly determine:

• Business lines (Do they fall under the list of restricted sectors?)

• Foreign ownership ratio

• Enterprise type:

  • Single-member LLC (100% foreign-owned)

  • Multi-member LLC

  • Joint Stock Company

  • Branch or Representative Office

• Required documents:

  • Passport or business registration certificate of the foreign investor

  • Investment project proposal

  • Headquarters lease agreement (if any)

  • Financial statements of the foreign investor (if any)

• Step 2: Apply for the Investment Registration Certificate (IRC)

  • The investor must submit the dossier to the Department of Planning and Investment (DPI) of the province/city where the enterprise’s headquarters is located.

  • Processing time: 15 – 30 working days.

  • Upon issuance of the Investment Registration Certificate (IRC), the investor can proceed to register the enterprise.

  Step 3: Register the enterprise and apply for the Enterprise Registration Certificate (ERC)

  • The dossier includes:

    • Application form for enterprise registration

    • Company Charter

    • List of founding members/shareholders

    • Valid copies of the investor’s passport, ID card, or business license

  • Upon issuance of the Enterprise Registration Certificate (ERC), the FDI enterprise is officially established.

  Step 4: Engrave the seal and make a public announcement

  • The enterprise engraves a round corporate seal and registers the seal specimen on the National Business Registration Portal.

  • Publicly announce the enterprise registration contents on the national portal within 30 days from the date of ERC issuance.

  Step 5: Open a Direct Investment Capital Account (DICA) and contribute capital

  • The investor must open a Direct Investment Capital Account at a commercial bank in Vietnam to transfer capital into the country.

  • Capital contribution must be made within the statutory time limit (usually within 90 days from the date of establishment).

  Step 6: Apply for sub-licenses (if applicable)

  • Certain specific sectors such as education, finance, real estate, and e-commerce require specialized sub-licenses before officially commencing operations.

  Step 7: Fulfill tax and labor compliance procedures

  • Register for a corporate tax code.

  • Register for electronic invoices and tax declaration accounts.

  • Register for social insurance for employees (if any).

Conditional business lines for foreign investors

Foreign individuals cannot invest in all sectors. According to the List of conditional business lines for investment (promulgated alongside the Law on Investment 2020 and guiding decrees), foreign investors are restricted or prohibited from investing in certain sectors, such as:

• • Press and publishing services

  • Trading in weapons, military equipment, and uniforms

  • Public postal services

  • Some sectors require a Vietnamese partner to hold a minimum capital percentage (e.g., advertising, logistics services, education, telecommunications, etc.)

  Failure to clearly understand the regulations on sectoral investment conditions can lead to the refusal of investment licenses or the suspension of business operations after establishment.

  Related articles:

  • Changing the headquarters address of a foreign-invested company

  • Establishing a branch of a foreign-invested company in Vietnam

Related articles:

Changing the headquarters address of a foreign-invested company

Establishing a branch of a foreign-invested company in Vietnam

Tax obligations and post-establishment legal compliance

A foreign-invested enterprise established by a foreign individual is obliged to:

• Pay the business license fee (license tax), Value Added Tax (VAT), and Corporate Income Tax (CIT).

• Submit periodic financial reports and tax reports.

• Register and use electronic invoices.

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

Legal risks when executing investment procedures in Vietnam

• • Risks of changing investment policies: The list of conditional business lines is frequently adjusted, affecting market access.

  • Administrative barriers and legal overlaps: Some localities apply inconsistent investment project appraisal processes, which may cause delays in issuing the IRC or ERC.

  • Difficulties in proving financial capacity: Proving legal investment capital can be challenging without clear financial records or if the issuing bank does not have a branch in Vietnam.

  • Intellectual property and brand protection risks: Failure to register intellectual property rights from the outset may result in a third party registering the trademark or trade name.

  • Disputes with domestic partners: When cooperating with Vietnamese individuals or entities, foreign investors need strict contracts with clear arbitration clauses to avoid risks in profit sharing or corporate governance.

  • Risks from changes in visa and work permit regulations: Residing and working in Vietnam may be affected if labor and immigration policies change

    Investing in a country with a developing legal system like Vietnam entails certain legal risks.

Investment consulting services for foreign individuals at BKC Law

• In-depth, legally compliant consultation by a team of experienced lawyers in the field of foreign investment.

• Fast and accurate processing of procedures, helping investors save time and costs.

• Representing clients in working with state agencies, relieving clients from directly handling complex administrative procedures.

• Absolute confidentiality of client information, ensuring the best interests of the investor..

For free legal consultation at BKC Law, please contact our Lawyers via the following information: 

• Phone: 0901 3333 41

• Email: info@bkclaw.vn

• District 1 Office: 9th Floor, Diamond Plaza Building, 34 Le Duan, Sai Gon Ward, Ho Chi Minh City

• Binh Tan Office: 41 Ten Lua, An Lac Ward, Ho Chi Minh City

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