Setup company in Vietnam by Vinasc
How to setup company in Vietnam?
Vietnam has become an attractive destination for foreign investors. A favorable investment environment, clear legal policy, human resources cheap and abundant as a commitment to investment efficiency. However, to decide to invest and setup company in Vietnam, investors need to approach full-information and advice from professional units.
With many years of experience working in the field of consulting for foreign businesses in Vietnam. We would like to advise some of the following basic contents to help investors more favorable in business plans in Vietnam.
Setting up a company in Vietnam: Which type of the enterprise should I choose?
According to the provisions of Vietnamese law, foreign investors can choose the following types of enterprises when setting up a company in Vietnam:
- Limited liability company
- Joint-stock company
However, we think that foreign investors should choose setting up a Limited liability company with 01 member or 02 or more members.
Because Limited liability company is popular in Vietnam as well as the top priority of foreign investors in Vietnam over the years. It is suitable for investment forms and models. On the other hand, it is favorable in changing the transfer, changing information. And the important thing is favorable to use, transfer of capital, profits abroad.
What is the regulation on investment capital for foreign investors when setup company in Vietnam?
Some conditional business lines will have minimum regulations on investment capital. However, most business lines will not have regulations and capital constraints for foreign investors when investing in Vietnam.
Therefore, enterprises have full rights to decide on the level of investment capital when investing in Vietnam.
According to our experience, when doing investment activities in Vietnam, foreign enterprises need to pay attention to the following issues of capital:
- Investors should choose the appropriate level of investment with business lines and fields. For example: If the company does production or processing, it will need a large capital for: renting factories, investing in machinery, technology … and working capital. In this case, loans will often be used, especially foreign loans (medium and long-term loans will have to be registered with the State Bank according to regulations). Therefore, it is necessary to analyze and identify two important indicators: Investment capital and contributed capital to implement the project.
- For the professions of: Services, consulting …. needless amount of the fixed capital, but it should be enough to pay working capital, such as: Office, staff salaries….
Where should the office be located when a foreign investor wants to setup company in Vietnam?
The selection of the location of the office and headquarters are the rights of foreign investors, except in restricted areas. However, some of the criteria that we think should be noted as follows:
- Favorable traffic conditions
- Tax incentive policies
- Labor policies
- Investment environment, environment and the business community.
In Vietnam, many provinces and cities have a favorable environment for foreign investors to set up a company. Such as: Ho Chi Minh City, Hanoi, Da Nang, Binh Duong, Dong Nai, Long An… and, Ho Chi Minh City is still the economic and financial center of Vietnam.
Tax policies should be known when foreign investors setup companies in Vietnam ?
1. License tax
License tax must be paid by the enterprise once a year, depending on the capital size:
- Capital over 10 billion: 3,000,000 VND
- Capital under 10 billion: 2,000,000 VND
- Branches, representative offices … .: 1,000,000 VND
2. Value Added Tax (VAT)
VAT applies to most of goods with 03 tax rates:
- Tax rate of 0%: mainly applies to export activities
- Tax rate of 5%: mainly applies to agriculture, culture, education …
- Tax rate of 10%: Most goods and services apply 10%.
3. Personal income tax
- For non-residents: 20% of income
- For resident individuals, the tax rates are calculated according to: 5%; 10%;
- 15%; 20%; 25%; 30%; 35% according to each increase in taxable income.
4. Enterprise income tax
- General tax rate apply: 20%
- Tax rate incentives (depending on each case, field, geographic location)
5. Other taxes may or may not be
- Foreign contractor tax
- Import and export tax
- Special consumption tax …
Other compulsory payables:
1. For foreign workers before 2022: 10%
- Social insurance: 3%
- Health insurance: 4.5%
- Labor accident insurance: 0.5%
- Trade union fees: 2%
2. For Vietnamese workers: 34%
- Social insurance: 25.5%
- Health insurance: 4.5%
- Unemployment insurance: 2%
- Trade union fees: 2%
What are available tax incentives, exemption or reduction for foreign investors in Vietnam?
According to general regulations in Vietnam, tax incentives, tax exemption … will be applied in two cases:
- Incentives in the investment field. Such as: Education, information technology …
- Incentives for the investment area. As localities, regions that attract and encourage investment….
However, in order to enjoy tax incentives, enterprises need to carry out investment procedures, capital contribution procedures and have complete accounting and tax records, in accordance with Vietnam law.
Why are foreign investors facing difficulties and no tax refunds for investment projects according to regulations?
According to current regulations, VAT refund will be applied in 02 cases:
- Refund of VAT on export activities
- Refund of VAT for investment projects.
Normally, foreign investors do not receive tax refund when setting up a company in Vietnam for the following reasons:
- Failure to declare the correct form of VAT;
- Failure to comply with the commitment in the investment registration certificate on investment period and operation time.
According to our experience, this is a huge disadvantage for investors, and the error belongs to the accounting department, the original consulting department.
How can foreign companies in Vietnam transfer profits abroad?
According to the regulations, foreign investors are protected by law and create favorable conditions for their legitimate interests in Vietnam. Therefore, foreign investors, after fully implementing the prescribed tax case, can remit profits abroad.
However, some enterprises faced difficulties due to not comply with capital regulations when investing in Vietnam. As:
- Investment capital account opened in accordance with regulations
- They prove the investment capital and other legitimate interests.
Over the past years, we have found that most businesses buying and transferring back from Vietnam companies have had difficulty because they do not have an investment capital account or do not carry out investment registration procedures.
What should you do to invest and setup company in Vietnam?
- There is an effective business plan
- There is a strong enough financial plan
- Choosing a professional consultant in Vietnam
- Preparing the necessary documents for the establishment and implementation of an enterprise in Vietnam
Vinasc provides services for foreign investors in Vietnam?
1. Legal Consulting services
- Investment Consulting services
- Procedures setup a company consulting services
- Consulting and adjusting enterprise information
- Consulting and implementing procedures for work permits, temporary residence cards for foreigners.
- Consulting on investment finance
2. Auditing services
- Auditing service, financial statements
- Tax audit services
3. Accounting services
- Chief accountant services
- Bookkeeping services
- Accounting review services
4. Tax consulting services
- Tax declaration services
- Tax settlement services
- Tax refund services
- Tax review service
5. Office services
- Virtual office services
- Shared office services
- Office rental services
Where does Vinasc provide the service?
- In Ho Chi Minh City
- In Phu Quoc Island
- In Binh Duong Province
- In Dong Nai Province
- In Long An Province
- In Dong Thap Province
Does setup company in Vietnam include initial tax procedures?
Vinasc’s company establishment service package includes:
- Consulting and conducting procedures for obtaining an investment registration certificate
- Consulting and conducting procedures for obtaining a business registration certificate
- Consulting and conducting procedures for the seal.
Therefore, the following initial procedures are not included:
- Initial use tax return
- Open a bank account
- Register for electronic tax payment
- Procedures for issuing invoices
- Procedures for initial labor declaration.
Advantages of service at Vinasc?
- Experienced and professional personnel
- A consulting unit that can use many languages
- Vinasc’s service is a comprehensive solution for investors with many strong services.
- Commitment to progress.
- Understanding the market, Vinasc is a place that connects with many localities, state agencies related to business management.
Other important contents: