Starting a business in Vietnam is an exciting opportunity for foreign investors and expatriates who want to tap into one of Southeast Asia’s fastest-growing economies. With its strategic location, young and dynamic workforce, and increasing openness to international trade, Vietnam offers a wealth of potential. However, navigating the country’s legal framework can be challenging, especially for expats unfamiliar with local regulations.
This guide outlines a comprehensive legal checklist to help expatriates understand the necessary steps and considerations for legally establishing a business in Vietnam.
Choose the Right Business Structure – Expat business Vietnam legal advice
The first legal decision to make is the type of business entity that suits your investment goals. In Vietnam, expats typically choose from the following structures:
Limited Liability Company (LLC): Most common choice for foreign investors. An LLC can be established with one (single-member) or more (multi-member) investors.
Joint Stock Company (JSC): Suitable for larger ventures, especially those planning to raise capital from multiple shareholders.
Representative Office: A non-profit setup for market research and liaison activities. It cannot engage in commercial operations.
Branch Office: Only available for foreign companies in specific sectors and subject to stricter licensing.
Legal Tip: LLCs are generally more flexible and require less complex governance, making them ideal for most expats entering the Vietnamese market.
Confirm Foreign Ownership Eligibility – Expat business Vietnam legal advice
Vietnam has gradually liberalized many sectors, allowing full foreign ownership. However, some industries remain restricted or conditionally open to foreign investors. These include:
– Telecommunications
– Logistics and transportation
– Education and training
Check the WTO Commitments Schedule and Vietnam’s Law on Investment to determine whether your proposed business sector is open to foreign ownership.
Legal Tip: If your business falls into a restricted sector, you may need to partner with a Vietnamese investor or obtain specific approvals.
Reserve a Business Name – Expat business Vietnam legal advice
Once you’ve identified your company structure and sector, you’ll need to reserve a company name. The name must be unique and comply with Vietnamese naming conventions.
– It cannot be identical or confusingly similar to existing businesses.
– It must include the type of enterprise (e.g., LLC or JSC).
– It must not violate social ethics or cultural traditions.
The Department of Planning and Investment (DPI) provides an online platform to check name availability.
Secure an Investment Registration Certificate (IRC) – Expat business Vietnam legal advice
For most foreign-invested enterprises (FIEs), an Investment Registration Certificate (IRC) is required. This document is issued by the local DPI and records your investment project details.
Required documents include:
– Application for investment registration
– Business plan and financial projections
– Legalized copies of investor identification or company profile
– Lease agreement for business premises
Timeline: Typically takes 15–20 working days, depending on the business sector and location.
Apply for an Enterprise Registration Certificate (ERC) – Expat business Vietnam legal advice
After securing the IRC, the next step is to apply for an Enterprise Registration Certificate (ERC). This certificate officially recognizes the legal existence of your business.
You’ll need:
– Application form for business registration
– Charter of the company
– List of members/shareholders
– Identity documents of the legal representative
Legal Tip: The ERC must be obtained within 90 days of receiving the IRC.
Register for Tax and Obtain a Corporate Tax Code -Expat business Vietnam legal advice
After incorporation, your company must register with the local tax authority. This includes:
– Obtaining a tax code
– Setting up e-invoice systems
– Registering for VAT and corporate income tax (CIT)
– Declaring initial tax registration
Companies must also open a bank account and notify the tax office accordingly.
Lease a Physical Office or Business Location
Vietnamese law requires that your company has a physical address, which cannot be a residential property.
The lease contract must include:
– Full address and landlord information
– Duration of lease (ideally at least one year)
– Details suitable for business licensing
Legal Tip: The lease must be signed before submitting IRC and ERC applications.
Comply with Labor Regulations
Hiring local staff involves several legal responsibilities:
– Signing written labor contracts
– Registering employees with social insurance authorities
– Paying mandatory contributions (social, health, and unemployment insurance)
– Maintaining internal labor regulations for companies with more than 10 employees
If you plan to hire foreign workers (including yourself), you will also need:
– Work permit or work permit exemption certificate
– Temporary residence card (TRC)
Open a Capital Bank Account and Inject Investment Capital
All foreign-invested companies must open a capital account at a licensed bank in Vietnam to receive investment funds. Capital contribution must be made in foreign currency and converted through this account.
Capital must be fully contributed within 90 days of ERC issuance (unless otherwise approved).
Late contributions may result in penalties or forced capital adjustment.
Understand Post-Registration Obligations
Once your business is operational, ongoing legal compliance is crucial. These include:
– Submitting quarterly and annual tax reports
– Annual license tax payment
– Financial audits (mandatory for certain companies)
– Updating business registration information if there are changes (address, legal rep, charter capital, etc.)
Legal Tip: Consider engaging a local accounting or legal service provider to manage compliance on your behalf.
Starting a business in Vietnam as an expat is completely feasible with the right legal guidance and preparation. While the process can be bureaucratic and time-consuming, having a clear checklist of the legal steps can help you avoid common pitfalls and ensure your business operates smoothly from day one.
At La Défense, we specialize in helping foreign entrepreneurs and investors navigate Vietnam’s legal system. From business formation to long-term legal compliance, our multilingual team offers tailored solutions to help your business thrive in Vietnam.
Read more:
- 7 Common Legal Mistakes Expats Make When Doing Business in Vietnam
- Understanding Taxation and Legal Obligations for Expats in Vietnam
- Understanding Vietnamese Law: A Guide for Expats