How to Start a Small Business in Vietnam (Step-by-Step)

Vietnam has emerged as one of Southeast Asia’s most dynamic business destinations, driven by strong GDP growth, a young workforce, and an increasingly modern legal framework. The enactment of the Law on Investment 2025 (effective March 1, 2026) and its guiding Decree 96/2026/ND-CP marks a decisive shift toward a more transparent, streamlined, and investor-friendly regulatory regime.

This guide provides a comprehensive, step-by-step roadmap to starting a small business in Vietnam in 2026, with a particular focus on legal conditions, procedures, market access, taxation, labor compliance, and corporate governance. It also highlights key legal reforms that significantly reshape how businesses are established and operated.

Legal Framework for Starting a Business in Vietnam (2026)

Main table of contents

Vietnam’s business environment is governed by a multi-layered legal system. The most relevant instruments include:

Law on Investment 2025
Enterprise Law (as amended)
Decree 96/2026/ND-CP (guiding investment procedures)
Labor Code 2019 (still applicable in 2026)
Tax regulations (VAT, CIT, PIT laws)

The 2026 legal framework reflects a clear policy shift from pre-licensing control to post-licensing supervision, aiming to reduce administrative burdens while maintaining regulatory oversight.

Key Reform Philosophy

The new law focuses on three pillars:

Simplification of market entry procedures
Reduction of conditional business lines
Greater flexibility for foreign investors

Notably, Vietnam has abolished or streamlined dozens of conditional business sectors, creating a more open investment climate.

Step 1 – Determine Business Activity and Market Access Conditions

Before establishing a company, investors must assess whether their intended business activity is legally permitted.

Prohibited and Conditional Sectors

Under the Law on Investment 2025:

Certain industries are strictly prohibited, including activities related to narcotics, human trafficking, and hazardous materials.
Many sectors are classified as conditional business lines, requiring specific licenses or approvals.

Market Access for Foreign Investors

Foreign investors must comply with market access conditions, which may include:

Foreign ownership limits
Licensing requirements
Joint venture obligations

Decree 96/2026 explicitly requires that investment projects satisfy market access conditions before obtaining approval.

Step 2 – Choose the Appropriate Business Structure

Selecting the right legal entity is a strategic decision that affects liability, governance, and tax obligations.

Common Business Types in Vietnam

The most widely used structures include:

Limited Liability Company (LLC)
Joint Stock Company (JSC)
Representative Office (RO)
Branch Office
Business Cooperation Contract (BCC)

Among these, the LLC remains the most popular for small businesses due to its simple governance and flexible ownership structure.

Key Considerations

When choosing a structure, investors should evaluate:

Capital requirements
Management complexity
Ability to raise funds
Foreign ownership restrictions

Step 3 – Investment Registration Certificate (IRC) – Is It Required?

Traditional Approach vs. 2026 Reform

Previously, foreign investors were required to obtain an Investment Registration Certificate (IRC) before establishing a company.

However, under the 2026 framework:

Investors may establish an enterprise before obtaining the IRC in certain cases.
This represents a major shift toward flexible investment structuring.

Conditions for Granting IRC

To obtain an IRC, a project must satisfy:

Legal land use rights
Compliance with planning regulations
Market access conditions
Technology requirements (if applicable)
Capital and labor conditions

Step 4 – Enterprise Registration Certificate (ERC)

After investment approval (if required), the next step is company incorporation.

Registration Procedure

The process typically includes:

Submission of company charter
Identification of shareholders/members
Appointment of legal representative
Registration with the Business Registration Authority

In many cases, the ERC can now be obtained within a relatively short timeframe due to digitalization.

Digital Transformation

Decree 96/2026 introduces:

Online submission systems
Optional use of digital signatures
Integration with national investment databases

Step 5 – Licensing for Conditional Business Lines

Certain industries require additional permits before operation.

Examples of Conditional Licenses

These may include:

Retail licenses
Education permits
Construction licenses
Financial service approvals

2026 Transition Period

Some provisions on conditional sectors are phased in until mid-2026, creating a transitional compliance window.

Step 6 – Tax Registration and Compliance

Main Taxes Applicable

Businesses in Vietnam are subject to:

Corporate Income Tax (CIT)
Value Added Tax (VAT)
Personal Income Tax (PIT)

Tax Registration Process

After obtaining the ERC, companies must:

Register with tax authorities
Obtain a tax identification number
Implement accounting systems

Vietnam’s tax regime is increasingly aligned with international standards, particularly for foreign-invested enterprises.

Step 7 – Labor and Employment Compliance

Key Legal Requirements

The Labor Code sets out:

Minimum working age (15 years old)
Employment contracts
Social insurance obligations

Employer Obligations

Employers must:

Register employees for social insurance
Ensure workplace safety
Comply with termination regulations

Hiring Foreign Employees

Foreign workers require:

Work permits
Visa or temporary residence cards

Step 8 – Corporate Governance and Legal Representative

Role of the Legal Representative

Every company must appoint at least one legal representative, who:

Represents the company before authorities
Signs contracts
Bears legal responsibility for operations

Management Structure

Depending on the business type:

LLC: Members’ Council or Owner
JSC: Board of Directors and General Meeting of Shareholders

Step 9 – Post-Licensing Compliance and Reporting

Ongoing Obligations

Businesses must comply with:

Periodic investment reports
Tax filings
Labor reporting
Compliance with sector-specific regulations

Shift to Post-Licensing Supervision

The 2026 framework emphasizes:

Reduced upfront approvals
Increased post-operation monitoring

This reflects a modern regulatory model aligned with global practices.

Key Highlights of Vietnam’s 2026 Investment Reforms

1. Flexible Investment Structure

Investors can now:

Establish companies before obtaining IRC
Choose between multiple procedural pathways

2. Special Investment Procedures (“Green Channel”)

Decree 96 introduces fast-track procedures for selected projects, reducing approval time significantly.

3. Digitalization of Procedures

Online filing systems
Electronic processing of applications

4. Focus on High-Tech and Strategic Sectors

New incentives target:

Artificial intelligence
Semiconductor industry
Data-driven businesses

5. Streamlined Licensing and Reduced Barriers

Removal of unnecessary conditions
Simplification of administrative steps

Practical Timeline to Start a Business in Vietnam (2026)

A typical timeline may include:

Business structure planning: 1–2 weeks
Investment approval (if required): 2–6 weeks
Company incorporation: 1–2 weeks
Licensing (if applicable): 2–8 weeks

With the new “green channel,” certain projects may be approved even faster.

Common Legal Risks and How to Avoid Them

Misclassification of Business Activities

Incorrect industry codes can lead to:

Licensing delays
Compliance violations

Failure to Meet Market Access Conditions

Foreign investors must carefully review:

Ownership caps
Sector-specific restrictions

Inconsistent Documentation

Contracts, licenses, and filings must be aligned to avoid regulatory scrutiny.

Starting a small business in Vietnam in 2026 is significantly more accessible than in previous years, thanks to sweeping reforms under the Law on Investment 2025 and Decree 96/2026/ND-CP. The legal system now prioritizes efficiency, flexibility, and digitalization, creating a more favorable environment for both domestic and foreign investors.

However, the regulatory framework remains complex, particularly in areas such as conditional business lines, market access, and post-licensing compliance. Careful legal planning and professional guidance are essential to ensure a smooth and compliant market entry.

Disclaimer

The information provided in this article is for general informational and reference purposes only. It reflects the legal framework as of 2026 and does not constitute official legal advice, professional legal opinion, or a substitute for individualized legal counsel. Laws and regulations in Vietnam are subject to frequent changes, and the application of these rules may vary depending on the specific circumstances of each investment project.

We strongly recommend that you consult our experienced FDI lawyers or qualified legal advisors for a detailed assessment, risk analysis, and tailored solutions that best suit your business objectives and specific situation.