Vietnam should be on your list of potential locations if your company has worldwide ambitions. Free trade agreements (FTAs) and a more strictly regulated business climate fuel the country’s rapid economic expansion.
After reading today’s article, you will have a clearer picture of the opportunities and challenges you can face to register a company.
The Pros and Cons of Setting up A company in Vietnam
An Expanding Market
Vietnam’s modernization and increased level of competitiveness began with the implementation of the “doi moi,” or “renovation,” strategy in 1986. Vietnam was able to make the shift from an agricultural economy to a more industrial market one because of this approach. To everyone’s surprise, Vietnam’s GDP grew in the second quarter of 2020, despite the ongoing effects of the Covid-19 epidemic.
Expanding existing facilities
Vietnam is in the midst of a massive construction boom as the country strives to improve its aging infrastructure to meet the needs of its rising population and expanding trade network. The Vietnamese government invests heavily in the building industry because of its significance to the country’s competitiveness.
Considerable resources have been allocated to Vietnam’s industrial sector, especially the electronics industry. The industry is expected to be a major contributor to GDP in 2019 (16.5%). Vietnam is holding its own against regional powerhouses in this cutthroat industry.
Facilitation of trade
The government has made major reforms to the regulatory business environment in order to attract foreign investment and foster the growth of entrepreneurial activity. The aforementioned changes have greatly simplified the process of doing business in Vietnam. Vietnam is among the world’s most developed nations in the following categories, according to the World Bank:
- Bringing down the initial investment threshold
- Making more internet data and alerts available to more people
- Tax on the labor fund reduced for businesses
- VAT returns are no longer required to be submitted on paper and may instead be submitted online.
Problems and Dangers of Register a Company
Although there are many opportunities for American investors and enterprises in Vietnam, they should also be mindful of the difficulties that may arise when first getting a firm off the ground.
Rules governing ownership by non-citizens
For political reasons, the Vietnamese government limits the scope of firms that may be held entirely by foreign investors. A Vietnamese joint venture partner is necessary for firms that do not come within the categories allowed for foreign ownership. In addition, obtaining ministry clearance is necessary to launch a firm in Vietnam if the kind of business being launched falls beyond the scope of any WTO agreements or local legislation controlling foreign ownership.
Inconveniently lengthy sign-up procedure
There are a number of requirements to get a business up and running in Vietnam. Depending on the nature of the company, this might take anywhere from one to four months. It’s necessary to first submit an application for an Investment Registration certificate, which may take up to a month to process. The next step is to apply for a business registration certificate Vietnam, which might take up to a week. Finally, depending on the nature of the enterprise, it may be necessary to submit applications for additional licenses.
Still an underdeveloped country
Vietnam is a developing nation with limited infrastructure and telecommunications networks compared to neighboring countries like Thailand, despite its numerous advantages and good attitude toward foreign firms.
The Vietnamese government, however, is taking the necessary precautions to guarantee the country’s competitiveness, and Vietnam is shaping up to be a very bright prospect.
How to Register a Company in Vietnam
Foreign limited liability companies (LLCs) in Vietnam may follow the steps outlined below to formally establish operations in the country. Here’s how you can register a company in Vietnam.
Certificate of Registration for Investments
An investment registration certificate is required to set up a business in Vietnam that is wholly owned by an outside investor. This certificate is issued by the Government Agency for Planning and Investment. Certificates are typically sent and received within a month.
Document Proving Business Registration
A company registration certificate is also required for establishments in Vietnam (BRC). This certificate is also issued by the Ministry of Planning and Investment. Besides its more common name, “Enterprise Registration Certificate,” the BRC has a few others (ERC).
Submission of Forms and Payment of Taxes for Obtaining a Business License
The tax ID of a company is the same as the one shown on its certificate of incorporation. It is mandatory for businesses to use an online tax payment method. The system is also used for the filing of tax returns and other forms by businesses. Businesses need an electronic signature to use this platform.
You have 90 days from the time you get the BRC to make the required capital contribution. If you don’t comply, you’ll have to pay a hefty fee.
Apply for sublicenses or permits, if applicable
In Vietnam, forming a company takes around a month. But some businesses need sublicenses because of the nature of their operations. This will cause the signup procedure to take more time.