How to establish 100% foreign owned company in Vietnam

Establish 100% Foreign Owned Company in Vietnam

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Vietnam is one of the fastest growing countries in Asia, and it is also one of the most attractive markets for foreign companies with its low cost-of-living and high quality services. There are many ways to start a business in Vietnam, but the most popular one is to establish a 100% foreign owned company. In this article, we will discuss how to start a 100% foreign owned company in Vietnam. 

How to establish 100% foreign owned company in Vietnam
How to establish 100% foreign owned company in Vietnam

100% foreign-owned company in Vietnam definition

A 100% foreign owned company in Vietnam is a company that has been established in Vietnam, but does not have any Vietnamese shareholders. The majority of its shares are owned by foreigners. 

In the past, 100% foreign-owned enterprises were not allowed to operate in Vietnam. However, with the country’s opening up policy, more and more of them have been established. Nowadays, 100% foreign-owned enterprises are a big part of the economy and contribute greatly to the nation’s development.

This type of company is allowed to be established in Vietnam thanks to a special law called “100% Foreign-Owned Companies Law” which was passed by the National Assembly on December 14, 2003. The law allows foreign investors to own 100% shares of companies they establish in Vietnam.

Restricted business lines for foreign investors in Vietnam

Restricted business lines for foreign investors in Vietnam
Restricted business lines for foreign investors in Vietnam

The Vietnamese government has issued a directive that limits which kinds of businesses foreign investors are allowed to invest in such as:

  • Trading in goods and services, 
  • Banking, 
  • Insurance, 
  • Real estate development,
  • Travel agencies.

This restricts the opportunities for foreign investors in Vietnam. These restrictions have been put in place due to fears of a monopoly on these industries by foreign investors.

Advantages of 100% foreign owned company in Vietnam

Vietnam is a country with great potential for business and investment. With its strategic location and low labor costs, it has attracted many international companies to invest there. As such, it has become an important destination for international investors looking for opportunities abroad

Factors that contribute to the success of a foreign owned company in Vietnam:

Highly skilled workforce

The first benefit of 100% foreign-owned companies in Vietnam is that they have access to a pool of talented and skilled people who are eager to work for them.

Low labor costs

Labor costs are much lower than other countries such as China or Japan, which makes it a more attractive destination for investors

Low tax rates

Foreign companies have lower tax rates as they don’t have to pay any taxes on their profits until they repatriate them back into their home country.

More opportunities to be creative and innovate

100% Foreign-owned companies in Vietnam are also able to set up initiatives for sustainable impact through their long-term investment in the country. These initiatives may include investing in education, healthcare, and other service providers that promote human development.

Procedure for establish a 100% foreign-owned company

Steps to set up a 100 foreign owned company
Steps to set up a 100 foreign owned company

To start a 100% foreign owned company in Vietnam, you will need to register your business with the Ministry of Planning and Investment (MPI) and obtain an approval letter from the MPI. You will also need to file certain documents with your local tax office before you can start operating as a company.

Foreign-owned companies in Vietnam need to follow a set of procedures in order to be fully compliant with local regulations.

The following are the procedures that a foreign-owned company must follow when setting up a business in Vietnam:

  • Register your business in Vietnam.
  • Obtain a business license from Vietnam’s Ministry of Industry and Trade:
  • Apply for the Vietnamese Foreign Investment Act (FIA) with the Ministry of Justice.
  • Apply for an agency permit with the Vietnamese Investment Agency (VIA).
  • Register your company in Ho Chi Minh City or Hanoi.
  • Obtain a tax number from VIA and prepare documents for tax payment.
  • Open a bank account at one of Vietnam’s major banks, register your company at this bank.
  • Receive final approval.

Required documents for setting up a 100% foreign-owned company in Vietnam

Setting up a 100% foreign-owned company in Vietnam can be a daunting task. This is because of the need to comply with many regulations and guidelines. There are also many documents that need to be submitted to the government for approval. The key documents required to set up a 100% foreign-owned company in Vietnam are:

  • Application form for Foreign Investment Company.
  • Business Registration Certificate.
  • Business License.
  • Business Tax Certificate.
  • Foreign Trade License.
  • Establishment Certificate.

Consulting on setting up 100% foreign-owned companies in Vietnam

Establishing a foreign-owned company in Vietnam is not a simple task, as it requires extensive research and preparation. The language barrier is also an obstacle. To establish a company in Vietnam, foreign investors should use legal advisory services in Vietnam. Foreign investors should look for reputable law firms with experience to avoid legal errors.

LTS LAW is a local law firm that has been in the country for many years and has some of the best legal expertise. This is where investors usually turn to first when they are starting a business in Vietnam. LTS LAW provides you with legal solutions in Vietnam so you can gain a reliable foothold in the market.

Contact us now for more details!

LTS LAW 

Address: Room 602, Floor 6, 520 CMT8, Ward 11, District 3, HCMC, Vietnam

Website: https://lts.com.vn/ 

Email: [email protected]

Hotline: (+84) 902 798 066