Starting A Business In Vietnam As A Foreigner - A Complete Guide

Ultimate Guide on Starting a Business in Vietnam as a Foreigner | Guide by LHD Law Firm

While Vietnamese startup companies go to other countries for starting their businesses, there are also various people from many different countries, choosing different types of businesses that have successfully established their businesses in Vietnam. However, how to start a business in Vietnam as a foreigner is still a big question for many startup companies.

Language, culture and legal are the first factors should be aware when foreigners start their businesses in Vietnam. This article will help you understand some of these important factors as the answer for the question “How to starting a business in vietnam as a foreigner”

☑ Factor 1: What types of Vietnamese legal entities are available?

A foreign investor (just like a local investor) may select one of the following Vietnamese legal entities to carry out a project:

• A limited liability company (“LLC”), in the form of either a single-member LLC (“SLLC”) or an LLC with two or more (up to a maximum of 50) members (“MLLC”).
• A shareholding or joint stock company (“JSC”) which is a company with at least three shareholders but no maximum number of shareholders.
• A general partnership or a limited liability partnership.
• A private enterprise (akin to a sole proprietorship).

☑ Factor 2: Learning business culture in Vietnam is the way of how to start a business in Vietnam as a foreigner

Learning business culture in Vietnam is the way of how to start a business in Vietnam as a foreigner

It can be said that business culture is the soul of an enterprise, because it influences, even dominates production activities, business decisions, internal and external relationships. Here, it is possible to understand the business culture of a business as perceptions, objectives and cultural values ​​that must be included in every activity.

Vietnam is located in the Eastern cultural region of the Southeast corner of the world; therefore, there is a typical agricultural culture that is full of characteristics of eastern culture.

-  With a businessman when he meets up with a Vietnamese partner: Let’s start the story by introducing yourself. Don't be surprised if they want to know your age. It is a way for Vietnamese people to choose their roles when they talk, due to the abundance of personal pronouns in Vietnamese.

- Gift is an extremely popular cultural expression in Vietnam. In particular, on the occasion Tet holiday of Vietnamese people, do not forget to give gifts and greeting cards to your partners and relationships here!

- Eating and drinking is an essential part of community activities and business activities in Vietnam. Dinner with local representatives or customers to help develop relationships and make your local partner

- The way Vietnamese people drinking in a party is also different. If you drink alone, it is impolite. Everyone's habit is to drink only after toasting

- During the work, the Vietnamese side often said, "we will consider", "we will answer". So if you need to decide early, it's best to send all the necessary documents before the meeting. If it is a document sent to state agencies, please write it in Vietnamese!

- At the beginning of the negotiation will always be the story which do not relate to your main discussion. Don't be impatient, that's called 'creating atmosphere'! You should not mention about your lawyer because the Vietnamese people do not want to see him when negotiating and also dislike the subject from the legal aspect.

- Sometimes Vietnamese entrepreneurs are always slow to catch business situations. It can be said that the slow attitude of rubber hours is a daily attitude in modern Vietnamese people.

☑ Factor 3: Learning laws in Vietnam is the way of how to start a business in Vietnam as a foreigner: Establishing businesses with foreign elements in Vietnam

You need to update on the Law on investment and the Law on enterprises in Vietnam when you have a plan to start a business in Vietnam as a foreigner

With the enactment of the Law on investment and the Law on enterprises 2020, Vietnam has established a legal framework to regulate investment participation and business establishment of foreign investors in Vietnam.

Thereby, it will improve the investment environment in the direction of creating a fair competitive environment while protecting national security. Based on the current law, foreign investors looking for investment opportunities in Vietnam can choose one of two options for how to start a business in Vietnam as a foreigner with foreign elements as follows:

Option 1: Request for the first investment registration certificate (whether it is a 100% foreign-invested enterprise or a joint-venture enterprise) and then carry out the procedures to apply for a Certificate of registration enterprise.

Option 2: Invest in the form of capital contribution, purchase of shares in Vietnamese companies, then participate in managing the company as agreement by the parties.

Each of the above options has certain advantages and disadvantages related to the conditions, administrative procedures and governance issues when you implement investment projects in Vietnam.

Complete Guide to starting a business in vietnam as a foreigner (Step by Step) →

Open a Company in Vietnam, with 100% foreign capital is a form of investment in which foreign investors are allowed to implement investment projects in the form of investment in the establishment of 100 foreign-owned companies in Vietnam, including the investment locations are being considered big attraction in Vietnam as Hanoi investment, investment in Ho Chi Minh city, Binh Duong, Dong Nai, Bac Giang, Bac Ninh, Thai Nguyen, Da Nang, Quang Ngai .... With many different areas.

1. The name of the Company (Both in Vietnamese and in English)
2. Details of the company Directors
3. The type of company being set up
4. Details on the amount of capital invested in the company
5. Details of the percentage ownership of each investor
6. The areas of business in which the company intends to operate

Once the license has been issued, the company can then begin trading. In general, small business formation involves first setting up a 100% Vietnamese owned company with 2 Vietnamese directors. A new contract is then drawn up transferring ownership to the foreign business person. Although previously, a foreigner could only own 50.9% of their business (49.9% to the Vietnamese director), this has since changed and you can now own up to 99% of your company and this will appear on the company business license.

Please contact our staff so that we can assist you in setting up your company. We will advise you on the safest and most efficient way to set up your company so that you can succeed from the beginning.

Another point of interest for expats is that having a registered company means you are eligible to apply for a Temporary Residency Card for a period of 1- or 3 years. Please view our information on Temporary Residency Cards here.

Business registration documents for limited liabilities companies (one LLC company)

Request for business registration in the standard form published by the authorized business registration body

Draft charter of the company.

List of members and the following attached documents:

(a) With respect to members being an individual, a copy of people's identity card, of passport or other lawful personal identification;

(b) With respect to members being an organization, a copy of the establishment decision, business registration certificate or other equivalent document; power of attorney, people's identity card, of passport or other lawful personal identification of the authorized representative. With respect to members being a foreign organization, a copy of the business registration certificate which is certified by the body at which the organization has made the registration within three months before the date of submission of the business registration documents.

Document of an authorized body or organization certifying the legal capital in respect of enterprises conducting lines of business for which legal capital is required by law

Practicing certificates of the director or general director and other individuals in respect of enterprises conducting lines of business for which a practicing certificate is required by law.

Business registration documents for a Two Member Limited Company (LLC company) 

Request for business registration in the standard form published by the authorized business registration body.

Draft charter of the company.

List of members and the following attached documents:

(a) With respect to members being an individual, a copy of people's identity card, of passport or other lawful personal identification;

(b) With respect to members being an organization, a copy of the establishment decision, business registration certificate or other equivalent document; power of attorney, people's identity card, of passport or other lawful personal identification of the authorized representative. With respect to members being a foreign organization, a copy of the business registration certificate which is certified by the body at which the organization has made the registration within three months before the date of submission of the business registration documents.

Document of an authorized body or organization certifying the legal capital in respect of enterprises conducting lines of business for which legal capital is required by law

Practicing certificates of the director or general director and other individuals in respect of enterprises conducting lines of business for which a practicing certificate is required by law.

Business registration documents for a Shareholding Company (Joint Stock company) 

Request for business registration in the standard form published by the authorized business registration body.

Draft charter of the company

List of founding shareholders and the following attached documents:

(a) With respect to shareholders being an individual, a copy of people's identity card, passport or other lawful personal identification;

(b) With respect to shareholders being an organization, a copy of the establishment decision, business registration certificate or other equivalent document of the organization; power of attorney, people's identity card, passport or other lawful personal identification of the authorized representative. With respect to a shareholder being a foreign organization, a copy of the business registration certificate must be certified by the body at which the organization registered within three months before the date of submission of the business registration documents.

Document of an authorized body or organization certifying the legal capital in respect of enterprises conducting lines of business for which legal capital is required by law.

Practicing certificates of the director or general director and other individuals in respect of enterprises conducting lines of business for which a practicing certificate is required by law.

Business registration documents for a Private Enterprise (Pte)

Request for business registration in the standard form published by the authorized Business registration body.

Copy of people's identity card, passport or other lawful personal identification.

Document of an authorized body or organization certifying the legal capital in respect of enterprises conducting lines of business for which legal capital is required by law.

Practicing certificates of the director and other individuals in respect of enterprises conducting lines of business for which a practicing certificate is required by law.

✅ Steps to step work with LHD Law Firm

Step 1: Get Legal Advice English - Vietnamese

Meet with an attorney. We get legal advice on the type of business best suited to your situation.

Step 2: Find office space and legal representation for your business (if there is no available LHD office)

Then find an office space so that your business not only has a place of business, but also a specific office address required by the government to apply for a business license. If you are not the legal representative for your business, you need to find a trusted partner.

Step 3: Apply for a business license (IRC, ERC or BL)

Prepare all the necessary documents and make sure that you meet all the necessary requirements before applying for a business license. Expect a 15-day waiting period for a Vietnamese-owned company and a 60-day waiting period for a foreign company.

Step 4: Legal and tax advice for foreign companies after establishment

Running your Vietnamese business now has the ability to hire employees and enter into business contracts. There are several things you need to do, such as obtaining your company seal, applying for a tax identification number, opening a company bank account, and publicly announcing your incorporation. Periodic duties include employee tax, accounting  report and insurance payments.

(In addition to legal advice, we also provide accounting services for companies with foreign capital for these companies)

Client's of LHD Law Firm

Hopefully, this article will help you know thoroughly about how to start a business in Vietnam as a foreigner. The above is two factors, in our opinion, it is also the two main difficulties of foreign businesses when they start their businesses in Vietnam. However, about corporate culture, you can gradually get used to but  the law must be clear from the beginning. Therefore, if you want to be more clear about business laws when you start a business in Vietnam, you can contact with LHD Law Firm (Free Quotation and legal advise)