Set up company in Vietnam - What advantages will foreign businesses have when setting up a company in Vietnam after the Covid-19 epidemic has devastated this national economy?
After a difficult period due to the impact of the Covid-19 pandemic, foreign-invested enterprises are entering the recovery and growth phase with high expectations for the prospects of the Vietnamese economy. This brings many advantages for foreign businesses to set up a company in Vietnam.
In the face of challenges from the Covid-19 pandemic, the Government of Vietnam has strived to maintain a balance in terms of ensuring the health of the people, as well as efforts to promote economic growth, and achieve outstanding results significantly.
In the second quarter of 2022, Hanoi's GRDP increased by 9.5%, and is expected to reach 7-7.5% this year, while Vietnam's GDP according to the World Bank's forecast will also increase by 7%. Recently, although inflation pressure has increased, the Government of Vietnam still managed to control the situation and adjusted fiscal policy to reduce price pressure.
(Vietnam's economy has strong growth after the Covid pandemic thanks to good policies)
German enterprises are still optimistic about business prospects in Vietnam and expect economic growth in Vietnam. According to AHK's World Economic Outlook Survey, up to 93% of German businesses will continue to invest in Vietnam, and more than 64% expect business activities to develop positively in the next 12 months.
The impact of the EU-Vietnam Trade Agreement (EVFTA) and Vietnam's strong commitments in ensuring the basic rights of workers and the environment are also considered as the basis for Vietnam to maintain its position as a one of the most attractive investment locations globally, along with factors such as a large market with more than 100 million people, and an attractive average salary that is only one-fifth of China's.
Over the past two years, the Covid-19 pandemic has devastated the business of the hospitality industry. Even this month, the number of international tourists was also much lower than expected, but fortunately we benefited from domestic tourism. This shows that the domestic market, including local businesses and domestic tourists, will play a very important role for this year and the following years for the tourism industry.
In general, foreign investment in Vietnam has been affected by the outbreak of the Covid-19 epidemic, but the economy is gradually recovering.
In the first nine months of this year, Vietnam's foreign investment expenditure exceeded US$15 billion. This is the highest level in the last five years and typically her OECD companies are also interested in Vietnam. Diversify your supply chain.
His 16.3% increase in FDI figures over the same period in 2021 is not only the largest increase over the same period in the last five years, but the ratio of realized FDI capital to registered capital is at a record level of over 82%. was recorded. At the same time, for every 10 dong registered, the paid-out capital was 8 dong. If this ratio continues to sustainably, this will be the clearest evidence of the attractiveness and efficiency of her FDI inflows into Vietnam.
(The percentage of foreign investors in Vietnam is increasing day by day)
Eurocham's survey shows that up to 42% of business leaders expect their companies to increase FDI inflows into Vietnam by the end of this year. Also from such positive comments, newspapers in the US have another opportunity to dig deeper to analyze more clearly why Vietnam has become a bright spot in economic growth this year.
The news page of the International Monetary Fund (IMF) has an article that Vietnam reverses the weak growth trend of Asia. The growth forecast chart in 2022 shows that Vietnam is the only economy that has and will have positive growth for the whole year. Relatively low inflation is also an exception in the general rule of the whole region.
In the latest report of the World Bank, Vietnam's GDP growth has jumped from nearly 2.6% in 2021 to an expected rate of 7.5% in 2022. Meanwhile, average inflation the annual average can be controlled at 3.8%.
To achieve the recent impressive growth, according to newspapers and international organizations, it is a combination of many factors, especially the agile policy after the pandemic.
The IMF believes that the first half of this year has seen a big economic shift when it comes to loosening regulations on epidemics, safe adaptation strategies and outstanding vaccination rates. Low interest rate policies, strong credit growth and the government's economic recovery and development program have resulted in high output, retail and tourism recovery.
The Diplomat has an article explaining why Vietnam's economy has a bright and brighter future. According to the article, the positive assessment of the Vietnamese economy by international organizations is predictable to those who have been following Vietnam for a long time.
In the context of general difficulties, Vietnam has become a bright spot with its developed infrastructure, friendly investment environment, and success in controlling COVID-19.
Vietnam posted the strongest growth in Asia in the third quarter with a particularly pronounced recovery in the services and retail sectors. Along with policies to stabilize the macro-economy, this is also the basis for international organizations to believe in Vietnam's sustainable growth in the coming years.
According to the provisions of the Enterprise Law, foreigners can establish partnerships, limited liability companies and joint stock companies in Vietnam.
In order to establish a company in Vietnam, foreigners must first carry out the procedures for applying for an investment certificate in accordance with the provisions of the Law on Investment 2014.
After obtaining the investment registration certificate, the foreigner submits the enterprise registration dossier to the competent authority. Business registration documents vary depending on the type of business.
How to set up a foreign company in Vietnam according to the law of this country
Business registration application form.
Copies of personal papers such as citizen identification cards, identity cards, passports or other lawful personal identification of the members.
A copy of the Investment Registration Certificate for foreign investors in accordance with the Law on Investment.
Business registration application form.
Copies of the following papers: identity papers such as citizen identification cards, people's identity cards, passports or other lawful personal identification of individual members; The establishment decision, the enterprise registration certificate or other equivalent documents of the organization and the power of attorney; Citizen's identity card, people's identity card, passport or other lawful personal identification of the authorized representative of an organization member or identification papers of the authorized representative of the organization. founding shareholders and shareholders for foreign investors being organizations.
For a member or shareholder being a foreign organization, a copy of the Business Registration Certificate or equivalent document must be consular legalized;
Investment registration certificate for foreign investors in accordance with the Law on Investment
According to the provisions of the Investment Law 2014, foreigners are allowed to establish companies in Vietnam. However, before setting up a company in Vietnam, a foreigner must have an investment project and carry out the procedures to apply for an investment registration certificate, and at the same time must meet the following conditions:
Regarding the rate of ownership of charter capital: foreign investors are allowed to own charter capital in Vietnamese companies without restriction, except for the following cases:
Foreign investors who come to a new market for the first time to do business will still have many doubts and questions that need to be answered about the market, consumer habits, and legal policies of the host country.
The percentage of foreign ownership in listed companies, public companies, securities trading organizations and securities investment funds must meet the provisions of law on securities.
(Conditions for foreign enterprises to invest in Vietnam according to the law of this country)
The percentage of foreign ownership in state-owned enterprises which are equitized or converted into other forms shall comply with the law on equitization and transformation of state-owned enterprises.
The percentage of foreign ownership not falling into the above cases shall comply with other provisions of relevant laws and international treaties to which the Socialist Republic of Vietnam is a signatory.
Currently, when foreign investors want to set up a company in Vietnam, they need to go through many administrative procedures, requiring investors to have professional knowledge and qualifications to be able to successfully establish a company in Vietnam. Set up the company. But in reality, not all investors have the expertise to be able to carry out the procedure. Hopefully this article can provide the most complete knowledge for businesses to easily invest and develop their operations. Foreign investors who come to a new market for the first time to do business will still have many doubts and questions that need to be answered about the market, consumer habits, and legal policies of the host country.
When a foreign investor enters Vietnam to invest in a project, he/she must follow the procedures to apply for an Investment Registration Certificate. However, before completing the procedures to apply for the Investment Registration Certificate, in some cases, the investor must register the investment policy with the Provincial People's Committee (The first process in setting up a foreign capital company)
☑ Application for registration of the establishment of a company with foreign investment
Individuals and legal entities can use the following legal documents to form a foreign investment company in Vietnam:
☑ An individual is a foreign investor
There are 3 kinds of important records for individuals
# Head office lease agreement
# Confirm a bank with the same amount of capital as the investment share capital in Vietnam.
☑ Organization is a foreign investor
There are 5 types of records for organizations:
# Business registration certificate
# Operating charter of a foreign company (mergers and acquisitions)
→ Note. These two documents must be legalized at the consulate when returning to Vietnam for use.
# Profitable financial statements or bank confirmation equal to the amount of money intended for investment in Vietnam.
# Headquarters lease agreement in Vietnam
# Decision to appoint a legal representative of companies in Vietnam.
Above are the basic conditions for establishing a company with foreign participants.
☑ Time for setting up a company with foreign capital
For investment projects not subject to investment policy decision: 15-20 working days from receipt of complete dossier.
For investment projects subject to investment policy decision: 05 - 10 working days from receipt of investment policy decision
☻ APPLICATION FOR THIS PROJECT POLICY IS ONLY FOR OTHER PROVINCES AND CITIES (EXCEPT FOR HO CHI MINH CITY AND HANOI DOES NOT APPLY)
☻ INVESTMENT LAW 2020, REQUIRES CONSULTATION WITH THE MINISTRY OF DEFENCE ON THE LOCATION OF THE COMPANY'S HEADQUARTERS (EXCEPT FOR THE FOREIGN INVESTOR'S OFFICE BUILDING)
Business registration application form.
List of founding shareholders and foreign investor shareholders (list of authorized representatives, if any)
Copies of the following documents:
Passports or other legal identity documents of participants who are individuals.
Enterprise Registration Certificate (ERC)
For a member who is a foreign entity, a copy of the Certificate of Business Registration or equivalent document must be legalized at the consulate.
This step is very important in order to obtain the green paper (IRC) INVESTMENT CERTIFICATE (WHITE PAPER)
After receiving the political decision of the Provincial People's Committee, proceed to register the establishment of the company.
This step includes REGISTRATION OF THE YELLOW BUSINESS CERTIFICATE (ERC)
An ERC application has a 5-day deadline.
After receiving a Certificate of Business Registration, a company must make a public announcement on the national business registration portal in accordance with the rules and pay the required fees.
The content to be announced includes the contents of the Certificate of Business Registration and the following information:
☑ Line of Business.
☑ List of Founding Shareholders and Foreign Investor Shareholders of Joint Stock Companies.
Implementing Agency: Business Registration Authority Reporting Unit
After obtaining the Certificate of Business Registration and posting the business incorporation application. The business engraves the seals at one of the licensed seal engraving sites. Enterprises determine the number and form of seals themselves, within the limits allowed by law.
1. Declaring and Paying License Fees Declare
The license fee once at the beginning of the business activity by the fee payer, no later than the last day of the month of the beginning of the business activity.
In case the levy payer has just set up a business but has not yet commenced production and operation, he/she must declare the license fee within 30 days from the date of the business registration certificate or date of issue of the license fee obtain investment registration and tax registration.
The deadline for payment of the license fee when starting a business is the last day of the deadline for filing the fee declaration file.
The license fee declaration file is the license fee declaration.
After coming into operation, the company shall pay the license fee annually by January 30 of each year.
2. Notification on the application of the method of calculation of Value Added Tax (VAT) (Form 06/GTGT)
(Note on Form 06/GTGT dated May 11, 2017. Businesses are not required to file Form 06/GTGT to register and change their VAT calculation method. This is one of the provisions of Circular No. 93/2017 /TT-BTC dated 19.09.2017 of the Ministry of Finance).
There are two VAT calculation methods: the deduction method (using VAT invoices) and the direct method (using sale invoices).
To apply the deduction method, the company notifies the tax authority on Form 06/GTGT; the deadline for submitting Form 06/GTGT is before the deadline for filing the first tax return.
3. Notification of use of tax authority services (if any)
Taxpayers who perform tax procedures through tax agents must notify the direct management authority in writing, attaching a certified photocopy of the taxpayer's service agreement, within 05 business days before the tax agent performs tax procedures for the first time as specified in the agreement.
4. Register for a personal tax code
When paying wages to employees, businesses must deduct personal income tax and offer each employee a tax code (if employees do not have a tax code). Individuals who receive wage or salary income authorize the income unit to perform tax filing and dependent filing procedures with the Internal revenue service (IRS).
5. Register with the tax authorities for electronic transactions.
Because Ho Chi Minh City has all the necessary infrastructure for information technology, firms based there must file their taxes online and pay them electronically.
With a publicly available digital signature, a business registers for online filing of tax return and electronic tax payment at: http://nhantokhai.gdt.gov.vn/
Provisions on capital accounts for foreign investors are spelled out in State Bank Circular 05/2014/TT-NHNN dated 03.12.2014 governing the opening and use of capital accounts for indirect investment for portfolio investment activities in Vietnam and Circular. 19/2014/TT-NHNN dated 08.11.2014 of the State Bank, Guidelines on Foreign Exchange Management for Foreign Direct Investments in Vietnam.
1. The business establishes a CAPITAL ACCOUNT (Note which clearly states the Bank about the capital account)
2. The capital contribution must be transferred to the CAPITAL ACCOUNT IN EFFECTIVE TIME AND FROM FOREIGN TO VIETNAM.
3. Notify the Department of Planning and Investment that the COMPANY has paid the capital in full and on time (Avoid being fined)