Starting A Business In Vietnam 2023

Starting a business in vietnam 2023 - Legal issues for foreign investors

Except for cases of illegal investment such as tax evasion, money laundering..., multinational business and starting business in Vietnam are all in the incentive policy of the State.

According to the provisions of the Investment Law 2020, the Enterprise Law 2020, Vietnam's WTO commitments and the bilateral free trade agreements between Vietnam and countries in the region and the world, foreigners established companies in Vietnam in most service industries and commercial businesses. Learn some legal issues to keep in mind when starting a business in Vietnam.

Satisfy licensing and approval requirements

It is necessary to distinguish offshore investment from establishing a business (enterprise) abroad but not doing direct business, for example setting up a company under the "offshore" model just to use it as an investment tool. Business investment abroad is mostly subject to approval from state agencies.

Decree 83 in 2015 replaces Decree 78 in 2006 of the Government guiding the Investment Law 2014 which has added regulations on outward investment. The Ministry of Planning and Investment will approve investment abroad when enterprises meet the conditions on investment, finance, and fulfill domestic tax obligations.

Follow Vietnamese laws on foreign investors' investment in Vietnam

Considerations when hiring a director abroad

Detailed regulations on whether the representative or holding the position of director is usually a citizen of the host country, or the hiring of a foreign director can be through a contract or form of trust in his name, all need to be considered. legally mentioned. The main problems that occur are causing losses and losses to the enterprise during the operation, breaking the agreement to hire that director when there is high profit or the business project fails.

Compliance with tax and financial obligations

The investor must obtain the tax authority's certification of tax payment obligations before investing abroad. The completion of tax procedures with the tax authorities of the host country needs special attention.

Investors always choose a country with a low tax rate to invest, as well as Vietnam, in order to enjoy incentives, they must go through legal procedures. It is also necessary to consider whether the country has an agreement to avoid double taxation with Vietnam (signed with 73 countries and territories, as of August 1, 2015) to maximize tax benefits.

Overseas company or domestic business

Some Vietnamese enterprises, especially start-ups, choose to locate their headquarters abroad and do business in the country. If you are a foreign enterprise, doing business in Vietnam will have to comply with the Law on Investment.

Therefore, it is necessary to consider choosing the nationality of the enterprise from the beginning to avoid problems later, in this case it can be determined to be a business without a license.

Choosing a form of business establishment in Vietnam is very important because of the specific legal characteristics of this country

Transfer capital abroad

The forms of money transfer services, travel money or through illegal transactions to conduct investment have been warned by the authorities. The capital transfer will be carried out after being granted an offshore investment registration certificate and approval from the host country.

Transfer of investment capital abroad and vice versa must be through an account opened at a domestic credit institution under the approval of the State Bank.

The government has regulations on repatriation of profits

Within a certain period from the date of annual tax finalization, the investor must remit all profits earned to Vietnam. Some exclusions are the use of profits for capital raising, business expansion or reinvestment. If there is a delay, the investor must report to the competent authority. Some investors have considered using exclusion methods to limit remittances to Vietnam.

Always give priority to those who are committed to investment

Similar to investment incentives in Vietnam, many countries also give preference to investment in certain industries, as well as "priority" for entrepreneurs with long-term investment commitments. Once the investor brings great benefits to a country, that country's government never tightens the policy restricting the investor's settlement or long-term residence.

Early protection of intellectual property rights

Some Vietnamese brands have been registered by foreign enterprises before investing in that country. Intellectual property rights are global and are playing an increasingly important role.

Buon Ma Thuot or Vinataba coffee registered abroad are two of the many Vietnamese brands that have been "stolen" and cost a lot to get back. Registering and having a good plan to protect intellectual property should be a priority to establish business rights in a certain country.

The issue of intellectual property rights is always a difficult issue to solve in Vietnam nowadays

Using foreign workers

Each country has policies to protect workers in relations with enterprises. When employing foreign workers, it is necessary to comply with the Labor Law of that country, especially the issue of insurance contributions and pay attention to tax issues for employees.

Many countries apply standard labor policies according to the International Labor Organization (ILO), so the conditions are stricter than in Vietnam.

Understanding Trade Barriers

After knowing the applicable tax rates for planning into the business plan, non-tariff barriers need to be carefully considered. Specifically, import and export quotas, customs procedures, technical requirements, anti-dumping, anti-subsidy and safeguard...

Understanding these regulations is not only to eliminate risk, but also to help find opportunities in that country, or compare opportunities between countries for investment options.

Sectors and trades that are not allowed to invest in business in Vietnam

Currently, there are many business lines with restrictions that do not allow foreigners to participate in business activities.

Enterprises established by foreigners will not be allowed to provide services of sending workers to work abroad under contracts (labor supply);

Foreigners are not allowed to do business in inspection and certification services for means of transport.

The process of starting a business is clearly defined in Vietnamese law

Process to start a business in Vietnam

Before going to look at the current cost of setting up a foreign-invested company, we must also understand the general issues when setting up this type of company. The process and time to carry out procedures for establishing a company with 100 foreign capital will now be carried out in the order of steps to establish a company as follows:

• Step 1: Carrying out procedures to apply for an investment certificate to a competent state agency, the time to carry out this procedure lasts from 30 to 45 working days.

• Step 2: Apply for a license to carry out business registration and establishment procedures for companies and businesses, the time to carry out this procedure is usually 3-5 days.

• Step 3: Announce to the state agency about the content of business registration on the national portal, this procedure usually takes 1 day.

• Step 4: Engrave the seal, and carry out procedures to apply for a seal sample; This procedure usually takes 3 working days.

• Step 5: Apply for a tax code with the state agency, the time to carry out this procedure is usually 5-7 working days.

• Step 6: Open a bank account for a foreign-invested company within 1 working day

• Step 7: Carry out procedures to declare license tax, the time to carry out this procedure is usually 5-10 working days.

Benefits of starting a business in Vietnam

Thanks to foreign direct investment (FDI) and strong private sector expansion, Vietnam is one of the fastest growing Asian economies with a high GDP growth rate.

Located in the heart of the Association of Southeast Asian Nations (ASEAN), Vietnam has a rather strategic position in terms of market access. Moreover, Vietnam has a long coastline and is close to the world's major shipping routes.

Vietnam is opening up to the global economy. It is a member of ASEAN, the ASEAN Free Trade Area (AFTA) and the World Trade Organization (WTO). It also has more than 60 double taxation treaties.

Vietnam's population is young, skilled and abundant. Literacy rate is over 90%.

Vietnam has a stable government and social structure, making it an ideal location for capital investment.

The statistics recently released by the Foreign Investment Department (Ministry of Planning and Investment) have once again shown that foreign investment in Vietnam continues to have a positive recovery trend.

Specifically, in 3 months, the total registered foreign investment capital in Vietnam reached 8.9 billion USD, while the disbursed capital reached 4.42 billion USD, up 7.8% over the same period in 2021.

Disbursed capital increased, according to the World Bank (WB), showing the "strong recovery" of foreign investment in Vietnam. The Foreign Investment Agency said that, thanks to the continuous and effective support of the Government and functional agencies, and the efforts of the business community to overcome the pandemic and adapt to the new situation, the The enterprise has gradually recovered, maintained and expanded its production and business activities. That is the reason why disbursed capital continuously increased over the same period in the first months of the year.

Hope this article can give you some interesting information about starting a business in Vietnam.