Procedures for setting up foreign invested companies in Vietnam

What are the procedures for establishing a foreign-invested company? Are you a foreign investor or a partner looking to establish a foreign owned company? Are you looking to invest in Vietnam but do not know where to start? You are wondering how to set up a foreign-invested company? Let’s join Luatvn.vn with the Hotline / Zalo number; 0763387788 go find the answer below the analysis based on practical experience below.

Who is authorized to establish a foreign invested company?

The persons with the right to establish a foreign-invested company are listed and clearly defined in the following law:
Article 18 of the Law on Enterprises 2014: The right to establish, contribute capital, buy shares, purchase capital contributions and manage enterprises
1. Organizations and individuals have the right to establish and manage enterprises in Vietnam according to the provisions of this Law, except the case specified in Clause 2 of this Article.
2. The following organizations and individuals are not entitled to establish and manage enterprises in Vietnam:
a) State agencies, units of people’s armed forces use state assets to set up business enterprises to make profits for their own agencies or units;
b / Cadres, public employees and public employees in accordance with the law on cadres, public employees and public employees;
c) Officers, non-commissioned officers, professional servicemen, defense workers and officers in agencies and units of the People’s Army; professional officers and non-commissioned officers in agencies and units of the Vietnam People’s Public Security, except for those who are appointed as authorized representatives to manage the State’s contributed capital in enterprises;

d) Officials leading and managing professional operations in State enterprises, except for those appointed as authorized representatives to manage the State’s contributed capital in other enterprises;
dd) Minors; a person with limited civil act capacity or lost civil act capacity; organizations have no legal status;
e) Persons who are being examined for penal liability, serving imprisonment sentences, decisions on administrative handling at compulsory detoxification establishments, compulsory educational establishments or banned from business practice, holding positions case or do certain jobs, related to business as decided by the Court; in other cases according to the provisions of law on bankruptcy, prevention of corruption.
If so requested by the business registration agency, the enterprise registration registrant must submit the judicial record card to the business registration agency.
3. Organizations and individuals have the right to contribute capital, purchase shares, purchase capital contributions to joint-stock companies, limited liability companies or partnerships in accordance with this Law, except for the following cases:
a) State agencies and units of people’s armed forces use state assets to contribute capital to enterprises to gain profits for their own agencies or units;
b) The subjects are not allowed to contribute capital to enterprises in accordance with the law on cadres and civil servants.

4. Profits for their own agencies or units under Point a, Clause 2 and Point a, Clause 3 of this Article are the use of income in any form obtained from business activities, from capital contribution, share purchase, Purchase capital shares for one of the following purposes:
a) Dividing in any form to some or all of the people specified at Points b and c, Clause 2 of this Article;
b) Adding to the operational budget of the agency or unit in contravention of the law on state budget;
c) Establish a fund or add it to a fund to serve the individual’s interests of the agency or unit.
Thành lập công ty vốn nước ngoài
Thành lập công ty vốn nước ngoài

The current forms of investment to establish foreign-owned companies in Vietnam

The forms of company establishment with foreign investment are as follows:
Article 22. Investment in establishment of economic organizations
1. Investors may set up economic organizations in accordance with law. Before establishing an economic organization, the foreign investor must have an investment project, carry out the procedures for issuance of an investment registration certificate as prescribed in Article 37 of this Law and must satisfy the following conditions. here:
a) Ratio of ownership of charter capital as prescribed in Clause 3 of this Article;
b) The form of investment, the scope of activities, the Vietnamese partner’s participation in the investment activities and other conditions in accordance with the international treaties to which the Socialist Republic of Vietnam is a signatory.
2. Foreign investors implementing investment projects through economic organizations established under the provisions of Clause 1 of this Article, except for the case of making investment in the form of capital contribution, share purchase or capital contribution or investment under the contract.
3. Foreign investors may own an unlimited charter capital in a business organization, except in the following cases:
a) Ownership ratio of foreign investors in listed companies, public companies, securities trading organizations and securities investment funds in accordance with the law on securities;
b) The ownership ratio of foreign investors in state-owned enterprises that are equitized or converted to other forms shall comply with the provisions of the law on equitization and transformation of state-owned enterprises;
c) Ownership ratio of foreign investors not specified in points a and b of this clause shall comply with other provisions of relevant laws and treaties to which the Socialist Republic of Vietnam Is a member.
Article 23.- Conducting investment activities by foreign-invested economic organizations
1. Economic organizations must satisfy the conditions and carry out investment procedures under regulations applicable to foreign investors when investing in establishing economic organizations; investment in capital contribution, purchase of shares or capital contributions of economic organizations; Investing under a BCC contract falls into one of the following cases:
a) Having foreign investors holding 51% or more of the charter capital or having the majority of the general partners being foreign individuals, if the economic organization is a partnership;
b) Having an economic organization specified at Point a of this Clause holding 51% of the charter capital or more;
c) Having foreign investors and business organizations specified in point a of this clause holding 51% or more of the charter capital.
2. Foreign-invested economic organizations not falling into the cases specified at Points a, b and c, Clause 1 of this Article shall comply with the investment conditions and procedures prescribed for domestic investors. investment in establishing economic organizations; investment in the form of capital contribution, share purchase, or capital contribution of economic organizations; Investment in the form of a BCC contract.
3. If a foreign-invested economic organization has established in Vietnam, if there is a new investment project, it may carry out the procedures for implementing that investment project without necessarily setting up a new economic organization.
4. The Government shall detail the order and procedures for the establishment of economic organizations to execute investment projects of foreign investors and foreign-invested economic organizations.
Article 24. Investment in the form of capital contribution, share purchase or capital contribution to economic organizations
1. Investors have the right to contribute capital, purchase shares and purchase capital contributions to economic organizations.
2. Foreign investors investing in the form of capital contribution, share purchase, or capital contribution to economic organizations shall comply with the provisions of Articles 25 and 26 of this Law.
Article 25.- Forms and conditions for capital contribution, share purchase and capital contribution to economic organizations
1. Foreign investors may contribute capital to economic organizations in the following forms:
a) Purchase of shares issued for the first time or additionally issued shares of a joint-stock company;
b) Capital contribution to limited liability companies and partnerships;
c) Contributing capital to other economic organizations other than those specified at Points a and b of this Clause.
2. Foreign investors purchase shares or capital contributions of economic organizations in the following forms:
a) Purchase shares of a joint stock company from the company or its shareholders;
b) Buying capital contributions from members of limited liability companies to become members of limited liability companies;
c) Purchase of equity interests of capital contributors in partnerships to become capital contributors of partnerships;
d) Buying stakes from members of other economic organizations other than those specified at Points a, b and c of this Clause.
3. Capital contribution, share purchase, capital contribution by foreign investors in the forms specified in Clauses 1 and 2 of this Article must satisfy the conditions specified at Points a and b, Clause 1, Article 22. of this Law.
Article 26. Procedures for investment in the form of capital contribution, share purchase, capital contribution
1. An investor shall carry out the procedures for registration of capital contribution, share purchase, or capital contribution to an economic organization in the following cases:
a) Foreign investors contribute capital, purchase shares, or contribute capital to economic organizations operating in conditional business investment sectors or trades applicable to foreign investors;
b) Contribution of capital, purchase of shares or capital contribution leads to foreign investors, economic organizations specified in Clause 1, Article 23 of this Law holding 51% of charter capital or more of economic organizations. .
2. Application for registration of capital contribution, share purchase, capital contribution:
a) The written registration for capital contribution, share purchase, or capital contribution includes: information about the economic organization in which the foreign investor is expected to contribute capital, purchase shares or capital contribution; ratio of foreign investors’ ownership in charter capital after capital contribution, share purchase, capital contribution to economic organizations;
b) Copy of identity card, ID card or passport for individual investor; a copy of the Certificate of Establishment or another equivalent document certifying the legal status of the institutional investor.
3. Procedures for registration of capital contribution, share purchase, capital contribution:
a) The investor shall submit the application specified in Clause 2 of this Article to the Department of Planning and Investment where the head office of the economic organization is located;
b) If the contribution of capital, purchase of shares or capital contributions of foreign investors meets the conditions specified at Points a and b, Clause 1, Article 22 of this Law, the Department of Planning and Investment shall notify such by document within 15 days from the date of receipt of sufficient documents for the investor to carry out the procedures for changing shareholders, members in accordance with the law. If the conditions are not met, the Department of Planning and Investment shall notify the investor in writing, clearly stating the reason.
4. An investor other than those specified in Clause 1 of this Article shall carry out the procedures for changing shareholders or members according to law provisions when making capital contributions, buying shares or capital contributions of economic organizations. In case of a need to register the capital contribution, purchase of shares or capital contributions of an economic organization, the investor shall comply with the provisions of Clause 3 of this Article.

Profile of company with foreign investment

For foreign investors being individuals
Foreigners directly investing in establishing foreign-invested companies in Vietnam need to prepare:
• A certified copy of the passport of the foreign individual.
• Lease contract for company headquarters / location of investment project.
• A legal statement of the bank’s account balance.
For foreign investors being organizations
• Certified copy of business registration certificate, consular legalized
• Audited financial statements or certified by the tax authority in the most recent year, consular legalized
• Copy of ID card or passport of certified representative
• The company’s charter
• Authorization document of the organization for the representative of the capital contribution in the company to be established in Vietnam
• Profile proving experience and financial capacity of foreign investors
The process of establishing a company with foreign investment
The process of establishing a foreign-invested enterprise as well as establishing a joint venture with foreign elements will follow these steps:
Step 1: Procedure to apply for an investment certificate with a business investment project in Vietnam
Step 2: Carry out the application for an enterprise registration certificate
Step 3: Perform the initial tax declaration and tax reports monthly / quarterly / year.
In addition, after establishing a foreign-invested company, in the course of its operation, if you want to change any related content, then you need to carry out the procedure for changing the investment certificate. .
With many years of experience in the field of applying for a license to establish a business with foreign elements in Vietnam, luatvn.vn is committed to consulting to help you better understand procedures, legal regulations as well as environment. Investment schools in Vietnam most clearly, consulting investors’ questions such as how to proceed, how long does it take, who has the right to set up a business, what to do to respond conditions to apply for a license, and to perform the service of setting up a joint venture business and how to apply for a business investment certificate fastest … Please contact us for the best advice!
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Questions and answers about procedures for establishing a foreign-invested enterprise should be consulted:

1. How many types of investment are currently regulated under Vietnamese law?
Four investment forms in Vietnam are specified in the 2014 Law on Investment:
• Investment in establishing economic organizations;
• Investment in the form of capital contribution, share purchase, capital contribution to economic organizations;
• Investment in the form of PPP contract;
• Investment in the form of business cooperation contract – BCC.
2. What is the percentage of foreign investors’ ownership in charter capital?
The Law on Investment 2014 stipulates that the ratio of foreign investors’ ownership in charter capital is not restricted in economic organizations, except for the case where the economic organization is: listed company; public company; securities trading organizations; securities investment funds; State-owned enterprises equitized or converted to foreign ownership in accordance with relevant laws and international treaties to which Vietnam is a member.
3. Where should I register a business address in Vietnam?
Not every site can be used to register a company. The business address must be an address of a rental home or office building in which the owner has a license to operate as an office building.
4. What is the rate of value added tax (VAT) in Vietnam?
There are three VAT rates: 0%, 5% and 10%, depending on the nature of the transaction.
The tax rate of 0% applies to exported goods and services, international transport and non-value added goods and services; offshore reinsurance services; credit provision, capital transfer and arising financial services; post and telecommunications services; and the exported products that are exploited natural resources and unprocessed minerals.
5. What is the corporate income tax rate (CIT) in Vietnam?
The standard corporate income tax rate (CIT) rate is 20%,
Particularly for the search, exploration and extraction of oil and gas in Vietnam, the tax rate of 32% -50%, the search, exploration and exploitation of rare natural resources (including including: platinum, gold, silver, tin, precious stones, rare earth except oil and gas) the tax rate of 50%.
6. Procedures for setting up foreign invested companies
• Step 1: Apply for an investment certificate with a business investment project in Vietnam (Submit and apply for permission from relevant ministries)
• Step 2: Apply for a business registration license
• Step 3: Receive the result and complete the investor tax procedures
7. What is the difference between foreign-invested enterprises and foreign enterprises?
Foreign enterprises are established according to the procedures and procedures prescribed by foreign laws.
Foreign-invested enterprise in Vietnam means a company established and operating under the provisions of Vietnamese law.
8. Can foreigners set up business households?
Under the provisions of Article 67 of Decree 78/2015 / ND-CP, the subjects entitled to business household registration are Vietnamese citizens who are full 18 years old, have full legal capacity and civil act capacity; Households have the right to establish business households and the obligation to register business households according to regulations.
As a result, foreigners cannot set up business households. If you want to invest in business in Vietnam, you need to ask someone with Vietnamese nationality to act on behalf of the business household or carry out investment procedures and business registration in Vietnam.
9. Service of establishing a prestigious foreign capital company in Ho Chi Minh City?
With many years of experience in the field of applying for a license to establish a business with foreign elements in Vietnam, luatvn.vn is committed to consulting to help you better understand procedures, legal regulations as well as environment. investment school in Vietnam most clearly, consulting investors’ questions.
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