Setting up foreign company in Vietnam

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Vietnam government passed the new law on Investment No. 67/2014/QH13 (New LOI) in 2014, and the new law on Enterprises No. 68/2014/QH13 (New LOE), which replace the previous laws as from July 1, 2015. Certain notable provisions of the new laws are asbelow.

● Requirements Capital: There is no requirements on foreign investment amount and registered capital in Vietnam. But registered capital can not less than 30% of total investment amount. The registered capital of encouraged/ large investment project can be reduced to 20%.

● Structure Foreign investors (company/ individual) can adopt one among following three structures when setting up company/ factory in Vietnam:

1. Direct investment by foreign company / individual; |
2. Indirect Investment through one holding company (single holding );
3. Indirect investment through two holding companies (double holding ).

The 2nd and/or 3rd structure is widely used. There are some
through holding company:
1. Unlimited deferred offshore profits which can be used for re-investment;
2. Limited liability on overseas lawsuits (civil and criminal ), and financial liabilities against parent company.
The disadvantages of the single holding structure will occur when selling foreign assets, the parent company will be taxed for the profits. The parent company/individual will be exposed to unpredictable foreign risks and faces double-taxation problems. Therefore, the third structure - double holding is recommended.

● Procedures:
1. Setting up offshore holding company;
2. Collecting holding company documents;
3. Documents translation/ embassy notarization;
4. Checking proposed Vietnam company name;
5. Prepare the M&A and application form;
6. Evaluation of investment project by related authorities;
7. Issuance of the enterprise registration certificate;
8. Publish in newspaper gazette;
9. Seal registration, open bank account;
10. Tax, customs, and environmental protection registration.

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Requirements for a trading company in Vietnam
Minimum capital requirement in Vietnam

There is no official minimum capital requirement for setting up a trading company in Vietnam. However, founders need to ensure that the injected minimum capital is sufficient for covering all their planned expenses.

For

you must consider the following costs when establishing a trading company in Vietnam:

    Whether a storage room is necessary for your products
    What are the transportation expenses
    Whether you need a retail outlet for selling your products

Trading company’s business plan

Foreign investors aiming to establish a trading company in Vietnam must first present a business plan including the following points:

    Business activities and methods of doing business
    Business plan and market development
    Evaluation of the implications and socio-economic efficacy of the business plan
    Labor use

Financial plan

In addition to a business plan, foreign investors also need to submit a financial plan. Documents that need to be included in the financial plan are:

    Representation of capital
    Sources of funds and fundraising plans
    Other financial documents

If your enterprise has already been established in Vietnam for at least 1 year, you also have to submit an income statement on the basis of your last audited financial statement.

After having prepared all the information needed to set up your company in Vietnam, you can initiate to compile documents as following:

    A document to apply for investment registration certificate
    Registration/written request for issuing Certificate of

Certification of legal status of the founding shareholders:
    For the founding shareholder as legal personality: legalized copy (not more than 3 months from submission of document) of Establishment Decision, Certificate of Business Registration or other equivalent documents, Articles of Association or others equally. The documents in foreign languages must be translated into Vietnamese and certified by the company specialized in

Setting up foreign company in Vietnam

Narrowing or deregulating professions when establishing foreign owned companies.
Article 6 of the 2014 Investment Law outlines the limits of the prohibited business lines, rather than the previously explicit general prohibition in Article 30 of the 2005 Investment Law. According to the new regulations, Business will include: drug business; trading in chemicals and minerals; Trading in wild and endangered and rare wild animals and plants originating from nature; trading in prostitution; buying, selling human beings, tissues, organs, and business activities related to human reproduction. This spirit is also confirmed in Article 5 of the Investment Law 2014 with the regulation that investors are entitled to carry out business investment in lines and trades that this law does not prohibit.
Setting up foreign company in Vietnam

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