10 Questions to Ask Before Setting-up Company in Vietnam | ANT Lawyers

Foreigners are encouraged to make investment in Vietnam through direct investment by Setting up company in Vietnam.

However there are restrictions in some cases in regard to investment capital, investment area, special licenses required. The investor is suggested to consult with a law firms in Vietnam for advice and service offering.

Before setting up business in Vietnam, ask yourself the following questions:

1. Which business should I invest in Vietnam?

There are non-conditional investment areas and conditional investment areas. Establishing company in the non-conditional investment areas are more simple than in conditional investment areas. Investment in IT services, manufacturing, management consulting, business promotion are a few samples of non-conditional investment areas. Example of conditional investment areas are real estate, trading, travel agencies, freight forwarding… which are more complicated with investment conditions. Investment conditions might also be changed over the time depending on the WTO commitments which Vietnam enters.

2. What should I name the business in Vietnam?

The company in Vietnam has to have Vietnamese name, and English name. The company could also have abbreviated name. The name of the company in Vietnam indicates the structure of the company, the business lines, and the name that differentiate against other businesses. For instance, the company could be named Alpha consulting limited liability company.

3. Where should I register the address of the business in Vietnam?

Not every address could be used to register a company. The address has to be an address of a house with leasing agreement or office building which owner has license to operate as office building.

4. What is the legal structure of the company?

Depending on the number of investor contributing capital, company could be set-up as one member limited liability company or two or more member limited liability company or joint stocks company.

5. How much capital is required to set-up a company in Vietnam?

The investment amount depends on the business plan and is subject to the approval of the provincial Department of Planning and Investment evaluating application dossier. In some business areas like real estate, banking and finance, minimum capital is required. In general for non-conditional investment area, the law does not specify the minimum capital to establish a company in Vietnam however the State agencies that evaluate investment plan could reject the investment project which are not feasible. Bank statement in foreign banks could be used to prove sufficient fund of investment capital.

6. Whom will be legal representative and work permit in Vietnam?

The investor will need to appoint the legal representative in Vietnam to oversee the business performance and take legal responsibility in Vietnam. If the legal representative is an expatriate, whom is a capital contributing member or owner of a limited liability company or a member of the Board of Management of a shareholding company which is registered to operate in Vietnam, he or she will be exempted from work permit in Vietnam. Otherwise, he or she will need to have a work permit to work in Vietnam legally. The work permit holder would then apply for temporary residence card to live in Vietnam as long as the work permit allows.

7. How long does it take to set-up a company in Vietnam?

It depends on what type, scale, and whether or not conditions are required. For a simple minimum capital without conditions to set-up, it would take 30 working days. For setting up company in conditional investment areas i.e. trading company in Vietnam, time would be lengthen due to the involvement of a number of State agencies approving the investment project and it would take 60 working days. For setting up company in other investments in areas requiring conditions to meet, time might be taken depending on the type of conditions and the government agencies evaluating the conditions of investment.

8. Whom will be granting the investment license in Vietnam?

For most of the investment projects, the provincial state agencies with the approval of the Department of Planning and Investment (DPI) will be granting the Investment Certificate in Vietnam. However, depending on the type, scale, and whether or not conditions are required, other Vietnam State agencies might be involved. For the case of trading company, ministry of trade and commerce, ministry of finance, provincial people’s committee will be reviewing the investment application dossier as well.

9. What are the tax liability in Vietnam?

Major taxes in Vietnam are corporate income tax, import and export tax, value added tax, and personal income tax in Vietnam. In some special areas, there are other taxes. The corporate income tax is currently at 22% and will reduce to 20% beginning 2016. Export is mostly encouraged as such the export tax is 0 however there are special cases when export tax is larger than 0. Import tax varies according to tariff. Value added tax is mostly at 10% however in some cases, VAT could be 5% or 0%. Personal Income tax varies according to income level and is applicable from VND 9,000,000 above.

10. What are mandatory reports submissions requirement in Vietnam?

Companies are required to keep accounting books, prepare and submit tax reports on monthly, quarterly and annually. Foreign companies are also required to have financial audit taken before the financial year end. The financial year in Vietnam is from January to December and the deadline to submit financial report is March 30th for the previous year. Other reports are required to be submitted at other State agencies.

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Change of Headquarter of Da Nang Immigration Department | ANT Lawyers

As of August 2018, according to the project for rearranging the administrative function of the Government and the Ministry of Public Security, Immigration Department of Da Nang has been merged into Immigration Department of Hanoi. Therefore, the procedures related to entry, exit of Vietnamese citizens and foreigners such as issuing visa, exempting visa, temporary residence card, permanent residence in Da Nang shall be implemented in Immigration Department of Hanoi.

Relating to the dossier and procedures carried out at the Immigration Department of Da Nang such as issuing passport, temporary residence card, permanent residence, the application shall be submitted to Immigration Department of Da Nang. Thereafter, this agency shall transfer such dossier to Immigration Department of Hanoi for approval. Finally, the results shall be returned to Da Nang.

For most of immigration procedures which used to be implemented in Immigration Department of Da Nang, such as issuing visa, the applicant shall submit dossier directly to Immigration Department of Hanoi. The change could possibly add up processing time, and inconvenience if there is requirement for re-submission, amendment and supplement.

ANT Lawyers law firm offer offices in both Hanoi and Danang, therefore could facilitate the process for individuals and businesses to register entry, residence permit in Da Nang for the smooth experience, to assist foreigners entering Vietnam doing business, setting up company and making investment.

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Change of Headquarter of Da Nang Immigration Department

As of August 2018, according to the project for rearranging the administrative function of the Government and the Ministry of Public Security, Immigration Department of Da Nang has been merged into Immigration Department of Hanoi. Therefore, the procedures related to entry, exit of Vietnamese citizens and foreigners such as issuing visa, exempting visa, temporary residence card, permanent residence in Da Nang shall be implemented in Immigration Department of Hanoi.

Relating to the dossier and procedures carried out at the Immigration Department of Da Nang such as issuing passport, temporary residence card, permanent residence, the application shall be submitted to Immigration Department of Da Nang. Thereafter, this agency shall transfer such dossier to Immigration Department of Hanoi for approval. Finally, the results shall be returned to Da Nang.

For most of immigration procedures which used to be implemented in Immigration Department of Da Nang, such as issuing visas, the applicant shall submit the dossier directly to Immigration Department of Hanoi. The change could possibly add up processing time, and inconvenience if there is requirement for re-submission, amendment and supplement.

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Temporary residence card for foreigner in Vietnam

If the foreign investor, the employee needs to reside in Vietnam to be able to facilitate the implementation of investment, labor contract, the investor and the employee needs to have the company sponsored and proceed to apply Temporary residence card in accordance with the purpose of residence in Vietnam.

Temporary residence card is a document issued by an immigration authority or a competent authority of the Ministry of Foreign Affairs to a foreigner who is permitted to reside for a limited period of time in Vietnam and is valid for visa replacement. When a temporary residence card is available, the foreign investor or worker will present a temporary residence card instead of a visa when entering, leaving Vietnam and is legally residing in Vietnam.

To avoid administrative fines or deportation for violations of the law on residence in Vietnam, foreign investors and employees need to follow procedures for applying for a temporary residence card suitable for the purpose of entry (symbol visa). Investors, employees who have appropriate entry visas (DT or LD visa) will be considered by the Immigration Authority to grant a temporary residence card.

For the application for a temporary residence card that requires the investor, the employee needs to have all business documents, proving that it is eligible to sponsor a foreigner and enter the country for the right purpose. Request a Certification of exemption from a work permit, work permit, entry visa for the right purpose, legal residence address in Vietnam.

When all of the above conditions are met, investors and employees shall carry out the procedures for applying for temporary residence cards in Vietnam so that they can reside, leave and enter in accordance with law. The duration of the temporary residence card is issued pursuant to the purpose of entry and the proposal of agencies, organizations and individuals. The temporary residence card is from 1 to 5 years but shorter than the passport duration by at least 30 days, specifically:

– Temporary residence cards with symbols NG3, LV1, LV2, ĐT and DH are valid for no more than 05 years.

– Temporary residence cards with symbols NN1, NN2, TT are valid for not more than 03 years.

– Temporary residence cards with the symbol LD and PV1 are valid for no more than 02 years.

When the temporary residence card expires, the foreign individual will be considered to request the sponsored company to apply for a new temporary rresidence card.

How ANT Lawyers Could Help Your Business?

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The Government Continues to Exempt Visas for Western European Countries

It has been announced on May 3rd, 2018 that visa exemption policy for 5 Western European countries has been extended as part of the Vietnam immigration policy to attract tourists to Vietnam. At the same time, the Government has decided to increase the exemption period from one year to three years.

Accordingly, the Government has a high consensus and the Prime Minister has decided to continue the visa exemption for five Western European countries, including England, France, Germany, Spain and Italy. As previous regulation, the visa exemption will be expired at the end of June 2018. The exemption period has also increased from one year to three years.

Visa policy is considered to be an extension of the tourism industry because Vietnam is a country has strict visa policies, with only visa exemption for citizens of 24 countries, much less than other countries in the region.

For example, Indonesia exempts visas from 168 countries, Malaysia 162 countries, Singapore or the Philippines 159 countries, Thailand 57 countries. Besides that, these countries apply the policy of issuing visas at the border and electronic visas.

Western Europe is considered a high-paying group. Statistics show that the first visa exemption year (2015) has 720 thousand guests. In 2016, the number of visitors increased 16%, turnover reached 202 million.

In 2017, Western European visitors reached 1.5 million people, contributing to the record of the first-time Vietnam reaching 12.9 million international visitors.

According to many experts, if visas for these countries are not renewed, tourism industry of Vietnam will lose 20% of its visitors from large markets with a loss of several hundred million USD. However, losses will not stop there, as guests may form a habit of not coming to Vietnam.

This new immigration regulation will start from July 1st, 2018.

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Three Difficulties in Applying Temporary Residence Card in Da Nang

In recent years, more and more foreigners are coming to live, work, study or to reside in Da Nang, therefore, many foreigners apply for Temporary residence card (TRC) for more convenience in Vietnam.

According to the regulation of Section 13, Article 3 of Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam, Temporary Residence Card (TRC)is a legal document issued by an immigration authority or a competent authority of the Ministry of Foreign Affairs to a foreigner who is permitted to reside in Vietnam for a certain period of time. This card has the same validity as a visa. Therefore, if the foreigners have TRC, they will reside and entry/exit Vietnam without applying for visa.

However, the process and procedures to apply for TRC would have many different practical applications in each province. Particularly in Da Nang, the issuance of temporary cards for foreigners is more challenging.

The first, for the issuance of a TRC, the foreigner must apply for suitable visa, the issuance of TRC is executed at the Immigration Department of the Da Nang City Public Security. The application for a visa in Da Nang is more complicated than in other provinces. It is necessary to have specific information relating to the operation and management of the enterprise which guarantee foreigner to enter Vietnam(if any). For the submission of dossiers to apply for the visa, the foreigner shave to submit by themselves or by the staff of their company. This makes it necessary for the foreigner or the sponsor have to spend the time to complete the procedure.

Secondly, after having a valid visa, the foreigners should apply the TRC at the Immigration Department of the Da Nang City Public Security. The dossiers for applying the TRC is regulated in the Article 37 of the Law on enter, exit, transit, and residence of foreigners in Vietnam. However, when applying for temporary residence cards in Da Nang, the Immigration Department could request more other relevant documents to the business, which is some time not found in the law, which poses challenges to applicant.

Thirdly, the granting of TRC to foreign investors, workers in Da Nang requires the confirmation of work permit exemption, work permits. The duration of the TRC issued will be valid for a period of two (2) years. As a result, for foreign investors, only have TRC with the validity term of 02 years are granted, instead of maximum 5 years, as provided for in Clause 2, Article 38 of the Immigration law. In order to be granted a TRC for a period of more than two years, the Immigration Department shall consider the business situation of the company, the tax payment status of the investor, etc. Therefore, if investors want to be granted TRC for more than 02 years, they need to work in Vietnam for a longer time and the business must be profitable.

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