Lost in Vietnam’s Company Setup Maze? You’re Not Alone.

Ever feel like the paperwork, unclear legal points and language barriers could stop your Vietnamese venture before it even starts? It’s a common frustration for founders. Whether you’re a local entrepreneur looking to scale or a foreign investor looking to tap into this booming market, understanding the setup process is key.

Why does this matter so much? Because getting the foundation right determines how you operate, attract further investment and grow long term. Ensuring compliance with local tax and accounting requirements through reliable accounting services is essential.

My 15+ years of cross-border FDI experience gives this guide its practical edge – I’ve helped businesses avoid the pitfalls you might encounter.

Here are some key points before we get started:

• Two Paths: Foreigners and locals have different regulations, especially on ownership and licensing.
• Entity Choice Matters: Choosing the right legal structure (LLC, JSC, etc.) impacts liability, capital requirements and operational scope.
• Digital Shift: Vietnam is digitizing the registration process, changing how applications are handled.
• Compliance is Key: Understanding tax obligations and compliance from day one prevents future headaches. Opening a bank account is also necessary for managing financial transactions in Vietnam.
• Local Insight Helps: Navigating bureaucracy and cultural nuances often requires experienced guidance.

Company Setup in Vietnam

Setting up a company in Vietnam can be a great venture whether you’re a local entrepreneur or foreign investor. The country’s growing economy, strategic location and investment policies make it an attractive destination for business. But navigating the setup process can be complex. Whether you’re looking to set up a wholly foreign-owned company or a joint venture with a local partner, doing your market research and seeking expert advice can make all the difference. With the right preparation and support you can navigate the Vietnam company formation process and tap into this booming market.

Vietnam Business Landscape 2025 — What Founders Need to Know First

Before you start filling out paperwork, get the lay of the land. Vietnam is a standout in Southeast Asia, attracting significant foreign direct investment (FDI) and nurturing local entrepreneurship.

Vietnam 2025 Economic Snapshot

The economy continues to grow, driven by manufacturing exports, domestic consumption and integration into global supply chains. Government policies encourage investment for sustainable development alongside economic growth.

New Entrants Growth Sectors

Opportunities abound in:

• Manufacturing: Especially high-tech, electronics and sustainable production.
• Technology: Fintech, E-commerce and Software Development are booming.
• Renewable Energy: Government push creates opportunities.
• Infrastructure: Logistics and smart city projects require support services.
• Tourism & Hospitality: Recovering strongly and diverse investment opportunities.

Business Reform and Incentives for Startups

Vietnam is continuously improving its business environment. In recent years, it has streamlined administrative procedures. While 2025 policy changes are still evolving, the trend is towards digitalization and creating favorable conditions for innovative startups and high-tech industries. Keep an eye on official government portals for the latest directives, like the investment laws from 2025 as mentioned by advisory firm Acclime.

Why Local vs Foreign Investors Face Different Rules

It’s important to understand that the path isn’t the same for everyone.

Ownership Caps and Restricted Sectors (for Foreigners)

Foreign investors face ownership caps in certain sectors deemed sensitive or critical by the government (e.g. distribution, advertising, logistics). Some sectors are conditionally open, requiring specific approvals or joint ventures, while others are closed. You can find guidance on procedures and regulations through resources like eRegulations Vietnam portal.

Capital Contribution and Investment Licensing (for Locals vs Foreigners)

• Locals: Generally have a simpler process focused on business registration with minimum capital requirements depending on the business lines but less scrutiny on the source of funds compared to foreigners.
• Foreigners: Must go through investment registration process before business registration. This involves proving financial capacity and getting an Investment Registration Certificate (IRC), then an Enterprise Registration Certificate (ERC). Capital must be transferred through specific foreign investment capital accounts. Opening a bank account is also a necessary step in the company formation process for foreign investors.

3 Vietnam Company Law Trends to Watch

Stay ahead by knowing these changes:

1. Digitalization of Registration: The government is pushing for online submissions and digital signatures. Vietnam’s National Business Registration Portal is part of this effort to simplify the process. Founders should prepare for more digital interactions with authorities.
2. Tax Transparency: Globally, tax transparency is increasing and Vietnam is part of this trend. Expect more focus on transfer pricing documentation (for multinationals) and stricter enforcement of tax filings and payments for all companies. While major law changes aren’t detailed here, the direction is clear: compliance is key.
3. Sustainable Development: Policies are favoring investments in green technology and sustainable practices, sometimes tied to incentives.

You Might Also Like: How Foreign Investors Can Set Up a Business in Vietnam – Viettonkin

Choosing the Right Company Type — Suitable for Your Background

Selecting the right legal entity is a crucial decision.

Entity Options for Foreigners

• Wholly Foreign-Owned Enterprise (WFOE): Typically a Limited Liability Company (LLC) or Joint Stock Company (JSC) owned 100% by foreign investors. Offers maximum control but requires navigating investment approvals carefully.
• Joint Venture (JV): A partnership between foreign investors and Vietnamese partners. Often required in sectors with ownership restrictions. Requires careful partner selection and shareholder agreements.
• Branch Office: A branch office allows foreign companies to do business in Vietnam without creating a separate legal entity. It offers a broader operational scope compared to a representative office but comes with specific legal liabilities and regulatory requirements.

Representative Office: A representative office is a common and low-cost entry option for foreign companies looking to set up in Vietnam. It is suitable for first-time entrants to get market understanding with smaller initial investments and quicker setup times compared to other business structures.

Licensing Process (Foreigners):

1. Check: Determine if the business line is open to foreign investment and if there are ownership caps.
2. IRC: Submit project details, financial proof, and legal documents to get the Investment Registration Certificate.
3. ERC: Once the IRC is approved, apply for the Enterprise Registration Certificate to set up the company.
4. Post-Licensing: Get sub-licenses (if any), make the company seal, open bank accounts, and register for tax.

Options for Locals

• Private Enterprise: Owned by one person with unlimited liability. Simple setup but high personal risk.
• Limited Liability Company (LLC): Can have one member (single-member LLC) or multiple members (multi-member LLC, up to 50). Liability is limited to capital contribution. Popular choice for SMEs. Specific licenses or registrations may be required depending on the business sectors the company will operate in.
• Joint Stock Company (JSC): At least three shareholders, no maximum limit. Can issue shares and list on the stock exchange. More complex governance but suitable for capital raising.

What Locals Often Overlook: The key difference is liability. While LLCs and JSCs offer protection for personal assets, founders must still ensure proper corporate governance and separation between personal and company finances to maintain that shield.

Mixed Ownership Scenarios — What to Know

• Local Nominee Structures: Using a Vietnamese citizen to hold shares on behalf of a foreigner to bypass ownership limits is legally risky and generally not recommended. These structures can be deemed void and lead to penalties or loss of investment.
• Foreign Capital Injection: Foreign investors can buy stakes in existing Vietnamese companies. This process usually involves notifying or seeking approval from licensing authorities, depending on the ownership percentage and sector. The process often requires valuation reports and careful structuring.

Company Formation Process — For Locals and Foreigners

While specifics vary, the general stages are the same.

Pre-Incorporation Preparation

• Business Plan Checklist: Both locals and foreigners need a clear plan outlining activities, market analysis, financial projections and operational structure. Foreign investors’ plans are scrutinized more during the IRC phase. The company charter is also important as it outlines capital contribution and other fundamental elements for compliance with the Company Law and investment regulations.
• Due Diligence (Foreign Investors): Check sector restrictions, potential partners (for JVs), location suitability (zoning, industrial park benefits), and regulatory requirements before committing capital. The costs associated with the company incorporation process, including notarization of documents, should also be considered as they can vary depending on individual business needs and regional factors.

Licensing and Registration Steps

• Local Timeline: For Vietnamese founders setting up simpler entities (like an LLC in unrestricted sectors), the ERC process can be completed within a week or two after submitting proper documents.
• Foreign Founder Delay Points: After the IRC, the Business Registration Certificate is the next step in the process. The IRC process takes time – weeks, potentially months, depending on the project’s complexity, sector and location. Delays often come from incomplete documents, unclear business objectives or requests for clarification from authorities. Preempt delays with thorough preparation and potentially local expert support. The Vietnam company registration process offers various business structures, making it easier for individuals or businesses to set up a company in Vietnam.

Minimum Capital Requirements

When setting up a company in Vietnam, understanding the minimum capital requirements is important for both locals and foreigners. These requirements vary depending on the type of business entity and the industry you will operate in.

For most sectors, there is no strict minimum charter capital requirement, though certain regulated industries (e.g., real estate, banking, education) do have specific minimum capital stipulations. However, the Department of Planning and Investment will assess the registered capital to ensure it is sufficient to cover the business’s operational expenses. This assessment is crucial as it affects the approval of your business registration.

In Vietnam, the total investment capital of a company can include both charter capital and loan capital. Charter capital, also known as contributed capital, must be registered with the licensing authority. Any changes to the charter capital amount require prior approval from the local licensing authority.

• For an LLC, the capital must be registered but there is no fixed minimum amount for most sectors. USD 10,000 is a commonly suggested practical minimum for a credible setup, but not a legal requirement.
• A JSC requires at least three shareholders but no minimum capital requirement, making it a flexible option for capital raising.

Foreign investors can set up a wholly foreign-owned company or a joint venture with a local partner. The company registration process can be completed within a specified timeframe and includes obtaining necessary licenses such as the Investment Registration Certificate (IRC) and the Enterprise Registration Certificate (ERC).

Conducting market research is important to understand local business norms, accounting obligations and tax obligations. Companies in Vietnam are subject to corporate income tax, value-added tax and business license tax. The corporate income tax rate is 20% and the value-added tax rate is 10%. Companies must also file annual financial statements and audited financial statements with local authorities.

Overall, while setting up a company in Vietnam involves many requirements, understanding the minimum capital requirements, business structures and tax obligations can help ensure compliance and pave the way for a successful business venture. With the right guidance, foreign investors can establish and grow their business in Vietnam.

Post-Incorporation Tasks

• Mandatory Taxes and Declarations: Register for a tax code, declare and pay Business License Tax annually, set up accounting systems and prepare for Value Added Tax (VAT), Corporate Income Tax (CIT) and Personal Income Tax (PIT) compliance. While not strictly mandated for all company types, it is highly advisable to have a legal representative who resides in Vietnam, or to designate an authorized person in Vietnam, for practical and compliance purposes. ASEAN Briefing provides insights into CIT filing requirements.
• Hiring Employees & Opening Bank Accounts:Locals Foreigners
  • Relatively easy.
  • Opening bank accounts requires IRC, ERC and company seal. Bank account is necessary for financial transactions and compliance with local regulations.
  • Hiring requires compliance with labor laws including contracts and social insurance registration. Foreign hires need work permits.

Taxes, Incentives and Compliance — A 2025 Founder’s Guide

Understanding the tax landscape is non-negotiable.

Corporate Tax Essentials

• Rate Tiers and Thresholds: The standard CIT rate in Vietnam is 20%. However, some industries or projects may qualify for preferential rates. SMEs often benefit from simplified accounting or tax regimes. Documentation required for corporate shareholders must be prepared meticulously to ensure tax filings compliance.
• Cross-Border Transaction Pitfalls (Foreigners): Transfer pricing regulations require transactions between related parties (e.g. parent company and Vietnamese subsidiary) to be conducted at arm’s length. Withholding taxes apply to payments like royalties, dividends and interest sent abroad. Proper documentation is key to avoid tax authority challenges. Shareholder approval is required for significant business decisions related to investment projects to ensure regulatory compliance and smooth operation.

Incentives by Region, Sector and Founder Type

Vietnam offers incentives to attract investment in priority areas.

• Tech and Renewable Sectors: Often eligible for CIT reductions or exemptions for a certain period and potentially land rent incentives.
• Special Zones: Investments in designated industrial zones, economic zones or high-tech parks often come with attractive incentive packages. PwC's Tax Summary for Vietnam outlines some available credits and incentives. These incentives are detailed further by official sources and publications like Vietnam Briefing.

Compliance Calendar and Common Traps

• Annual Filings: Key deadlines include annual Business License Tax payment (usually early in the year), provisional CIT payments (quarterly), final CIT declaration (typically within 90 days of the financial year-end) and audited financial statements submission. Late filings attract penalties.
• Tips for Avoiding Audit Red Flags: Keep records meticulous, ensure all transactions have supporting documents, comply strictly with VAT invoicing rules and manage intercompany transactions carefully.

Legal, Financial and Cultural Landmines to Avoid

Many ventures trip over predictable issues. Here’s how to sidestep them.

Legal Gaps That Sink Companies Fast

• Labor Law Misinterpretations (Locals & Foreigners): Incorrect employment contracts, improper termination procedures or failure to pay social insurance can lead to disputes and heavy fines.
• IP Registration Failures (Foreigners): Assuming home-country trademark or patent registration protects you in Vietnam is a mistake. Register intellectual property locally early to prevent infringement or losing rights to local actors. Vietnam’s Trade Portal offers some basic information on trade regulations.
• Publicizing Founding Shareholders: It is necessary to publicize information about founding shareholders during the establishment of an entity. This includes details about legal representatives and officers which is crucial for legal compliance.
• Maintaining Records at Head Office: Businesses are required to maintain their records and significant documents, such as meeting minutes and financial statements, at their registered head office. This is important for compliance and operational transparency.

Banking and Capital Roadblocks

• Opening Local Accounts as a Foreigner: Requires specific documents (IRC, ERC, seal, legal representative's passport/visa). Delays can occur if documents aren't perfectly in order.
• Foreign Exchange Regulation Confusion: Rules govern how capital is injected, profits are repatriated and loans are managed. Non-compliance can freeze funds or incur penalties.

Cultural Disconnects that Kill Deals

• Negotiation Styles: Vietnamese negotiation often emphasizes relationship-building and indirect communication, contrasting with more direct Western approaches. Patience and understanding hierarchies are key.
• Hiring Practices (Locals): While hiring family can be common, scaling businesses often requires shifting towards merit-based recruitment to ensure competitiveness. Balancing loyalty and capability is a frequent challenge for local founders.

Expert Support and Strategic Next Steps

You don’t have to figure this out alone.

When and Why to Hire Incorporation Experts

• Cost vs. Risk: While DIY saves upfront fees, errors in licensing, tax registration or legal structure can cost exponentially more down the line in penalties, delays or restructuring. This is true for both local and foreign founders, though the complexity for foreigners often makes expert help more critical. Specific legal frameworks applicable to foreign entrepreneurs must be navigated carefully to ensure compliance and avoid costly mistakes.
• Common Tasks Outsourced: Document preparation and translation, submission follow-up with authorities, navigating specific licensing requirements, tax registration and initial compliance setup. Smart founders focus on their core business while letting experts handle the procedural hurdles. Adhering to Vietnamese laws relating to foreign investments is crucial, including the registration process and ongoing reporting obligations. Viettonkin Consulting’s Cross-Border Expertise

With over 15 years in Vietnam and the ASEAN region, my team and I at Viettonkin Consulting have seen it all.

• End-to-End Incorporation Success Stories: We’ve helped numerous foreign investors and local entrepreneurs from concept to launch and beyond.
• Regional FDI Insight Beyond Vietnam: Our experience spans Southeast Asia, so we can help you turn challenges into opportunities.

Your 30-Day Company Setup Plan (Conceptual)

Timelines vary, but here’s a conceptual sprint for a well-prepared setup (more realistic for locals or simpler foreign setups):

Need the details? We can help you create a realistic timeline for your situation.

Start Smart, Scale in Vietnam

Setting up a company in Vietnam is full of opportunities, but success depends on understanding the different paths for local and foreign founders, choosing the right structure and managing compliance from day one. The landscape is changing, with digitalization and new regulations in 2025.

For local entrepreneurs, it’s about leveraging the streamlined process while having robust legal and financial setup. For foreign investors, it’s about navigating the investment licensing and ownership rules.

Ready to grow in Vietnam? Partner with us at Viettonkin Consulting to turn challenges into wins. We have the regional expertise and hands-on experience to help you. Let’s talk how we can make your Vietnamese venture succeed—because when going for your next big thing, there’s only forward!

Read More: FDI in Vietnam: Essential Information for Setting Up a Foreign-Owned Company