Procedures for Establishing a Foreign-Invested Business in Vietnam

Vietnam has become an attractive destination for foreign direct investment (FDI). However, establishing a foreign-invested business involves a more complex process than setting up a purely domestic enterprise. Investors need to clearly understand the key steps, particularly regulations regarding the Investment Registration Certificate (IRC) and the Enterprise Registration Certificate (ERC).

A foreign-invested business is an enterprise established in Vietnam with capital contribution from foreign individuals or organizations. Depending on the proportion of foreign capital, the business may be wholly foreign-owned or a joint venture between Vietnamese and foreign investors. This type of enterprise operates under the provisions of the Investment Law and the Enterprise Law, and is generally required to obtain an Investment Registration Certificate (IRC) before being established and commencing operations.

According to Article 21 of the 2020 Investment Law, foreign investors may carry out investment activities in Vietnam through various forms, including:

• Establishing a foreign-invested enterprise from the outset, with foreign ownership ranging from 1% to 100% of charter capital;
• Contributing capital, purchasing shares, or acquiring equity in a Vietnamese enterprise that has been granted an Enterprise Registration Certificate;
• Signing a Business Cooperation Contract (BCC);
• Or investing under a Public-Private Partnership (PPP) contract.

To establish a foreign-invested business in Vietnam, investors must meet several basic conditions:

• Be an individual or organization from a country or territory that is a member of the WTO;
• Have a registered office and implement the investment project in accordance with the registered business objectives;
• Not operate in prohibited sectors and only register in areas where Vietnam has opened for foreign investment under international commitments;
• Demonstrate financial capacity, showing the ability to provide capital for project implementation.

Investors may choose an appropriate business form such as a Limited Liability Company (LLC) or a Joint Stock Company for registration and operation in Vietnam.

Investors can establish a foreign-invested business in Vietnam through the following two methods:

One common method for foreign investors to participate in business activities in Vietnam is contributing capital, purchasing shares, or acquiring equity in an existing Vietnamese enterprise. This approach helps shorten procedural time and offers more flexibility compared to establishing a new foreign-invested business.

The process consists of three main steps as follows:

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Step 1: Establish a 100% Vietnamese-Owned Company

First, a Vietnamese company must be legally established with an Enterprise Registration Certificate.
Foreign investors may refer to the application and procedures for company establishment described in the direct investment guide (Step 2 above).

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Step 2: Obtain Written Approval for Capital Contribution or Share Purchase

Before foreign investors contribute capital or purchase shares, the Vietnamese enterprise must obtain written approval from the Department of Planning and Investment where the enterprise is located.

Application documents for capital contribution, share purchase, or equity acquisition include:

• Registration application for capital contribution, share purchase, or equity acquisition by the foreign investor;

• Notarized copy of personal identification (ID card/passport) for individual investors;

• Consular legalized copy of the certificate of establishment or business registration for organizational investors;

• Copy of the enterprise registration certificate or investment certificate of the Vietnamese company receiving the capital;

• Capital contribution or share purchase agreement between the parties;

• Declaration with a copy of the land use right certificate of the Vietnamese company (if applicable under points b and c, Clause 2, Article 24 of the 2020 Investment Law);

• Authorization letter for the applicant, together with a notarized copy of the ID card/passport of the authorized person.

Submission location: Investment Registration Office – Department of Planning and Investment of the province/city where the enterprise is located.
Processing time: Approximately 10 working days from the date of receiving complete documents. The competent authority will issue a written notice approving the conditions for capital contribution or share purchase by the foreign investor.

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Step 3: Complete the Capital Transfer Procedure to the Foreign Investor

After receiving the written approval, the parties proceed with transfer of shares or equity to the foreign investor in accordance with regulations.

Transfer documents include:

• Transfer agreement and contract liquidation minutes;

• List of members/shareholders after completing the transfer;

• List of foreign investors (for joint stock companies), including information of authorized representatives;

• Valid identification documents of individual investors (ID card/passport);

• Consular legalized copies of organizational legal documents for foreign corporate investors;

• Authorization letter (if applicable) and identification documents of the authorized person.

Submission procedure:
The enterprise may submit directly at the Business Registration Office – Department of Planning and Investment or submit online via the National Business Registration Portal using a public account or digital signature.

Processing time: Approximately 5–7 working days from the date of receiving valid documents. Upon completion, the enterprise will be issued a new Enterprise Registration Certificate reflecting foreign investor information.

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Important Notes

• If a foreign investor contributes capital or purchases shares in an enterprise operating in the education sector, it is mandatory to obtain an Investment Registration Certificate before proceeding.

• When transferring shares to a foreign investor (for joint stock companies), the transferor is obligated to declare and pay personal income tax (PIT) at a rate of 0.1% of the transfer value to the directly managing tax authority.

After obtaining the Enterprise Registration Certificate, a foreign-invested business must carry out several mandatory legal and administrative procedures to ensure compliance with the law.

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1. Publicize business registration information

Within 30 days from the date of issuance of the Enterprise Registration Certificate, the company must publish its business information on the National Business Registration Portal.

Failure to publish or late publication may result in administrative penalties under Clause 1, Article 26 of Decree 50/2016/ND-CP, with fines ranging from VND 1,000,000 to VND 2,000,000.

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2. Seal engraving and use

Immediately after receiving the Enterprise Registration Certificate, the company must create a round company seal and position seal for the legal representative.

According to Article 43 of the Enterprise Law 2020, the company has full discretion over the number, form, and content of its seals. Seal usage must be consistent across contracts, transactions, and official documents.

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3. Create and display company signage

Pursuant to Clause 4, Article 37 of the Enterprise Law 2020, the company must design and install signage at its head office, branches, representative offices, and business locations.

The signage must clearly display:

• Company name as registered in the business registration certificate;

• Enterprise code;

• Registered office address;

• Phone number or contact information (if available).

Failure to display signage at the business location may result in fines from VND 10,000,000 to VND 15,000,000, under Clause 2, Article 34 of Decree 50/2016/ND-CP.

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4. Obtain a digital signature

Digital signatures are mandatory for businesses to perform electronic administrative obligations such as:

• Online tax declaration and payment;

• Electronic customs declaration;

• Electronic social insurance declaration;

• Transactions via the National Single Window portal;

• Participation in online bidding.

Digital signatures can be purchased from service providers licensed by the Ministry of Information and Communications.

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5. Open a corporate bank account

After receiving the Enterprise Registration Certificate, the company must open a commercial bank account in Vietnam to facilitate financial operations, transactions, and tax payments.

Once the account is opened, the company must notify the Department of Planning and Investment (if required) and contribute the registered capital on time as specified in the Investment Registration Certificate.

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6. Submit initial tax registration documents

According to Clause 2, Article 33 of the Law on Tax Administration 2019, within 10 working days from the issuance of the Enterprise Registration Certificate, the company must perform initial tax registration at the directly managing tax authority.

Initial tax registration documents typically include:

• Enterprise tax registration declaration form;

• Copy of Enterprise Registration Certificate;

• Power of attorney (if submitted through an authorized representative);

• Other forms as required by the local tax authority.

Late submission may result in fines under Article 13 of Decree 125/2020/ND-CP, ranging from VND 2,000,000 to VND 25,000,000, depending on the severity.

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7. Submit license fee declaration

A foreign-invested company must submit the license fee declaration to the directly managing tax authority before January 30 of the year following the establishment, according to Clause 1, Article 10 of Decree 126/2020/ND-CP.

For companies established in the last six months of the year (from July 1 to December 31), only 50% of the first-year license fee is required.

After declaration, the company must pay the license fee via the electronic tax portal or a commercial bank.

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8. Notify issuance of e-invoices

Before issuing invoices, the company must register for use and notify issuance of e-invoices to the tax authority.

Required documents include:

• E-invoice issuance notification form;

• Decision to apply e-invoices;

• Sample invoice to be used.

The tax authority will review and approve before the company officially issues invoices.

Some reputable e-invoice providers include EasyInvoice, Viettel, Bkav, MISA, M-Invoice, among others.

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9. Complete procedures for foreign employees

If the company employs foreign workers, it must complete the following documents and permits:

• Obtain approval for the use of foreign labor from the Department of Labor, Invalids, and Social Affairs;

• Apply for a Work Permit;

• Apply for a visa and temporary residence card for foreign employees after approval.

These procedures must comply with Decree 152/2020/ND-CP and its guiding documents.

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10. Apply for a business license (for trading activities)

If the company engages in wholesale, retail, or distribution of goods in Vietnam, in addition to the Enterprise and Investment Registration Certificates, it must apply for a business license (distribution license) at the Department of Industry and Trade where its head office is located.

Required documents include:

• Application form for business license;

• Enterprise Registration Certificate and Investment Registration Certificate;

• Documents proving financial capability and commercial experience;

• Detailed business plan.

After obtaining the business license, the company is eligible to conduct wholesale, retail, and distribution activities in Vietnam.

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