Notes when establishing foreign direct investment enterprises

Notes when establishing an FDI enterprise

First, regarding business sectors investment

Foreign investors should carefully consider and choose the necessary and sufficient business sector to operate the business. 

Preferably, investors should decide on the sectors that have been clearly committed by Vietnam in the international bilateral or/and multilateral treaties to avoid the risk of being rejected when registering fields/sectors that are not yet open to the market. 

Some investment fields/business sectors are associated with the requirements for the corresponding amount of feasible investment capital or the corresponding specific business permits if they are in the list of conditional business sectors. 

Therefore, the elimination of business sectors that are not or are not really necessary will help the investor save maximum time and costs to carry out arising legal procedures as well as obtain most convenience when registering and implementing investment and business activities in Vietnam.

Second, regarding foreign investors

Foreign investors investing in Vietnam can be individuals (also known as entrepreneurs) or foreign legal entities. Most of the normal investment fields and business sectors that have been fully opened by Vietnam are regulated to allow investors to be individuals or to establish foreign capital companies in Vietnam. In other words, there is no limitation for the investors to be individuals or legal entities. 

However, there are still some conditional business sectors that specifically require investments on whether the investors must be an individual or a legal entity, which can be determined through a combination of investment conditions for all registered investment fields/sectors based on scope of Vietnam's commitment to market opening and the provisions of Vietnamese law, if any. 

Third, regarding investment capital, charter capital to establish an FDI enterprise in Vietnam

Currently, Vietnam's market-opening commitments and Vietnamese law only regulate the investment limit conditions of projects to establish FDI enterprises in certain fields such as education, real estate business, travel, payment intermediary, etc.  For the rest of other business sectors, there are no regulations on investment limits, investors only need to ensure the feasibility of the amount of investment capital commensurate with the scope and scale of the project.

In order to determine the appropriate amount of investment capital and charter capital, The investors need to determine the total investment limit conditions (if any), for all investment fields/sectors (if any), have a specific financial plan to ensure feasibility when implementing the project, avoid registering less than necessary, which leads to many time-consuming and costly adjustments.

Fourth, regarding the contribution of charter capital after establishing an FDI enterprise in Vietnam

It should be noted that the contribution of investment capital and charter capital must comply with the registered date shown on the Investment Registration Certificate, the company's charter and Vietnamese law. 

Accordingly, it should be noted that the effective date of investment capital and the Company's charter capital contribution in Vietnam (for both LLP and JSC) is registered by the Investors within 90 days from the date of the Certificate of Enterprise Registration.

 The investors will have to make an investment capital contribution by transferring to an investment capital account opened by an FDI company in Vietnam under the request/instruction of the State Bank of Vietnam. 

Fifth, regarding choosing a location for investment and establishment of company

Investors should pay attention to the following points when choosing a location for investment and establishment of a company:

• Select a location to invest and establish an FDI company in Vietnam with clear addresses;

• Select a lessor with sufficient documents to prove ownership or/and the right to lease/sublease, if any;

• The place/office for lease is permitted, designed and built in accordance with Vietnamese law, and is not in dispute. The leased office needs to be located in the area designed and built for the office function on the basis that the construction has been licensed by the competent state agency of Vietnam.

Sixth, regarding using the company's seal

An FDI enterprise is allowed to use the company's seal. Specifically, an FDI company in Vietnam has the right to decide on the form, content and number of its seals, and may have many seals with the same form and content.

Seventh, regarding the employment

An FDI enterprise in Vietnam may hire foreign or Vietnamese workers to work at the company. However, if there is a foreign worker, the Company must carry out the procedures for approval to use foreign workers, issue of Visa, work permit, temporary residence card according to the following conditions and procedures of Vietnamese regulations.

Eighth, regarding the legal representative

The legal representative of the Company in Vietnam is an individual representing the company to exercise rights and obligations arising from the company's transactions, representing the company as a claimant, defendant, persons with related interests and obligations before the Arbitration, the Court and other interests and obligations under the law.

Limited liability companies and joint stock companies in Vietnam may have one or more legal representatives. The company must ensure that there is always at least one legal representative residing in Vietnam. 

If the Company has only one legal representative, that person must reside in Vietnam and authorize in writing another to perform the interests and obligations of the legal representative when leaving Vietnam. In this case, the legal representative is still responsible for the performance of the authorized interests and obligations.

Ninth, regarding the implementation of tax obligations

Every year, each company in Vietnam must pay a licensing fee (from 2 to 3 million VND depending on the registered charter capital); must pay corporate income tax when there is a profit; declare and pay Value-Added Tax (VAT). Depending on the business sectors and investment fields, companies in Vietnam may also have to pay taxes such as export tax, import tax, excise tax, etc.

Vietnam also has many regulations on investment incentives on corporate income tax when investing in incentive investment fields or investing in areas with difficult and intensively difficult socio-economic conditions.

Tenth, regarding the investment project report

Foreign-invested companies in Vietnam established under foreign-invested investment projects must strictly and fully comply with the investment project reporting regime, register an account and comply with the project reporting regime through the National Investment Portal.

Above are some points to note when establishing a foreign-invested company in Vietnam.