Interested in starting a business in Vietnam? This short guide provides information about the main business structures available and some of the key features of the business climate in Vietnam. Our team is ready to help you with all the procedures involved in company formation, and can provide you with other business-related services in Vietnam.
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Main company types available in Vietnam
Foreign investors who choose Vietnam to do business can benefit from a competitive and skilled workforce, a strategic location, and numerous business opportunities. In Vietnam, various types of companies can be easily registered:
- the limited liability company is the most popular business structure in Vietnam. There is no minimum share capital required; however, entrepreneurs should prepare around USD 10,000 for company formation costs in Vietnam;
- the joint stock company is another business entity available in Vietnam. At least 3 shareholders can set up this structure, plus a board of directors and a supervisory board;
- the Foreign-Owned Enterprise (FOE) is another suitable option for international investors in Vietnam. Joint ventures with local partners are also available when establishing an FOE;
- the sole proprietorship in Vietnam is known as a private enterprise. This business entity is optimal for single individuals starting their operations in Vietnam;
- branches are also available in Vietnam. These are extensions of foreign companies that can be established in Vietnam, under the local rules;
- A liaison/representative office in Vietnam can be established if the company owners from abroad want to test the local market. There are no economic activities involved, only marketing strategies;
- General and limited partnerships are also great business options for international entrepreneurs in Vietnam. Such a partnership can be established by at least two individuals, with specific capital contributions and various rules to adhere to.
Taxation in Vietnam
Here are some details about the taxes in Vietnam, which you should take into account if you have a company in this country:
- 20% is the standard corporate tax rate (CIT) in Vietnam. Lower rates ranging from 10% to 17% apply for companies operating in sectors like IT or in dedicated regions;
- companies activating in mining & extraction are subject to a CIT ranging from 32% to 50%;
- The Foreign Contractor Tax (FCT) in Vietnam ranges between 2% to 5%. This is the withholding tax applied to foreign companies gaining income in Vietnam through contracts with local partners/collaborators;
- 10% is the standard VAT rate in Vietnam. Lower rates apply to specific products and services available for sale in Vietnam;
- the personal income tax (PIT) in Vietnam ranges from 5% to 30%, depending on the income.
Characteristics of the business climate in Vietnam
If you want to set up a company in Vietnam, it is good to know some of the most important characteristics of the business environment in this country. Our specialists have made a short list of key features:
- the Vietnamese government focuses quite a lot on attracting foreign investment, offering various incentives in the business environment, especially for those active in manufacturing, textiles, high-tech, etc.;
- Vietnam is one of the countries with the highest economic growth in recent years. In 2024, the country will register a GDP growth of almost 7%;
- Vietnam is competing with China in terms of competitive labor costs, skilled workforce, and affordable supply chain;
- even if the bureaucracy can be a headache, the country is in the process of digitalization to offer foreign entrepreneurs a modern and trendy business climate.
Do you want to know more about company incorporation in Vietnam? We invite you to discover the services offered by our team of specialists and contact us for comprehensive information.