Starting a successful business in Vietnam

Southeast Asian jurisdictions are demonstrating high economic growth rates that significantly exceed the average for developed countries. However, registering a company in Vietnam can be beneficial for a whole range of reasons, rather than just individual factors such as GDP, foreign investment or favourable corporate legislation.

The country offers favourable conditions for launching commercial projects. Foreigners can quickly and inexpensively start a business in Vietnam, and they will have no problems with banking services, capital withdrawal, or the security of long-term investments. The tax climate here is very attractive. The state encourages investment inflows, foreigners are not restricted in their rights, and they can solely own commercial structures.

Requirements for registering a company in Vietnam are gradually being harmonised with international standards of transparency and control of financial flows, and the country is cooperating with regulatory organisations (FATF, OECD). The corporate services, logistics, hi-tech and knowledge-intensive manufacturing sectors are developing rapidly.

Vietnam’s business profile:

• Official language: Vietnamese (Latin script)
• Form of government: parliamentary republic
• location: Southeast Asia, Indochina Peninsula;
• Time zone: GMT UTC+7;
• currency — Vietnamese dong (VND), USD/VND exchange rate — 1:26135;
• main sectors of the economy — services, industry, agriculture, company registration, financial sector is actively developing;
• GDP —$ 430 billion, GDP per capita —$ 4.28 thousand

Advantages for investment and business

Registering a company in Vietnam is a simple and straightforward procedure, regulated by corporate law, with bureaucratic influence kept to a minimum. Therefore, businesses with interests in Southeast Asia can actively develop, taking advantage of the most favourable conditions. This is facilitated by Vietnam’s strong banking system, diversity of organisational and legal forms, economic stability, and government policy of attracting foreign investment.

The main advantages for starting and running a business are:

• a large domestic market (Vietnam’s population is just over 100 million), with the purchasing power of the country’s citizens constantly growing;
• strategic location at the intersection of regional and global trade routes, simplified access to ASEAN markets;
• a skilled workforce ready to develop creative and professional skills;
• business-friendly taxation in Vietnam;
• support for the corporate sector at the state level;
• incentives for high technology in Vietnam and financial developments based on blockchain;
• consistently high rates of economic development;
• flexible corporate requirements (it is possible to establish a joint-stock company in Vietnam or one of the alternative organisational and legal forms adapted to a specific business model);
• Vietnam has signed double taxation avoidance agreements with more than 80 countries;
• Foreigners are not restricted in their rights.
• Political and economic stability in Vietnam.
• you can obtain a residence permit or permanent residence for investment;
• Vietnam’s well-developed business infrastructure.

However, the key advantage of the jurisdiction is the absence of offshore status. De jure, corporate tax in Vietnam is set at a level typical of developed Asian middle-income countries. Therefore, the jurisdiction cannot be accused of facilitating aggressive tax optimisation and dubious financial flows. And investments in Vietnam are not associated with long-term risks.

Personal taxation

As in other developing jurisdictions in the region, which are traditionally referred to as second-wave Asian tigers (Indonesia, Malaysia, the Philippines, Thailand), the country has a progressive income tax system. The rules for residents and non-residents differ. Income tax rates in Vietnam on salaries range from 5% to 35%. Income from sources other than employment is subject to separate taxation (from 0.5% to 10%).

Conditions for granting tax resident status:

• residence in Vietnam for 183+ days (calendar year) or 12 consecutive months (counted from the date of arrival);
• permanent residence, owned or rented accommodation (for 183+ days per year) in Vietnam, if the individual cannot prove tax residency in another country.

When a foreigner does not meet any of these conditions, they are considered a non-tax resident.

Rates for individuals who are tax residents, income from employment:

Rates for individuals who are tax residents, whose income is not related to employment or is solely related to business:

Rates for individuals, tax residents, business income (qualifying condition — income of 100 million VND):

Rates for individuals, non-residents, income without division into separate groups:

Other personal taxes and fees:

• social insurance (paid by the employee and also by the employer) — 8%;
• health insurance — 1.5%;
• unemployment insurance — 1%.

Personal income that is not subject to taxation:

• net wealth;
• interest received on deposits and insurance policies (life, property);
• social pensions based on age;
• income from the transfer of property between family members.

Corporate taxation in Vietnam

The concept of tax residency does not apply when calculating corporate income tax. After registering a company in Vietnam, the entity must pay CIT (Corporate Income Tax) in any case. The tax liabilities of foreign business entities are determined based on the concept of permanent establishment (PE).

A permanent establishment of a foreign company in Vietnam includes:

• any format (branch, office, factory, mine, quarry, deposit, special equipment, etc.) used by a legal entity to exploit Vietnam’s natural resources;
• a structure providing consulting services through its employees;
• agent of a foreign legal entity;
• official representative of a legal entity in Vietnam, if he has the authority to sign contracts on behalf of the company.

When calculating tax liabilities, only the portion of income that was received directly in the jurisdiction is taken into account. When determining rates, the provisions of Vietnam’s double taxation agreements with other countries may apply; DTAs have greater force than the national tax code.

Corporate tax in Vietnam, the most important points:

• base rate — 20%;
• Higher rates are provided for — from 25% to 50% (oil and gas sector), from 32% to 50% (exploration and development of mineral resources);
• if several conditions are met, the company may apply reduced rates — 10%, 15% and 17%.

Other taxes applicable to legal entities:

• VAT rates in Vietnam are 0%, 5% or 10%;
• export duties — from 0% to 40%;
• Special Sales Tax (SST) — the rate depends on the goods (tobacco products, alcohol, cars/motorcycles, air conditioners, aeroplanes, etc.); imports are subject to SST twice;
• Property tax — paid by foreign companies and investors, the rate depends on the location (district), existing infrastructure and the business sector in which the legal entity operates;
• Land use tax — from 0.03% to 0.15% per m2;
• stamp duty — rates depend on the type of asset;
• profit from asset revaluation — standard corporate tax rate;
• capital gains tax in Vietnam — a rate of 20% is usually applied (profit from the sale of a stake in a local company); transfer of securities — 0.1% of revenue; from 2026, the rate of 20% of profit may be replaced by 0.1% of total revenue;
• dividend income — none (additional conditions apply);
• Interest and royalty income — standard corporate tax rate.

Legal forms of doing business

A limited liability company in Vietnam is a classic format for conducting commercial activities, allowing 100% foreign participation. When starting a business in Asia, a limited liability company is the standard form that is equally suitable for different basic conditions. However, corporate law in the jurisdiction provides for other options, giving investors and business people an additional level of freedom when launching a commercial project.

Types of companies in Vietnam:

Vietnam’s free economic zones

The opportunity to conduct business in a favourable tax climate can be achieved in several ways. The approach adopted in most offshore jurisdictions leaves many loopholes for financial violations. Vietnam’s free economic zones, which have a special tax regime, are a more versatile option. It ensures transparency and compliance with international standards designed to combat money laundering and terrorist financing. Therefore, compliance and auditing in Vietnam are approaching global standards, and the existence of FEZs (Free Economic Zones) removes questions about legal tax optimisation.

Conditions for corporate tax reduction in Vietnam for companies registered in free zones:

• up to 10%, up to 15 years — for all legal entities and any commercial projects;
• 10%, up to 30 years — for hi-tech companies;
• 10% for the education sector and healthcare sector;
• 100%, up to 4 years — for selected projects approved by the government, after which corporate tax will be reduced by 50% (up to 9 years);
• 50% reduction in income tax in Vietnam for local and foreign workers.

An additional benefit is a full exemption from VAT and import duties for 5 years (for certain categories of equipment, raw materials and supplies). There are other tax benefits in Vietnam, but their scope of application is much narrower.

The most well-known SEZs in the Free Economic Zone are:

• VSIP (Vietnam Singapore Industrial Park), the result of cooperation between the governments of Vietnam and Singapore, focused on modern industrial production;
• PDIP (Phuoc Dong Industrial Park) — a strategic centre for industrial development with modern infrastructure, specialising in logistics, green energy, construction, and steel production;
• HPIP (Hiep Phuoc Industrial Park) — a SEZ with a strategic location, offering favourable conditions for companies engaged in industrial activities;
• Dinh Vu Cat Hai Economic Zone — a major industrial and economic centre, the zone’s advantage is its location in the port city of Haiphong, the main activities of companies registered here are shipping, logistics and services;
• HKIZ (Hoa Khanh Industrial Zone) is an industrial and logistics centre focused on sustainable development and exports.

Financial services

Vietnam’s banking system is highly developed, with a wide range of services available to private and corporate users, and the operating conditions of financial and credit institutions are geared towards customer comfort and satisfaction. Therefore, in most cases, there is no need to open accounts abroad. KYC (Know Your Customer) and AML (Anti-Money Laundering) regulations are fully complied with in Vietnam, but it is possible to become a customer of a financial institution without any significant problems. There are at least 40 banks operating in the country, so companies and individuals can choose a financial partner that meets their specific requirements, completely eliminating any disadvantages associated with a lack of choice.

The banking system of Vietnam includes three main types of credit institutions:

It should be noted that the level of comfort for customers of financial and credit organisations in Vietnam is growing. Advanced internet banking tools have become the norm, and most services can be accessed online. Financial service providers are actively investing in their own digital platforms , and the level of transaction security fully complies with modern requirements.

Features of doing business in Vietnam

All organisational procedures are regulated by corporate law. It is focused on supporting business and creating attractive conditions for foreign investment inflows. FATCA and CRS have been formally implemented in Vietnam’s regulatory documents. However, the automatic exchange of financial information (AEOI, Standard for Automatic Exchange of Financial Account Information) is still operating in a limited mode.

Legal conditions for starting and operating a business:

• a registered office is mandatory;
• after registering a company in Vietnam, in most cases it must appoint an official legal representative;
• nominal service is permitted;
• It is possible to establish a business in Vietnam within 15-20 business days (full cycle, including registration with the tax authority and obtaining licences).
• KYC/AML rules in Vietnam require disclosure of information on beneficiaries;
• Contributions to the company’s authorised capital can be made in foreign currency, but current operations are conducted only in VND.
• The approximate time frame for opening a bank account is no more than a month, and potential clients undergo a rigorous credit check.
• Basic information about the company, its personnel and business is publicly available (NBRP, National Business Registration Portal).
• FATCA and CRS in Vietnam restrict banking secrecy, but this approach is common to all developed jurisdictions;
• Maintaining business operations requires annual costs ranging from$ 300 to $1,000 (depending on the field of activity and size of the company).
• Compliance with KYC/AML rules is mandatory in Vietnam.
• The creation of holding structures is permitted.
• Foreign investors and businesspeople can obtain long-term visas.

Audits are mandatory for companies registered in Vietnam in the following cases:

• a company with foreign capital;
• public companies;
• a company that meets any of the following conditions:
  • income of VND 50 billion (approximately £$ 1.91 million);
  • $assets of at least VND 20 billion (approximately £765,800);
  • at least 200 employees.

Investment Residence Permit Programme

The opportunity to invest money in the country’s economy in exchange for a long-term residence permit or citizenship is a feature of most classic offshore jurisdictions. Vietnam’s long-term business visa did not previously offer all the options of an investment residence permit, but it was a working tool chosen by businesspeople, investors and founders of technology start-ups.

Key features of the programme:

• the investment visa is valid for 1 to 10 years
• the visa can be extended;
• multiple entries are permitted without restrictions;
• simplified work permit application process;
• Possibility of sponsorship for spouse and children under 18 years of age
• Possibility of obtaining permanent resident status and citizenship.

Investment residence permit options:

Recommended business areas for registering a company in Vietnam

The choice of commercial interests is based on an analysis of a number of key factors, including established business connections, ease of obtaining licences (permits), flexibility of corporate legislation, available financial reserves, and the overall state of the economy in a particular jurisdiction.

Political stability in Vietnam provides maximum freedom in choosing a direction for business. This is facilitated by a developed market for banking and corporate services, modern means of communication, a favourable tax climate and an advantageous geographical location. It should be noted that Vietnam’s manufacturing centre and the availability of skilled labour make hi-tech businesses possible. This option remains unavailable to many offshore companies.

The best industries for investment in Vietnam:

• Industry. Vietnam’s manufacturing centre is not far behind China in terms of capacity. It offers an affordable and skilled workforce, developed infrastructure and low taxes. Vietnam’s time zone also simplifies business operations in the Southeast Asian region.
• Software development. Vietnam is one of the world’s leading outsourcing centres. Companies that want to optimise production costs in software development enter into contracts with local contractors. Salaries in this sector are significantly higher than in the rest of the country, which is why the IT sector is developing rapidly.
• Renewable (green) energy. The shift away from oil and gas in favour of alternative sources is a global trend driven by environmental concerns. Vietnam’s favourable climatic conditions (many sunny days, strong winds, full rivers) are conducive to any commercial ventures based on renewable energy sources.
• Agriculture, food industry. Vietnam can no longer be called an agrarian country, but it has managed to preserve its fertile land. Local farmers grow and supply coffee, tea, cotton, pepper, soybeans, sugar cane and bananas to the world market. Fish and seafood are a stable source of revenue for the state budget.
• Tourism and services. Vietnam is a country with a rich historical heritage. It has many ancient monuments and Buddhist temples, and offers excellent conditions for a comfortable and secure holiday. Therefore, the tourism sector generates consistently high profits, creating interesting opportunities for profitable business.
• Effective business planning. Vietnamese holding companies allow you to launch and develop projects related to the protection of personal and corporate assets. Such opportunities are in demand among clients who want to preserve their savings and build a legal structure for tax optimisation.

Conclusion, conclusions

There is now a wide choice of countries in which to launch a cross-border business. If stability, predictability, minimal risk and a good reputation are your priorities, you can register your company in a European or Asian jurisdiction. In cases where the task is to optimise taxation or protect assets, one of the offshore jurisdictions is often chosen.

Registering a company in Vietnam is an interesting and fully functional option that combines the advantages of onshore jurisdictions and tax-free territories. Corporate legislation encourages business by creating comfortable and secure working conditions.

You can easily open an account in Vietnam (personal or corporate) and get access to a wide range of modern financial services. Registering and running a business does not involve significant difficulties or restrictions, and all KYC/AML requirements are met in this jurisdiction. Nominee services in Vietnam increase the level of confidentiality and minimise the risk of information leaks.

The corporate segment operates with state support and incentives, and the influence of bureaucracy is minimised. Investors and business people can obtain a Vietnamese business visa, and significant funds are being invested in the development of infrastructure and logistics. Several legal forms are available for registration, each of which is geared towards specific models of commercial operations.

Business English in Vietnam eliminates communication problems and makes it easier for foreigners to do business. You will be able to withdraw profits or invest them in project development without restrictions. The minimum authorised capital in Vietnam for company registration encourages the launch of start-ups and small businesses, and strict intellectual property protection laws allow for the development of projects in the field of hi-tech and advanced technologies.