Establishing a Foreign Company in the Import-Export Sector in Vietnam

Vietnam is becoming an attractive destination for foreign businesses looking to invest in the import-export sector. Establishing an import-export company in Vietnam offers numerous opportunities but also requires a clear understanding of the regulations, import-export tax policies, and customs procedures. Below is some essential information to help businesses navigate and operate smoothly.

1. Process of Establishing an Import-Export Company

To establish an import-export company in Vietnam, foreign investors need to understand the following information: Foreign investors are allowed to establish import-export and distribution companies in Vietnam, including:

• Foreign individuals who are citizens of WTO member countries or countries with free trade agreements with Vietnam
• Organizations or businesses that are nationals of WTO member countries or countries with free trade agreements with Vietnam.

Conditions for establishing a foreign-invested company engaged in import-export and distribution:

• The company's HS codes for goods must be on the list of unrestricted, non-prohibited import-export items according to Vietnamese law.
• A foreign-invested enterprise can only exercise the right to import, export, and distribute goods when it has the following two legal documents:
  • Investment Registration Certificate (if the investor contributes capital to establish from the beginning)
  • Enterprise Registration Certificate

Documents required for establishing an import-export and distribution company with foreign investment:

• For individual foreign investors:

  • Notarized passport of the investor

  • Proof of financial capacity to implement the project: Foreign investors need to prepare one of the following documents: Bank account balance confirmation or savings book in the investor's name with the amount equivalent to the investment in Vietnam.
  • Documents proving the project location and company headquarters: Lease contract for a house or office in Vietnam to register the company headquarters, notarized copy of the land use right certificate. If renting from a company, provide: Enterprise registration certificate (with real estate business function), land use right certificate of the leased property, construction permit of the building.

Note: Apartment buildings cannot be registered as company headquarters and project locations for foreign-invested companies.

• For foreign investors as organizations (foreign companies investing in Vietnam):

  • Notarized and consular legalized copy of the business registration certificate of the company in the home country
  • Notarized passport of the legal representative of the company in the home country
  • Notarized passport of the general director - the legal representative of the company in Vietnam
  • Notarized and consular legalized copy of the company's charter
  • Documents proving the financial capacity of the investor
  • Documents proving the project location and company headquarters through a lease contract for a house or office in Vietnam to register the company headquarters.

Steps to establish a foreign-invested company engaged in import-export and distribution

a) Apply for an Investment Registration Certificate:

• Submission location: Department of Planning and Investment where the headquarters is intended to be located.
• Processing time: Within 15 working days from the receipt of complete and valid documents, the Department of Planning and Investment will issue the Investment Registration Certificate to the foreign investor. 

b) Apply for an Enterprise Registration Certificate:

• Submission location: Department of Planning and Investment where the company is headquartered.
• Processing time: 03 – 06 working days.

2. Import-Export Tax Policies

In Vietnam, certain types of products are exempt from requiring an import or export license, reflecting the government's efforts to streamline trade and promote economic growth. However, businesses involved in import-export activities must still adhere to several key tax policies designed to protect and foster domestic production:

• Import Tax: This tax applies to goods imported into Vietnam, with rates varying based on the type of goods and their country of origin.
• Export Tax: Imposed on specific exported goods, particularly those related to national resources, to regulate and conserve these assets.
• Value-Added Tax (VAT): A 10% VAT is levied on most imported goods and services, consistent with the standard rate applied to domestic transactions.

3. Export Tax Incentives

Vietnam has various export tax incentives to promote export activities and competitiveness in the international market. The incentives include:

• Export tax exemption: Some export items are exempt from export tax to encourage export and reduce costs for businesses.
• Export tax reduction: Businesses may receive export tax reductions for specific items, depending on the government's policies at different times.
• Export tax refund: Businesses can receive a refund of the VAT paid on exported goods, helping to reduce costs and increase competitiveness.

4. Customs Procedures

Customs procedures are an essential part of the import-export process. Basic steps include:

• Customs declaration: Businesses need to fully declare information about the imported and exported goods through the electronic customs declaration system.
• Inspection and clearance: Customs will inspect the goods and the declaration information. Once the inspection is complete, the goods will be cleared.
• Payment of taxes and customs fees: Businesses need to pay all relevant taxes and fees before the goods are cleared.

Establishing a foreign company in the import-export sector in Vietnam presents many attractive business opportunities but also involves numerous regulatory and legal challenges. Understanding the regulations on import-export tax policies and customs procedures will help businesses operate efficiently and comply with the law. Export tax incentives and refunds are crucial highlights that help businesses reduce costs and increase competitiveness in the international market. If needed, businesses should seek professional legal and customs consultancy services to ensure smooth establishment and operation.