Q&A about business establishment consulting, personnel recruitment, virtual office rental and accounting and tax services

1 How long does it take to register a company in Vietnam?

2 What are requirements to obtain a Work permit?

3 What tax obligations that companies need to follow in Vietnam?

How long does it take to register a company in Vietnam?

Vietnam has made significant efforts to liberalize its business environment and attract foreign investment. Over the years, the government has implemented reforms to simplify procedures and reduce bureaucratic obstacles, making it easier for both local and foreign entrepreneurs to start businesses.

  •  To set up a Vietnamese company, the regitration process takes only 3-5 working days.

  •  To set up a foreign company, the timeframe for enterprise registration can vary, but it typically takes 20-45 working days.

Tip

Foreigners can buy over a Vietnamese company for some of the potential advantages:

 

+) The ownership transfer process takes only 10-20 working days.

+) Less paperwork than setting up a foreign company from beginning.

+) Capital contribution is not an issue.

+) Easier to register some conditional business lines.

 

While there are advantages to acquire an existing company as a foreigner, there are also potential disadvantages that should be considered. It's important to seek professional advice from Zora Consulting, and carefully assess the potential disadvantages before you proceed with an acquisition.

What are requirements to obtain a Work permit?

In Vietnam, foreign nationals are generally required to obtain a work permit to legally work in the country. The requirements for obtaining a work permit in Vietnam can vary depending on the specific circumstances and the type of work being performed. Here are some general requirements:

  • Qualification relevant to the position;

  • Working experience relevant to the position in previous overseas company (at least 3 to 5 years);

  • Criminal record;

  • Health check;

  • Business license & proper profile of the employer company;

  • Consular legalization of the qualification and recommendation letter.

Tip

Obtaining a work permit for the "Director cum legal representative position" is relatively easier compared to other positions. The company management could take into consideration to appoint the Director or Deputy Director as one of the Legal Representatives on business license for easier Work Permit process.

What tax obligations that companies need to follow in Vietnam?

Foreign companies operating in Vietnam are subject to the following tax obligations:

  1. Corporate Income Tax (CIT): Foreign companies are generally subject to Corporate Income Tax on their taxable income generated in Vietnam. The current standard CIT rate is 20%. However, certain industries or activities may qualify for preferential tax rates or tax exemptions under specific investment incentive schemes.
  2. Value Added Tax (VAT): Foreign companies engaged in the sale of goods, provision of services, or import/export activities in Vietnam are required to register for Value Added Tax. The standard VAT rate is 10%, with some goods and services subject to a reduced rate of 5% or eligible for VAT exemption.
  3. Withholding Tax (WHT): Foreign companies may have withholding tax obligations when making payments to residents of Vietnam or non-resident individuals or entities. Common types of payments subject to withholding tax include dividends, interest, royalties, and service fees. The rates and applicable withholding tax obligations depend on the nature of the payment and the recipient's tax residency status.
  4. Personal Income Tax (PIT): Foreign companies employing individuals in Vietnam, including both local and foreign employees, have an obligation to withhold and remit Personal Income Tax on salaries and other taxable benefits provided to their employees. The Personal Income Tax rates range from 5% to 35%, depending on the income level.
  5. Social Insurance and Health Insurance: Foreign companies must contribute to the Social Insurance and Health Insurance funds for their employees in Vietnam. The contribution rates are based on the employees' salaries and are subject to periodic adjustments.
  6. Foreign Contractor Tax (FCT): Foreign companies providing certain services or executing contracts in Vietnam may be subject to Foreign Contractor Tax. The tax rate varies depending on the nature of the service or contract and can range from 1% to 10%.

Tip

It's important to note that tax regulations and rates can change over time, so it is advisable to consult with our tax advisor to ensure compliance with the latest tax obligations. We can provide specific guidance based on the activities and circumstances of your foreign company in Vietnam.