Conditions for establishing a company with foreign capital in 2024

What are the conditions for establishing a company with foreign capital?

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What are the conditions for establishing a company with foreign capital?

Conditions for establishing a company with foreign capital in 2024

With the current integration trend, it is easy to see that many foreign companies want to operate in Vietnam. According to Vietnamese law, in order to do business in Vietnam, companies must meet the conditions for establishing a company with foreign capital. Establishing a foreign-invested company is a preeminent legal service in which Viet My provides comprehensive, well-founded consulting services quickly and reliably. We are ready to take on difficult tasks quickly to ensure that all your requirements are met. Read our analysis to help you better understand the process of establishing a foreign company.

Content:

1. What is a foreign invested company?

According to the provisions of the Investment Law 2020, this type of enterprise is not mentioned directly but is only defined as a general term in Article 3 as follows: “Foreign-invested enterprise organization is an organization enterprises in which foreign investors are members or shareholders.”

2. Conditions for establishing a company with foreign capital in 2024

Since Vietnam joined the International Trade Association, more and more foreign traders have come to the Vietnamese market to do business. However, different countries have different laws, making it more or less difficult for overseas Vietnamese. If investors do not clearly understand the conditions, regulations and requirements of each industry, they will hesitate to invest. Next, Viet My will mention the conditions for establishing a foreign-invested company that companies must meet.

2.1 General conditions when establishing a company with foreign capital

Investing in projects that are harmful to national defense, security, and public interests.
Invest in projects that destroy Vietnam’s historical, cultural, ethical traditions and fine customs.
Invest in projects that harm human health, destroy resources, and destroy the environment.
Invest in hazardous waste treatment projects brought into Vietnam from abroad. Production of toxic chemicals or use of toxic substances is prohibited by international treaties.

2.2 Conditions in specific fields when establishing a foreign-invested company

a. Conditions for establishing a foreign company in the manufacturing sector:

Foreign investors need to ensure that the project location is consistent with the local development plan.
Must have financial capacity to implement the project.
Maintain environmental conditions, order and safety.

b. Conditions for establishing a foreign-invested company in the field of commerce

A foreign investor must secure a location for the project.
We need financial capacity and experience to implement the project.
The import, export, and distribution of goods must have HS codes, not subject to bans, export restrictions, import bans, distribution, and in accordance with the roadmap that Vietnam established when joining the WTO.
Comply with the Certificate issuance conditions, investment capital and legal capital conditions prescribed for each specific field.
Meet the foreign investor quota in any project.

c. Conditions for establishing a foreign company in the service sector:

Foreign investors can only register service industries in which Vietnam has committed to open its market when joining the WTO.
When joining the WTO, certain conditions must be met according to Vietnam’s service commitment plan.
A foreign investor must secure a location for the project.
Investors must prove their capacity and experience in implementing the ongoing investment project.
Investors must prove they have enough financial capacity to carry out the project.

3. Some notes when establishing a foreign-invested company in 2024

Foreign investors, including foreign individuals and foreign companies, can establish companies in Vietnam with ownership rates from 1% to 100%, depending on the investment field.
Conditions for establishing a foreign-invested company vary depending on the field in which the investor is establishing.
According to WTO obligations and Vietnamese law, a number of industries can be easily established in Vietnam such as: Trade, import-export, investment consulting, management consulting, software sector, real estate , construction, restaurants, tourism, manufacturing (requires factory in industrial park)…
There is no minimum capital contribution level for investors, except for professions that require charter capital but must be consistent with the business field of the established company. However, the amount of contributed capital affects the investor’s application for a work permit and temporary residence card, and only the investor who is the capital contribution management agent can be exempted from the work permit and receive the card. If the investment amount is 3 VND or more, the validity period of the temporary residence card will be longer if the investor makes a large investment.
Foreign investors bringing capital at the time of establishment are required to submit financial proof in the following way: For individuals, bank book, bank balance, etc. For corporations, bank balances, tax returns, profit and loss statements, etc. However, submitting these documents is not mandatory when a foreign investor invests and purchases shares.
Procedures for establishing a foreign-invested company require additional documents for real estate, office, or loan contract, while real estate documents for rented houses, offices, and headquarters must be submitted along with the application. establish. However, this condition is not mandatory for Vietnamese companies and procedures for repurchasing investments. The director, legal representative or capital manager of a foreign-invested company can be a foreigner or Vietnamese.
Foreign-invested companies also receive an Enterprise Registration Certificate (ERC) from the Business Registration Office of the Department of Planning and Investment, where the headquarters is located, just like Vietnamese companies.
Foreign-affiliated companies that introduce 1% of capital from the beginning or foreign-affiliated companies operating in the field of education must issue an investment registration certificate (IRC).
The main difference between a foreign-invested company and a Vietnamese-owned company is that the company must open an investment capital account to contribute capital and then repatriate profits.
Unlike Vietnamese companies that are responsible for their own share of capital, foreign-invested companies are obliged to contribute capital to capital accounts and their capital share is monitored through investment reports.
The investment term for foreign-invested enterprises is specified in the Investment Registration Certificate. Therefore, if the investor has not deposited capital, the bank holding the investment capital account will not accept late deposited capital. To carry out investment procedures, it is necessary to adjust the investment registration certificate and extend the investment term. Procedures for declaring tax, value-added tax, and corporate income tax for foreign-invested companies are the same as for Vietnamese companies. However, foreign-invested enterprises must have their accounts audited annually.
In addition, foreign-invested enterprises that have been issued an annual investment registration certificate must complete procedures for reporting foreign investment, investment monitoring and evaluation reports, and project implementation reports.

4. Procedures for registering the establishment of a foreign-invested company

Procedures for establishing a company with 100 foreign capital are carried out as follows:

Step 1: Application for issuance of Investment Registration Certificate accompanied by the establishment of a foreign-invested economic organization

Within 15 days, the investment registration agency shall issue an Investment Registration Certificate to the investor from the date of receipt of valid documents if the project meets the following conditions:

Not belonging to industries or professions banned from investment or business as prescribed in Article 6 of the Investment Law and international treaties on investment.
Determining the location of the investment project is based on valid copies of documents on land use rights, location lease contracts or any other papers and documents determining the right to use the location. To carry out investment projects.
Investment projects according to the plan specified in Clause 7, Article 31 of this Decree.
Meet the investment rate conditions for the area determined by the Provincial People’s Committee on the basis of the actual situation in the area and approved by the Standing Committee of the Provincial People’s Council (if any) and the number of employees employed. use (if any).
Meet market access conditions for foreign investors.

Step 2: Proceed to apply for a business registration certificate

Documents to establish a foreign company applying for a business registration certificate:

Business registration application
Company rules
Our founding members and shareholders
Power of attorney
Notarized copy of the enterprise’s investment registration certificate
Notarized copy of identification documents of the legal representative of the enterprise
Agency reviewing business registration documents: Provincial/City Business Registration Office.
Business registration certificate issuance date: 5-8 working days

Step 3: Apply for a business license for a company doing business in many conditional industries

According to the provisions of Decree 09/2018/ND-CP on goods purchase and sale activities and activities directly related to goods purchase and sale of foreign investors and foreign-invested business organizations in Viet Nam:

Retailing is the sale of goods to individuals, households and other organizations for consumption.
Import-export and wholesale of goods (not in the following industries)
Lubricant; Rice; Street; The articles are recorded. books, newspapers, magazines).
Investors must issue a business license if participating in retail activities or establishing a retail business.

5. Frequently asked questions about conditions for establishing a company with foreign capital

5.1 Do companies with foreign capital receive investment incentives?

Yes, but foreign companies can only receive the same investment incentives as Vietnamese companies.

5.2 What taxes must companies with foreign capital pay?

Foreign-invested companies must pay the same taxes as Vietnamese companies: Value Added Tax, Special Consumption Tax, Import-Export Tax, Corporate Income Tax. For foreign employees, income tax is calculated based on total income.

5.3 When does establishing a company with foreign capital require an investment certificate?

The Investment Law 2020 allows two ways to establish a foreign company in Vietnam: Registering to establish a foreign-invested enterprise according to Article 22; register foreign investment and purchase shares according to Article 24; Therefore, the procedures when registering to establish a new foreign-invested company must be followed.

5.4 How long does it take to establish a foreign-invested company?

It takes about 15-20 working days to apply for an investment license and 5-8 working days to apply for a business license to establish a foreign joint stock company. Total setup time is approximately 20-30 business days.

5.5 What is the type of choice for investors when establishing a foreign-invested company?

Normally, there are three main types of establishment of foreign-affiliated companies in Vietnam: Single-member limited liability company (an individual or an investment group); Limited liability company from 2 to 50 employees (2 or more individuals or 2 or more groups); A joint stock company has three or more shareholders.

Above is the most detailed information about the conditions for establishing a foreign-invested company that Viet My has compiled for your reference. Luat va Ke toan Viet My hopes that this article has provided useful knowledge for investors. You can also refer to useful procedures for Vietnamese companies such as procedures for mobilizing investment capital for foreign companies.

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Author

Nguyen Thanh Phuc

Mr. Nguyen Thanh Phuc has more than 15 years of experience in business administration, consulting, legal support, tax and strategic consulting. Mr. Nguyen Thanh Phuc is a leading expert in the field of Law and Accounting in Vietnam, founder of the Viet My Law and Accounting brand, which has successfully franchised more than 30 branches nationwide. Viet My is the only Vietnamese brand reputable enough to franchise and succeed in the fields of Law and Accounting.

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