LLC Incorporation In Vietnam in 2023-24
Thinking to open a limited liability company in Vietnam can be a smart move for foreign investors looking to expand their business in Southeast Asia.
LLCs represent the most popular option for foreign investors because of their less liability and lower capital requirements. A limited liability company’s members are only liable for the business obligations up to their investment.
The process of incorporating an LLC in Vietnam is relatively straightforward, with low initial costs and a streamlined registration process. This makes it an attractive option for small and medium-sized enterprises (SMEs) looking to expand their business in Vietnam.
Vietnam possesses to be one of the quickest-rising economies in the region, with a rapidly expanding middle class and a young, skilled workforce. All these attracts entrepreneurs from different parts of the world to incorporate a company in Vietnam.
To incorporate LLC in Vietnam, you must understand the business concept, market, and resources required. Also, developing a comprehensive business plan and conducting market research are important.
This article feeds a detailed process of LLC incorporation in Vietnam. We’ll get right to it if you’re interested.
Steps to Open a Limited Liability Company in Vietnam
The process to open a Limited Liability Company in Vietnam typically involves the following steps:
Step 1:- Choose a company name and conduct a name search
Step 2:- Obtain an Investment Registration Certificate (IRC)
Step 3:- Open a bank account and deposit the minimum capital
Step 4:- Get a Business Registration Certificate (BRC).
Step 5:- Register for tax and obtain other necessary permits and licenses
The exact process and timeline for starting an LLC in Vietnam may vary depending on the location of the business and the specific requirements of the industry.
Numerous Documents Needed for LLC Incorporation in Vietnam
Additionally, the document list is contingent on the type of investment and whether the firm will be owned 100% by foreign investors, or partly held by international investors.
Here is a list of documents typically required to open a Limited Liability Company (LLC) in Vietnam:
- Memorandum of Association and Articles of Association
- Business registration application form
- The identity documents of the legal representative(s) of the company, such as a passport or national identity card.
- A lease agreement for the company’s registered address.
- A confirmation from the company’s bank verifying the deposit of the minimum required capital.
- A tax registration form and confirmation of tax code.
- A labour registration form and confirmation of the company’s labour code.
- Additional licenses & permits rely on the nature of the business.
Eligibility Criteria for LLC Incorporation in Vietnam
To incorporate LLC in Vietnam, certain eligibility criteria must be met.
Here are some of the key requirements:
The number of shareholders: An LLC in Vietnam must have at least two shareholders and no more than 50 shareholders.
Legal status: All shareholders of the LLC must have legal status, which means they must be individuals or legal entities recognized under Vietnamese law.
Capital requirements: An LLC in Vietnam must have a minimum charter capital of VND 10 million (approximately USD 430).
Business scope: An LLC in Vietnam can engage in a wide range of business activities, with some exceptions that are reserved for state-owned enterprises or prohibited by law.
Registered office: An LLC in Vietnam should possess a registered office in the country, whether it be a physical location or a virtual one.
Management structure: An LLC in Vietnam must have a management structure consisting of at least one legal representative and one director. The legal representative must be a Vietnamese citizen or a foreign national with a valid work permit.
Compliance with regulations: An LLC in Vietnam must comply with all relevant laws and regulations, including tax laws, labour laws, and business licensing requirements.
Legal Structure for Incorporating LLC in Vietnam
Foreign investors looking to incorporate LLC in Vietnam should be aware that from a company point perspective, a multi-member business is built on a three-tier structure:
- It should have a member council that is headed by a chairperson.
- It also must have directors.
- It should also be supervised by a board.
Members’ Council has to organize a single annual meeting, which is the equivalent of an annual general assembly of shareholders from other countries. The chairman of the council, this chairperson can serve for a maximum of 5 years.
These regulations are not required for LLCs that have only one member because they can be governed by one of the corporate structures listed below:
- They can also appoint a president and director.
- They can also appoint members of the council as well as directors.
Structures for Foreign Investors Looking to Open a Limited Liability Company in Vietnam
Opening a Limited liability company in Vietnam is the most used business structure around the globe since it is recognized by a majority of nations.
Vietnam has introduced a variety of changes to its laws, including new investment strategies as well as foreign investors that come here can establish businesses making use of these legal forms.
If you are looking to create a company within Vietnam as a Limited Liability Company then you have the option of choosing one of the following shareholding structures:
- An entirely foreign-owned business;
- A partially foreign-owned business that is also known in the context of a joint venture which has just one Vietnamese member can be a member.
The choice must also be by the area of business in the field in which the business is expected to operate. Additionally, LLCs can be divided into multi-member or one-member corporations.
Taxation on Vietnamese LLC Incorporation
Numerous taxation on Vietnamese LLC incorporation is subject to several types, including corporate income tax, value-added tax, and personal income tax.
The following are some of the key tax considerations to incorporate an LLC in Vietnam:
- Corporate income tax: LLCs in Vietnam are subject to corporate income tax on their taxable income at a standard rate of 20%.
- Value-added tax (VAT): The current standard VAT rate is 10%, with certain goods and services subject to a reduced rate of 5% or 0%.
- Personal income tax (PIT): The current PIT rates range from 5% to 35%, depending on the employee’s income level.
- Other taxes: LLCs in Vietnam may also be subject to other taxes, such as customs duties, special consumption tax, and environmental protection tax, depending on the nature of their business.
Costs to Open a Limited Liability Company in Vietnam
The initial costs for LLC incorporation in Vietnam will vary depending on several factors, including the size of the business, the location of the company, and the specific requirements of the industry.
However, here are some general expenses that businesses can expect to incur:
- Registration fee: The cost of registering an LLC in Vietnam is around VND 300,000 to VND 500,000 (approximately USD 13 to USD 22), depending on the location.
- Business license fee: The fee for obtaining a business license varies depending on the type of business and the location, but can range from VND 500,000 to VND 1,000,000 (approximately USD 22 to USD 44).
- Seal and stamp fees: Businesses in Vietnam are required to have an official seal and stamp, which can cost around VND 200,000 to VND 300,000 (approximately USD 9 to USD 13).
- Legal and professional fees: Businesses may need to engage legal and professional services to assist with the registration process. However, the cost of these services can vary but may range from USD 1,000 to USD 2,000 or more.
- Minimum capital requirement: Vietnamese LLC incorporation requires a minimum capital contribution, which varies depending on the type of business and the location.
Why incorporate LLC in Vietnam?
There are several reasons why a business might choose to incorporate an LLC in Vietnam:
- Vietnam has made significant efforts to improve its business environment and streamline administrative procedures, making it easier for businesses to set up and operate in the country.
- The Vietnamese government has implemented a range of policies and incentives to support businesses, particularly in areas such as manufacturing, infrastructure development, and innovation.
- Vietnam is located in a suitable location in Southeast Asia, with easy access to neighbouring countries and major trade routes. This can provide businesses with access to a large and growing market.
- Vietnam offers a competitive cost structure for labour, with a large pool of skilled workers and relatively low labour costs.
- Vietnam has one of the fastest-growing economies in the world, with a young and dynamic population, a growing middle class, and a rapidly expanding consumer market.
Conclusion
LLC incorporation in Vietnam can be a good option for entrepreneurs looking to invest or want to start a business in the country. LLCs offer limited liability protection, tax advantages, and flexible ownership structures, making them a popular choice for small and medium-sized enterprises.
However, as with any international expansion, it’s important to carefully consider the costs, risks, and regulatory environment before deciding to set up a business in Vietnam. It is best to seek advice from business experts of Odint Consultancy to help you incorporate LLC in Vietnam.
FAQ’s
Foreigners can start an organization in Vietnam and hold the company up to 100 per cent of the shares of the business. However certain industries do not permit full ownership.
In Vietnam, the term “Limited Liability Company” is used to describe it is a Limited Liability Company as an organization that is comprised of between one and 50 shareholders.
In an LLC, shareholders’ liability is only limited by the amount of money they’ve invested into the business. However, in an LLC members are protected from liability in some way or another by the specific jurisdiction.
Multi-member foreign-owned LLCs that are filed as partnerships must complete a U.S. tax return when they are involved in business or trade within the U.S.
The major benefit of the formation of an international LLC is the fact that it lets you conduct business in several states without needing to form separate LLCs for each state.
