5 Steps to Register A Trading Company In Vietnam

Introduction 

Vietnam has become a bustling centre of global trade, drawing in investors with its strong economic expansion, advantageous geographic position, and welcoming business climate. Vietnam is a great place to establish a trading company since it has a rapidly growing consumer base of about 100 million and an exceptional GDP growth rate of 6-7% each year over the last ten years. The nation’s membership in many free trade agreements (FTAs) demonstrates its integration into international trade networks, which increases its 

attractiveness to foreign enterprises. Vietnam’s ranking in the World Bank’s Ease of Doing Business Index for 2023 was 70th out of 190 economies, indicating notable advancements in transparency and business rules. All this figures show how profitable it is to register a trading company in Vietnam.

We’ll cover the essentials of registering a trading business in Vietnam through this article. We will go over the necessary licences and permissions, tax and financial rules, corporate structures and legal requirements, foreign ownership and investment laws, practical issues and problems, and more. Every segment endeavours to furnish an all-encompassing comprehension of the procedures and tactics required for effectively navigating the Vietnamese commercial environment.

What are the steps to register a trading company in Vietnam?

Registering a trading company in Vietnam involves several important steps and considerations. 

1. Legal Requirements and Business Structures

Recognizing the legal prerequisites and business configurations is essential when registering a trading business in Vietnam. 

A limited liability company (LLC), joint stock company (JSC), and partnership are just a few of the business structures that foreign investors can use. 

• • Limited liability company: With its adaptable management structure and member liability limitations, an LLC is the most popular option. 

• • Joint stock companies: Larger companies who might want to sell shares to the public can consider forming a joint venture.

In Vietnam, a trading corporation must be registered by fulfilling specific legal requirements and obtaining the required paperwork. These consist of an authentic company plan, evidence of investment funds, investor personal identification credentials, and a Vietnamese registered office address.

A Department of Planning and Investment (DPI) application must be submitted in order to receive an Investment Registration Certificate (IRC). Information regarding the project, the investor, and the investment funds must all be included in the application. After approval, the IRC opens the door for the investor to move forward with business registration and other licensing processes, enabling the establishment of a trading firm in Vietnam that complies with the law.

2. Foreign Ownership and Investment Regulations

When you register a trading company in Vietnam, Understanding international ownership and investment laws is crucial. In many businesses, Vietnam permits 100% foreign ownership; nevertheless, there are ownership limitations and prohibitions in place in other areas. Certain industries, including banking, transportation, and telecommunications, might mandate ownership caps or joint ventures with local partners.

Different sectors, like manufacturing, retail, IT, and services, are accessible to foreign investment. Regulators may be more stringent and foreign engagement in certain industries—those judged sensitive or essential to national security, for example. For international investors, a comprehensive list of sectors is available from the Ministry of Planning and Investment.

The requirements and processes for foreign investment are governed by Vietnam’s Foreign Investment Law and other relevant legal frameworks. These include the Law on Enterprises and the Law on Investment, which describe the responsibilities and rights of foreign investors as well as investment incentives and safeguards. Investors may effectively register a trading company in Vietnam and ensure compliance and strategic alignment with local laws by having a thorough understanding of these requirements.

3. Licensing and Permits Needed to register a trading company in Vietnam

Setting up a trading company in Vietnam necessitates acquiring a number of licences and permits to guarantee legal operation. The Business Registration Certificate (BRC) is the primary licence required as it validates the company’s existence. Investors must submit an application with necessary supporting documentation, such as the company charter, shareholder list, and evidence of legal capital, to the Department of Planning and Investment (DPI) in order to receive the BRC.

Depending on the industry, trading activities may need other permits in addition to the BRC. For example, businesses that import and export items should have a trading licence. Certifications unique to a product or adherence to safety regulations for sectors such as food, cosmetics, and pharmaceuticals are examples of additional industry-specific approvals.

The licensing procedure entails a number of phases, such as gathering the proper paperwork, submitting applications to the appropriate authorities, and going through any necessary inspections or evaluations. Comprehending these prerequisites is essential for establishing a trading firm in Vietnam, guaranteeing compliance with regulatory regulations, and promoting seamless business operations.

4. Taxation and Financial Regulations 

When you register a trading company in Vietnam, Complying with the tax laws and financial rules is essential for financial planning and compliance. Vietnam’s corporate income tax (CIT) rate is 20%; however, charges may be higher in particular industries, such as the oil and gas sector. Apart from the Corporation Tax (CIT), companies also have to pay Value Added Tax (VAT), which is usually 10%, and other taxes like import/export charges, employee personal income tax, and social insurance contributions.

Vietnam encourages foreign investment in particular industries and areas by providing a range of tax breaks and incentives. For some projects, particularly those in the high-tech, environmental protection, and special economic zones, these incentives may include lowered CIT rates, tax vacations, and exemptions from import taxes.

There are strict guidelines for financial reporting and audits. Vietnamese Accounting Standards (VAS) require businesses to have accurate and transparent financial records. An independent auditing company is required to conduct an audit of the annual financial statements. Your trading company’s seamless operation and legal compliance in Vietnam are guaranteed by careful adherence to these regulations.

5. Practical Considerations and Challenges

Setting up a trading company in Vietnam entails overcoming a variety of obstacles and practical concerns. There may be several steps involved in bureaucratic processes in order to secure the required licences and permits, making them complicated. Possible obstacles encompass postponements in the handling of applications and the interpretation of regional statutes. To lessen these problems, patience and careful preparation of the necessary paperwork are essential.

For activities to run well, interacting with local authorities is essential. Building strong partnerships with tax authorities, the Department of Planning and Investment (DPI), and other regulatory agencies helps speed up processes and enable compliance. It’s best to use local legal and consulting firms to handle these dealings with skill.

The process of opening a local office include locating a suitable space that satisfies zoning requirements and business demands. Knowing the local labour regulations pertaining to contracts, social insurance, and employee perks is necessary while hiring staff. Finding competent applicants may be made easier by collaborating with respectable regional recruitment firms. For a trading firm to be established in Vietnam and for commercial operations to run well, several pragmatic considerations must be taken care of.

Conclusion

Although there are many benefits to registering a trading company in Vietnam, there are also several procedures that must be carefully navigated. It’s crucial to comprehend legal requirements and select the relevant legal entity, including an LLC or JSC. Under the guidance of the Foreign Investment Law, foreign investors are required to abide by ownership requirements and sector-specific restrictions.

Important procedures include obtaining the required permits, such as the Business Registration Certificate (BRC), and abiding by financial and tax laws, such as the 20% corporate income tax rate. A successful establishment and operation of your trading firm in Vietnam is ensured by taking into account practical concerns including bureaucratic procedures, engaging local authorities, and opening a local office. Speak with our experts to register a company in Vietnam today.