Set Up A Subsidiary In Vietnam: Steps & Legal Requirements Covered


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    set up a subsidiary in vietnam

    Vietnam is becoming a more alluring location for international businesses. It is a top choice for businesses wishing to grow in Southeast Asia due to its strong economic growth, welcoming business environment, and advantageous position. Establishing a subsidiary in Vietnam is one of the best strategies to enter into the Vietnamese market.  

    This article will guide you through everything you need to know about setting up a subsidiary in Vietnam, including the legal requirements, types of business entities, the step-by-step registration process, the costs involved, and more.

    Why Set Up a Subsidiary in Vietnam?

    Vietnam presents many benefits to companies wishing to open a subsidiary. 

    Here are some key reasons why setting up a subsidiary in Vietnam is a smart move:

    • Economic Growth: With a GDP growth rate that has routinely exceeded 5.5% in recent years, Vietnam has one of the fastest-growing economies in the world. A youthful, energetic labour force and rising domestic spending are the main drivers of this expansion.
    • Strategic Location: Vietnam’s strategic location in Southeast Asia allows it to be easily accessed by other ASEAN nations, giving it access to a market with a population of over 673 million.
    • Advantageous Trade Agreements: Vietnam is a party to a number of trade agreements, including as the CPTPP and EVFTA, which offer lower tariffs and better market access to companies.
    • Investment Incentives: The Vietnamese government provides a range of incentives, such as tax exemptions and subsidies in specific industries and geographical areas, to attract foreign investment. 
    • Growing Consumer Market: With a population of over 98 million, Vietnam boasts a growing middle class with increasing purchasing power.

    Legal Requirements for Establishing a Subsidiary in Vietnam

    Registering a subsidiary company in Vietnam requires adhering to specific legal regulations. 

    Here’s a basic overview:

    • Foreign Investment Restrictions: Certain sectors in Vietnam have restrictions on foreign ownership. It’s crucial to research these limitations before proceeding.
    • Business License: A business license that details the operations and industry of your subsidiary is required.
    • Investment Registration Certificate (IRC): For most foreign-invested companies, acquiring an IRC is the first step. This certificate outlines your proposed investment project and is granted by the Department of Planning and Investment (DPI).
    • Enterprise Registration Certificate (ERC): Applying for the Enterprise Registration Certificate, which formally registers your subsidiary as a legal entity in Vietnam, is possible after obtaining the IRC.
    • Tax Registration: Your subsidiary must register with the tax authorities and comply with all relevant tax regulations in Vietnam.

    Types of Business Entities in Vietnam: Which One is Right for You?

    Vietnam offers various business entity options, each with its own advantages and limitations. Here are the most common ones:

    Wholly Owned Subsidiary (WOS) 

    A wholly owned subsidiary (WOS) is a distinct legal entity that the parent business owns in its entirety. Although it could need a larger initial expenditure, it gives complete control and flexibility.

    Joint Venture Company (JVC)

    A JVC involves partnering with a Vietnamese company. This can be beneficial for navigating local regulations and accessing local networks, but profit-sharing and decision-making processes need careful consideration.

    Representative Office

    representative office in Vietnam has a limited scope and cannot directly engage in commercial activities. It works well for conducting market research or creating a local presence in the absence of fully functional activities.

    The industry, the desired amount of control, and your particular goals all play a role in selecting the best business structure. 

    Step-by-Step Process to Register a Subsidiary Company in Vietnam

    The procedure for establishing a subsidiary company in Vietnam can be broadly divided into the following steps:

    Selecting a Business Structure

    Choose the best business structure for your needs in terms of ownership and operations.

    Apply for an Investment Registration Certificate (IRC)

    Prepare and submit the required documents to the DPI for obtaining the IRC.

    Charter Capital Deposit

    Deposit the minimum charter capital required for your chosen business entity at a local bank.

    Enterprise Registration Certificate (ERC) Application

    Apply for the Enterprise Registration Certificate with the relevant authorities, submitting necessary documents like the company charter and lease agreements.

    Obtain Business Licenses 

    You might need to obtain extra licenses or permits before you can start operating, based on your industry.

    Tax Registration and Compliance

    Register your subsidiary with the tax authorities and ensure adherence to all applicable tax regulations.

    How to Find the Best Location for Your Vietnam Subsidiary?

    Selecting the best location for your subsidiary is crucial for its success. Consider the following factors when selecting a location:

    • Economic Zones: Vietnam has a number of economic zones that offer particular benefits to international investors, like lower taxes and streamlined administrative processes. High-tech zones and industrial parks are two examples.
    • Proximity to Supply Chains: Depending on your sector, having suppliers and logistics centres nearby can drastically save operating expenses and boost productivity.
    • Labour Availability: Consider regions with a skilled labour force that meets your business needs. Most cities like Ho Chi Minh City and Hanoi offer a large pool of qualified workers.
    • Infrastructure: Ensure the location has adequate infrastructure, including transportation, communication, and utilities.
    • Cost of Living and Operating Costs: Examine the cost of living and business expenses in several areas to select a place that fits within your budget. 
    • Market Access: If your company provides services or is engaged in retail, take into account sites that are easily accessible to your target market and have a high volume of foot traffic.

    Expected Costs to Register a Subsidiary Company in Vietnam

    While Vietnam offers a cost-competitive environment, there are various expenses associated with establishing a subsidiary company. Here’s a breakdown of some key cost factors:

    • Registration Fees: Government fees for obtaining the IRC and ERC can vary depending on the complexity of your business structure and registered capital.
    • Legal and Consulting Fees: Hiring legal and business consultants to assist with the registration process and ensure compliance can incur costs.
    • Minimum Charter Capital: Depending on the company entity selected, a different minimum charter capital need may apply. It’s still an initial investment, even though it’s less than in some other areas.
    • Office Space and Setup: The price of leasing office space will vary based on the size and location of your business. Utilities, furnishings, and equipment may incur additional expenditures.
    • Work Visas and Permits: There will be fees involved in obtaining work visas and permits for overseas workers.
    • Ongoing Operational Costs: Keep in mind that there will always be continuous expenditures for things like marketing, employee perks, and salary.


    Establishing a subsidiary in Vietnam has a plethora of prospects for growth and expansion within one of Asia’s most rapidly developing economies. You can successfully establish a subsidiary in Vietnam by comprehending the legal criteria, selecting the appropriate company entity, and meticulously organizing every stage of the registration procedure.

    Our area of expertise at OnDemand International is helping entrepreneurs establish their businesses in Vietnam. From business registration and tax registration to virtual office space and other essential services, our team is here to simplify the process and ensure your success in the Vietnamese market. Speak with our business formation experts today.


    The corporate income tax rate in Vietnam is 20%.  There are also various other taxes applicable, such as value-added tax (VAT) and personal income tax. 

    The timeframe for establishing a subsidiary can change based on how intricate your company’s organisational structure is and the efficiency of obtaining approvals. Generally, it can take anywhere from 30 to 90 days to complete the process.

    Ongoing compliance requirements cover yearly financial statements, tax filings, and compliance with labour laws and regulations. Regular audits may also be required depending on the size and nature of the company.