Starting a Business in Vietnam (2024)

How to Start a Business Under Vietnam’s Enterprise Law 2024: Starting a business in Vietnam presents exciting opportunities as the country’s economy continues to grow, attracting both local and foreign investors. To successfully navigate the process, it’s important to understand the legal requirements set forth by Vietnam’s Enterprise Law 2024. This guide will walk you through the steps to establish a business under the updated regulations, ensuring compliance and a smooth start.

1. Choosing the Right Business Structure

The first crucial decision when starting a business is selecting the appropriate structure. Vietnam’s Enterprise Law 2024 provides several options, each with its own advantages:

• Sole Proprietorship: Owned and operated by a single individual who is personally responsible for the business’s liabilities.
• Limited Liability Company (LLC): One of the most common choices for small and medium businesses. An LLC can have one or multiple members and offers liability protection to its owners.
• Joint-Stock Company (JSC): Best suited for large enterprises that need significant capital. A JSC can issue shares to raise funds from investors, making it ideal for businesses looking to scale.
• Partnership: Two or more individuals share ownership and management responsibilities. Partnerships can be general or limited, depending on how the liabilities are divided.

The right structure depends on your business goals, your willingness to take on personal liability, and how you plan to raise capital.

2. Naming Your Business

Naming your business is not just a creative task but also a legal one. According to the Enterprise Law 2024:

• The name must be unique and not similar to existing registered businesses.
• It should not use words or symbols associated with government bodies or political organizations.
• Business names must be in Vietnamese, but you can use numbers, symbols, or even a foreign language version, as long as it complies with the law.

Before finalizing your name, check Vietnam’s National Business Registration Portal to ensure it’s available.

3. Business Registration Process

Once you have decided on your structure and name, the next step is to register your company. The registration process involves the following steps:

• Prepare the registration documents: These include details about your business name, structure, headquarters, charter capital, and list of shareholders or members (if applicable).
• Submit the documents: You must submit these to the Department of Planning and Investment (DPI) in the province where your company is located. Registration can be completed online or in person.
• Obtain the business registration certificate: After your application is reviewed and approved, you will receive the certificate within 3-5 working days. This serves as proof of your company’s legal status in Vietnam.

4. Charter Capital Requirements

The Enterprise Law 2024 allows businesses to set their own charter capital based on their needs, but certain industries like banking, real estate, and insurance have minimum capital requirements. A higher charter capital may enhance your business’s credibility but could also increase your tax obligations.

5. Opening a Business Bank Account

Once your company is registered, you need to open a corporate bank account for transactions like paying taxes and salaries. To open an account, you will need:

• Business registration certificate
• Company charter
• Legal representative’s identification (passport or ID card)

Choose a bank that offers services tailored to your business needs, especially if you expect to handle international transactions.

6. Tax Registration

After receiving your business registration certificate, you must register with the tax authorities. Common taxes in Vietnam include:

• Corporate Income Tax (CIT): The standard rate is 20%, though some industries may qualify for lower rates.
• Value-Added Tax (VAT): Typically 10%, with some goods and services enjoying reduced rates.
• Personal Income Tax (PIT): Employers are required to withhold PIT from employee salaries.
• Social Insurance Contributions: Employers must register employees for social insurance and contribute to social, health, and unemployment insurance.

Staying compliant with tax obligations is critical to avoid penalties.

7. Licensing and Permits

Depending on your industry, you may need additional licenses. For example:

• Food and Beverage: You’ll need food safety certifications.
• Construction: Specialized permits are required for building projects.
• Import/Export: Register with customs authorities for import/export activities.

Ensure you obtain all necessary permits to operate legally.

8. Hiring Employees

If you plan to hire staff, Vietnam’s 2024 Enterprise Law outlines several responsibilities for employers:

• Employment Contracts: These must be in writing, detailing job responsibilities, salary, and working conditions.
• Social Insurance: Employers are required to register employees for social insurance.
• Labor Laws: You must comply with labor regulations regarding wages, safe working conditions, and employee rights.

Following these guidelines will help you attract and retain talent while remaining legally compliant.

9. Protecting Intellectual Property

If your business involves unique products or branding, protecting your intellectual property (IP) is crucial. You can register:

• Trademarks: Protect logos, names, and symbols.
• Patents: Cover inventions and technological innovations.
• Copyrights: Protect artistic, literary, or creative works.

IP registration helps prevent legal disputes and protects your business.

10. Corporate Governance and Compliance

Maintaining corporate governance after establishing your business is essential. Key areas include:

• Annual Reports: Submit financial reports to the DPI and tax authorities each year.
• Board Meetings: Required for certain business structures.
• Audits: Larger companies may be subject to mandatory audits for financial transparency.

Adhering to corporate governance standards ensures your business’s long-term success and credibility.

Conclusion

Starting a business under Vietnam’s Enterprise Law 2024 involves multiple steps and careful planning. By following the guidelines in this article, you can set up your business efficiently and legally in Vietnam’s growing market. Whether you’re a local entrepreneur or a foreign investor, understanding these legal requirements will help your business thrive.