Can Foreigners Open a Shop or Business in Vietnam? Licensing Guide

Introduction

Vietnam’s economy has continued to grow strongly in recent years, with the services sector in particular making up a rising share of the total — an important engine behind domestic demand and the startup boom. According to Vietnam’s Ministry of Planning and Investment, services rose from 41.6% of GDP in 2019 to nearly 45% in 2024, reflecting rising consumption alongside growing demand for local services.

As the market opportunity has widened, more and more foreigners want to open restaurants, retail shops or tutoring centers in Vietnam. But compared with the buzz around the market, actually getting the licensing and compliance right still presents real challenges. In particular, different industries are open to foreign investment to very different degrees, so it pays to understand the thresholds in advance to avoid common pitfalls.

Who Qualifies, and What’s Open to Foreign Investment

Before opening a business in Vietnam, you first need to be clear about your own eligibility and how open your target industry is to foreign investment. These two factors will directly determine whether you can obtain the business license and operating rights you need.

1. Foreign Individual vs. Foreign-Invested Enterprise

• Foreign individual: a foreigner can set up a business in Vietnam as an individual, but in most cases still needs to establish a Foreign Invested Enterprise (FIE) to operate legally — especially where charging customers, issuing invoices and formal tax registration are involved. Operating directly as an individual (as a sole household business) is essentially not workable.
• Foreign-invested company: at registration, the business scope must be clearly stated, and both an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC) are required. Some specific industries, such as tutoring, need an additional industry-specific license on top of the general process.

Note: if you plan to operate in Vietnam on an ongoing basis, setting up a foreign-invested company gives you more complete legal protection and tax standing.

2. Industry Restrictions and Openness

Different industries are open to foreign investment to different degrees, and the application process and shareholding limits also vary:

Note: tutoring centers fall under a specially regulated category — not only is foreign ownership capped, but operating content, premises and teacher qualifications also face higher requirements.

If you want to confirm whether your status and industry meet the conditions for opening a business, ask Zagdim and let us know your situation.

The Process: Main Steps for Foreigners Opening a Business in Vietnam

Once you have confirmed your eligibility and chosen your industry, opening a business in Vietnam as a foreigner generally follows five main steps, each closely tied to the legality of your ongoing operations.

Step 1: Choose a Business Structure (Wholly Owned, Joint Venture or Branch)

First, decide on the company’s legal structure. Foreign investors can choose:

• A wholly foreign-owned enterprise (100% foreign-owned)
• A joint venture (co-owned with a local company)
• A branch or representative office (suited to those with an existing international business base)

Each structure has different implications for investment scale, industry access and tax burden — choose the one that best fits your actual business plan.

Step 2: Apply for an Investment Registration Certificate (IRC)

Applying for the Investment Registration Certificate (IRC) is the first legal step for a foreigner starting a business in Vietnam.

• Submitted to: the provincial Department of Planning and Investment
• Required documents: a business plan, a notarized copy of the legal representative’s passport, and a premises lease
• Standard approval time: 15–30 working days

Once the IRC is obtained, you have basic permission to begin specific business activities in Vietnam.

Step 3: Register the Enterprise Registration Certificate (ERC)

After obtaining the IRC, you need to further register the Enterprise Registration Certificate (ERC), which establishes the company’s legal status.

• Application documents: company charter, list of shareholders, proof of business premises
• Registered capital: no minimum requirement for food and beverage or retail; a tutoring center is recommended to have at least VND 500 million

Step 4: Apply for Industry Licenses (If in a Regulated Industry)

For industries such as education, food and beverage, or certain retail categories (such as pharmaceuticals or cosmetics), an additional industry-specific license is needed on top of the general business license:

• Food and beverage: requires a Food Safety and Hygiene Certificate
• Tutoring centers: requires an Education and Training Permit from the provincial Department of Education

Review procedures vary by industry and may require additional submissions covering premises planning, teaching staff information or fire safety certification.

Note: for a tutoring center, some regions require at least one locally licensed teacher to be designated as the person responsible for instruction.

Step 5: Complete Tax Registration and Start Formal Operations

Finally, the company must complete tax registration with the tax authority, obtain a corporate tax code, and begin filing taxes and paying social insurance as required by law.

• Value-added tax (VAT): generally 10%, with an 8% rate for food and beverage
• Corporate income tax (CIT): standard rate of 20%

Once tax registration is complete, the business can formally open, followed by ongoing operational management and compliance reporting appropriate to its business type.

Documents Needed: Basic Materials for Opening a Business in Vietnam

When applying for investment and business licenses, foreign investors need to prepare a set of formal documents to ensure the review goes smoothly. The main documents include:

• Passport copy / proof of residence

A notarized copy of the company’s legal representative’s passport, plus proof of residence in Vietnam if applicable.

• Business plan

A detailed description of the business model, expected investment amount, budget arrangements and a three-year operating plan — this is the core material for the Investment Registration Certificate (IRC) application.

• Company Charter

Clearly lists the company name, business scope, capital structure, shareholder list and governance rules, and must be signed by all shareholders.

• Lease or property ownership document

The company must have a formal commercial-use premises, and must submit a lease contract or property title copy as proof of address. Some regions require the lease to run at least one year.

• Investment Registration Certificate (IRC) copy

Required as a prerequisite document when registering the Enterprise Registration Certificate (ERC).

Note: if you are operating a tutoring center, you will also need to submit teacher qualification certificates, a curriculum outline, and fire safety acceptance certification for the premises, to meet the education department’s special review requirements.

FAQ: Common Questions on Foreigners Opening a Business in Vietnam

Q1: Can a foreign individual open a business directly?

A1: No. A foreign individual must set up a company (a legal entity) and complete both investment registration (IRC) and enterprise registration (ERC) before legally operating under the company’s name. Operating directly as an individual is illegal and can lead to fines or even deportation.

Q2: Does running a restaurant require a special license?

A2: Yes. Beyond the basic business license, a restaurant must also apply for a Food Hygiene and Safety Certificate, proving that the kitchen, ingredient sourcing and service process meet Vietnam’s food safety standards.

Q3: Are there foreign-ownership limits on retail?

A3: General retail (such as daily goods and apparel) generally allows 100% foreign ownership, but specific categories (such as pharmaceuticals or cosmetics) or e-commerce may require a joint venture or an additional license in some provinces. It is best to confirm in advance based on the specific business type and location.

Q4: What special conditions apply to opening a tutoring center?

A4: A tutoring center is a specially regulated industry, with foreign ownership capped at 49%, and requires an Education and Training Permit from the provincial Department of Education. In addition, a curriculum outline, list of teaching staff, teacher qualification certificates and fire safety acceptance certification must be submitted.

Q5: Can a foreigner hold 100% of the shares?

A5: In food and beverage and general retail, a foreigner can hold 100% of the shares and have full control of the company. But in education (tutoring centers) and certain other specific industries, the law caps foreign shareholding and full ownership is not possible.

Q6: Is a business in Vietnam required to hire local staff?

A6: There is currently no law that mandates hiring local staff, but in practice, many industries (such as food and beverage and retail) hire some local employees for ease of management and to handle inspections by tax and labor authorities. Certain specific industries (such as tutoring centers) require a set proportion of local teachers on staff.

Q7: Do I need a lawyer? How much does it cost?

A7: It is strongly recommended to hire a professional lawyer familiar with foreign investment and company setup, especially for industries requiring special licenses, such as education, healthcare or beauty services. Lawyer fees vary by case complexity and city, generally ranging from USD 1,500 to USD 3,000.

Points to Note

Despite the appeal of Vietnam’s market opportunity, foreigners who don’t fully understand the legal details when opening a business often step on hidden landmines. The following are common misunderstandings and mistakes worth paying special attention to:

1. Opening a Business on a Tourist Visa Is Illegal

Many first-time entrepreneurs in Vietnam mistakenly believe that a tourist visa is enough to start a small-scale business. In fact, a tourist visa is limited to short-term stays and tourism activities and cannot be used for any commercial activity. Violators face fines at minimum, and deportation with a blacklist ban at worst.

2. Ignoring Industry-Specific Licenses Can Lead to Fines or Closure

Even after obtaining company registration (ERC), businesses in certain industries (such as food and beverage, education or healthcare) still need to apply for an additional professional license. Skipping this step can lead to heavy fines if discovered during an inspection, or even a forced shutdown.

3. Check the Legality of Your Lease and Location Carefully (Commercial vs. Residential Use)

Location is also a common source of risk. Some foreigners rent a residential-use property to operate as a shop, classroom or office, but Vietnamese law has clear rules on land-use classification, and a residential property cannot be used for commercial operations without a formal use-change permit.

Note: before signing a lease, always confirm the address is registered as “commercial purpose” in the property records, or that a legal use-change permit has been obtained, to avoid a forced shutdown later.

Everyone’s plans differ in the details — if you have a similar question, ask Zagdim and we can help you work through it.

Summary

Opening a business in Vietnam — whether a restaurant, a retail shop or a tutoring center — looks full of growth and opportunity on the surface, but the actual process hides a range of compliance, licensing and location-legality challenges. The key to landing successfully is doing a thorough market assessment early, clearly understanding local legal requirements, and preparing the documents and funding that are needed. Getting help from a professional lawyer or consulting team along the way can effectively avoid mistakes and delays, and help turn your business plan into reality. If you are planning to start your own business in Vietnam, consider filling out the form below so a specialist can help confirm feasibility.

Have a question about this guide? Leave a comment below, or ask Zagdim directly.

Sources

• Vietnam Ministry of Planning and Investment — 2024 Investment Guide
• Vietnam Ministry of Industry and Trade — 2023 Retail Business Guide
• Official Gazette of Vietnam — Decree 86/2024/ND-CP on Education Sector Regulations
• BBCIncorp — How to Start a Business in Vietnam as a Foreigner (2025)
• Hanoi City People’s Committee — Business Compliance Requirements 2024
• Ho Chi Minh City Department of Industry and Trade — Retail Licensing Practices 2023
• Danang Department of Education and Training — Education Licensing Updates 2025