How to Set Up a Company in Vietnam as a Foreigner

Introduction

Vietnam has become one of Southeast Asia’s most closely watched destinations for foreign entrepreneurs looking to build a business. But because of legal and cultural differences, setting up a company in Vietnam as a foreigner still comes with real challenges. Understanding Vietnam’s business environment is key to operating successfully there.

Vietnam’s economic transformation is part of the context. Following two decades of war and economic hardship through the late 1970s and 1980s, the Vietnamese government launched its Đổi Mới (“renovation”) reform and opening-up policy in 1986. More than three decades on, Vietnam has moved from being one of the world’s poorest countries to a middle-income economy, and is now recognized as one of the fastest-growing and most dynamic economies in Asia — and one of the largest recipients of foreign direct investment in the region. According to a global survey of the best countries for expats to live in, Vietnam ranked 18th worldwide; on that survey’s investment-environment dimension specifically, Vietnam scored particularly highly, which is a major reason the country now draws so many new arrivals. Vietnam’s government has also stepped up infrastructure investment and rolled out a number of special incentive policies, making the country a top destination for foreign investors.

Common Investment Restrictions

In practice, foreign capital in Vietnam still faces some restrictions worth noting in advance:

Restrictions on foreign ownership. Vietnam’s current Investment Law is Law No. 61/2020/QH14, effective 1 January 2021. Its Appendix IV lists conditional business lines for foreign investors (widely reported at roughly 220-230 sectors after later trims), some specific to sectors like trading, distribution and logistics services. The list and its conditions are published on Vietnam’s national business registration portal.

Companies operating in a conditional business line must fully meet the applicable conditions (such as minimum capital, foreign-shareholding limits, facility and staffing requirements, and operating licenses). Failure to meet these requirements can result in government penalties and an order to cease operations.

Restrictions by industry. Some industries require separate approval from different ministries — for example, banking requires approval from the State Bank of Vietnam, while education, construction and real estate require approval from other relevant ministries. Different provinces may also offer different incentives to encourage investment.

In recent years, Vietnam’s government has prioritized foreign investment in the following directions:

• Projects that apply “high, new and clean technology,” use a high proportion of domestically produced materials and components, show a high ratio of domestic R&D spending, and commit to technology transfer and on-the-job training
• Joint ventures or co-production arrangements between foreign and domestic enterprises
• Multinational companies with a global brand and strong competitiveness, and foreign companies engaged in supporting industries

Forms of Foreign Investment

Foreign investors in Vietnam can invest either directly or indirectly.

Investment Forms and Procedures

The procedure differs depending on the form of investment. The statutory timeframes below refer to government processing time only, and do not include the time needed to prepare documents or any practical delays.

Vietnamese Taxes and Tax Rates

Foreign investors in Vietnam face tax obligations regardless of which business structure they choose. There are four common taxes to be aware of:

• Corporate income tax: applies to any organization operating a business in Vietnam that earns taxable income. Exemptions are available, and certain expenses can be deducted from taxable income. The standard rate is 20%; preferential rates of 17%, 15% and 10% apply in some cases; other rates (such as for oil and gas operators) run from 32% to 50%.
• Value-added tax (VAT): levied on the value added at each stage of the production and distribution chain, with four rate tiers:
  • *Exempt*: applies to, among others, 26 categories including certain agricultural products, salt products, transfer of land-use rights, life insurance, finance, healthcare, public postal and telecom services, culture-related construction work, education and training, broadcasting, publishing, mass transit, temporarily imported goods for re-export, technology transfer, and export of unprocessed natural resources.
  • *0%*: applies to exported goods and services, goods and services consumed outside Vietnam or in non-tariff zones, goods processed for export or domestic export, goods sold to duty-free shops, certain export services, construction and installation for export-processing enterprises, and air, sea and international transport services.
  • *5%*: applies to specific essential goods and services, including clean water, fertilizer, agricultural activities, agricultural products and equipment, unprocessed food seasonings, medical and educational equipment, and scientific and technical services.
  • *10%*: the standard rate.
• Personal income tax, 5% to 35%: tax residents are taxed on worldwide income at these progressive rates, while non-residents are taxed at a flat 20% on Vietnam-sourced income.
• Foreign Contractor Tax (FCT): a combined CIT (0.1%-10%, depending on business line) plus VAT (2%-5%) withholding on Vietnam-sourced income of foreign contractors without a Vietnamese legal entity; the calculation basis changed under Circular 20/2026/TT-BTC, effective 12 March 2026.

Companies must also submit annual audited financial statements to the relevant state authorities, including the tax authority, the planning and investment department, the statistics department and the finance department. Tax filings and audited financial statements must be submitted on time to avoid penalties, so it is worth engaging an accountant in advance to prepare the company’s books and financial statements before the audit.

Common Questions About Investing in Vietnam

Foreign Investment Projects Require Prior Approval

Although Vietnamese law provides for equal treatment between foreign and domestic investors, foreign investors must still comply with different business licensing requirements and related restrictions. The government bodies involved in foreign investment include the Ministry of Planning and Investment, the Ministry of Industry and Trade, the Ministry of Finance, the Ministry of Natural Resources and Environment, the Ministry of Construction, and the State Bank of Vietnam. People’s Committees, industrial-zone management boards and provincial economic zones are the main bodies responsible for registering foreign investment.

Vietnam currently maintains a number of restrictions on foreign investors, mainly covering: limits on foreign ownership ratios; industry restrictions; specific investment requirements; geographic restrictions; and requirements on the qualifications of local partners. Depending on the industry, scale and impact of the investment project, registration may require approval from the National Assembly, the Prime Minister or a provincial People’s Committee.

Restrictions on Industry Access

Under the new Investment Law, Vietnam takes a “negative list” approach to foreign investment: for industries not on the negative list, foreign investors receive the same treatment as Vietnamese investors. As a result, both foreign and domestic private entities have the right to establish and own businesses in Vietnam and to legally operate in areas not subject to government restriction on foreign investment — although Vietnam still retains a considerable number of industry-specific restrictions for foreign investors. Investing in a particular restricted industry requires the relevant regulator’s approval — for example, telecoms investment may require an assessment from the Ministry of Information and Communications, and power-sector investment may require an assessment from the Ministry of Industry and Trade.

Vietnam’s National Security Review Regime

The new Investment Law introduced a national security review regime: any investment activity that poses, or could pose, a threat to Vietnam’s national defense or security may be suspended, halted or terminated. In addition, for M&A transactions involving entities with rights over land on islands, at the border, or in coastal areas, the Investment Law adds a new prior-approval requirement to safeguard national defense and security. Because the Investment Law does not clearly define “national defense and security,” enforcement bodies retain considerable interpretive latitude in practice, so some uncertainty remains for foreign investment.

Restrictions on Foreign Investors’ Land-Use Rights

In Vietnam, land is owned by the state and the collective, so neither local citizens nor foreigners can obtain legal ownership of land. Foreigners can only obtain a Land Use Right Certificate (LURC), representing a right to use the land. The LURC obtained by a foreigner has a maximum term of 50 years, after which it may be renewed or the land reclaimed by the government. Foreigners can choose to pay land rent annually or in a single lump sum; with a lump-sum payment, the foreigner is permitted to sublease, mortgage or sell the land and the assets attached to it.

Foreign investors cannot directly acquire land. They must first establish a legal entity in Vietnam (a “project company”), which then signs a formal land lease agreement with the lessor and applies to the government for a Land Use Right Certificate. In practice, once a foreign investor identifies a suitable project site, they typically sign a memorandum or a letter of offer with the land lessor.

For foreign investors, investing in Vietnam — especially acquiring equity in a local company or carrying out a large infrastructure project — requires attention to potential land disputes, including the risk of being unable to renew a land-use right upon expiry, whether the land’s designated use (such as urban residential, industrial-park, or commercial and services land) fits the specific project, and whether the land type matches the intended investment purpose.

Foreign Exchange Considerations

Vietnam requires domestic transactions to be conducted in Vietnamese dong. Foreign exchange is tightly regulated. While the Vietnamese government does allow foreign investors to make capital contributions and remit legitimate profits and other lawful investment income through authorized foreign-exchange institutions, investors often encounter difficulties due to lengthy government approval processes — for example, being asked to provide supporting documents (audited financial statements, contracts for imported goods or services purchased from abroad, tax payment certificates, etc.), or being required to complete tax and other fiscal obligations as a precondition for remitting funds. The State Bank of Vietnam also requires foreign investors to submit a profit-remittance notice to the tax authority at least seven working days before remitting funds.

Setting Up a Company: Documents, Steps and Costs

Documents Foreigners Need to Prepare

1. A valid passport
2. Proof of funds: showing, via a bank account balance or savings book, that the investor holds the corresponding amount to be invested in Vietnam
3. Office address: a property or office lease agreement in Vietnam, to register the company’s headquarters
4. A business plan

The Basic Process for Foreigners Setting Up a Company

Setting up a company in Vietnam is not a complicated process. Following these steps helps ensure your business activities in Vietnam get off to a smooth start.

1. Decide on the business type. Before setting up a company in Vietnam, you should decide what type of business you plan to run — different business types are subject to different rules and requirements under Vietnamese law, including investment restrictions and conditions. You can choose to set up:

1) A wholly foreign-owned LLC (100% foreign-owned company in Vietnam)
2) A partly foreign-owned LLC (a Vietnam joint-venture company)

A 100% foreign-owned company is very difficult to get approved and requires meeting a number of conditions. For that reason, it is often more practical to register as a joint-venture-type company first, using a local nominee owner to set up the company before transferring it to the foreign investor once formation is complete. Ask Zagdim if you would like guidance on this route.

2. Choose a company name. Foreigners must follow Vietnam’s legal rules when choosing a company name, ensuring the name does not duplicate an existing company and is consistent with business ethics.

3. Prepare an investment plan. Setting up a company in Vietnam requires an investment plan, which should include the company’s business objectives, expected income and expenditure, and the source of investment funds. This plan is used later in the registration process.

4. Find a partner (where required). Under Vietnamese law, foreigners in certain business areas — such as financial services and education — need to partner with a local counterpart. Finding a reliable partner is critical to running the business successfully.

5. Apply for registration. Once preparation is complete, you can apply to register the company with the Vietnamese government. You will need to submit the required documents, including the company charter, investment plan, cooperation agreement (if applicable) and shareholder documentation.

6. Obtain the license. The Vietnamese government reviews the application documents and, after assessment, decides whether to issue a license. Once the license is granted, you can formally begin business operations in Vietnam.

Costs of Registering a Company in Vietnam

If you plan to register a company in Vietnam, there are a number of additional costs to consider beyond the registration cost itself, such as filing fees and office rental. While these extra costs are relatively low individually, they are still worth budgeting for.

1. Registered capital: the minimum registered capital for a limited liability company is USD 100,000; for a joint-stock company, the minimum is USD 300,000.
2. Company name search fee: registering a company in Vietnam requires a search to confirm the proposed name is not already registered; this fee is VND 1,000,000.
3. Company registration fee: covers preparation of the company charter, shareholder list, and board member list, among other documents; generally around VND 5,000,000.
4. Business license fee: obtaining the business license requires a fee, generally around VND 1,000,000.
5. Tax registration fee: after registering the company, tax registration is required, at a cost of around VND 1,000,000.
6. Office lease cost: after registration, the company needs to lease office premises; the rental cost varies by location and floor area.

Advantages of Buying Property Under a Company Name in Vietnam

1. Legal and tax advantages: buying property under a company name can bring certain legal and tax benefits — for example, the company may be able to access a lower tax rate or more flexible tax arrangements.
2. Fund management and financing: buying property under a company name allows better management and control of funds; the company can more conveniently use its own capital or bank financing to make the purchase.
3. Asset protection: putting property under a company’s name can offer better asset protection. If you buy property under your personal name, your personal assets could be exposed if a legal dispute or other risk arises. Holding property under a company name keeps the property separate from personal assets, lowering personal risk.
4. Succession and transfer: buying property under a company name can make succession and transfer easier. If you plan to pass the property to the next generation as a family asset, or sell it to another investor, a corporate structure can offer a simpler, more convenient process.

Summary

Registering a company in Vietnam, and buying property under that company’s name, both come with a number of advantages and potential opportunities. Registering a company allows you to operate a business in Vietnam and benefit from relevant legal and tax incentives. Buying property under a company name can offer better asset protection and management, and simplify succession and transfer procedures. As a dynamic and promising market, Vietnam offers considerable room to achieve your business goals and grow your investment. That said, it is essential to comply with local laws and regulations, and to consult a professional before making decisions, to ensure you are working from accurate information.

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