Investing in Vietnam requires foreign investors to research suitable business structures for their needs. However, to ensure legal compliance, they need to be advised by experts to choose the most appropriate type of enterprise based on their economic conditions and needs. With current trends, many investors have opted to establish economic organizations; invest in joint ventures, buy shares, buy capital contributions, or carry out investment projects. investment forms in Vietnam
Each investment form will have different advantages and disadvantages. LawPlus would like to provide foreign clients with some notes related to investment activities in Vietnam.
Table of Contents/Mục lục
1. Investment forms in Vietnam for foreign investors
Foreign investors wanting to invest in Vietnam must satisfy the provisions and conditions specified in Clause 2, Article 24 of the Law on Investment 2020. That is:
– Market access conditions for foreign investors are specified in Article 9;
– To ensure national defense and security according to the provisions of this Law;
– Regulations of the Law on Land in Vietnam on conditions for receiving land use rights, .conditions for land use in islands, communes, wards, border towns, communes, wards, and coastal townships.
According to the 2020 Investment Law, there are 5 forms of investment in Vietnam:
- Investment in the establishment of economic organizations;
- Investment in capital contribution, purchase of shares, purchase of capital contributions;
- Implementation of investment projects;
- Investment in the form of a BCC contract; and
- New investment forms, and economic organization types as regulated by the Government.
2. Popular investment forms in Vietnam for foreign investors
Foreign investors can choose one of the investment forms as regulated by the law. However, they must meet the conditions for market access for foreign investors as stated in the 2020 Investment Law. In Vietnam, popular investment forms for foreign investors include establishing economic .organizations, contributing capital, buying shares, buying capital .contributions; through BCC contracts, and establishing representative offices.
2.1. Investment in establishing an economic organization
Establishing an economic organization such as a Limited Liability Company (LLC) or .Joint Stock Company (JSC) is a popular form of investment for many foreign investors in Vietnam. This form is suitable for investors who are individuals or companies that have been legally established in a .foreign country and wish to enter the Vietnamese market. Investors who want to establish an economic organization must go through .the procedure of applying for an Investment Registration Certificate and an Enterprise Registration Certificate.
Before investing, investors need to consult with experts about the investment. sector and market access conditions for investment sectors to make the right investment decisions and comply with the law. At the same time, the company must register the business sector and .investment objectives (along with the investment sector), depending on the conditions or restrictions on some investment sectors in Vietnam. Accordingly, the company can only provide activities/services by the approved business sector.
There are many common operating sectors for foreign investors that the Vietnamese government has committed to open for foreign investors to establish include: technical consultancy; management consultancy; market research…
List of sectors where market access is not allowed
List of sectors where market access is conditional
2.2. Investment Form of capital contribution, share purchase, capital contribution purchase
The form of a capital contribution, purchase of shares, or purchase of capital contributions is also an investment form that foreign investors should pay attention to if they want to contribute capital, purchase shares, or buy capital contribution portions of an economic organization already established in Vietnam. According to investment regulations, investors have the right to contribute capital, purchase shares, or buy capital contribution portions of legally established economic organizations in Vietnam. However, for certain sectors as regulated by law, the ownership ratio for foreign investors will be limited.
To carry out this type of investment, investors must find an economic organization that has been legally established in Vietnam and is suitable for the field of operation that the investor intends to undertake. Foreign investors purchase shares or purchase capital contributions of economic organizations in the following forms:
- Purchasing shares of a joint-stock company from the company or shareholders;
- Purchasing the capital contribution portion of a member of a limited liability company to become a member of such limited liability company;
- a Purchasing the capital contribution portion of the capital contributing member in the partnership to become a capital contributing member of the such partnership;
- Purchasing the capital contribution portion of members of other economic organizations in addition to the above cases.
2.3. Investment in the form of a BCC contract
The Business Cooperation Contract (BCC) is a contract signed between investors to cooperate in business, share profits and distribute products according to legal regulations without establishing an economic organization. Investing in this form does not require the entities between the parties signing to be legal entities. This means that investors can sign a contract with a legal entity to invest in business activities. In addition, this form helps save time and costs as there is no need to establish an economic organization. Thus, investment in the form of a BCC contract is an investment form established based on a contract signed between investors but without establishing a new legal entity.
However, because an economic organization is not established, the parties will not have a common seal. This is a disadvantage in Vietnam because in some specific cases, Vietnamese law requires a seal for each specific document.
2.4. Representative office
This only applies to foreign traders who have been legally established. The business sector of foreign traders has been allowed by Vietnamese law to have a legal entity in Vietnam. The permitted activities of a representative office include performing representative functions, researching, and promoting business investment opportunities for foreign traders. In addition, investing in a representative office brings many benefits to investors, such as easy management, cost savings, and no obligation to pay certain taxes such as gambling tax and enterprise income tax. Therefore, this is also considered a suitable option for foreign companies wishing to explore the market and promote trade in Vietnam.
To understand more about the requirements, terms, and conditions related to investment in Vietnam, customers can refer to the following table:
| Establishing an economic organization capital | Capital contribution, share purchase, capital contribution purchase | BCC Contract | Representative office | |
| Time | 25 – 30 working days | 20 – 25 working days | Agreements of parties | 15 – 20 working days |
| The minimum of investment capital depending | Depending on the specific industry, there will be different investment capital | Agreements of parties | Agreements of parties | None |
| Legal responsibility | Take legal responsibility by the law | Parties take legal responsibility by the law | Take legal responsibility by the law and agreements of contract foreign | Foreign traders are responsible for the operation of representative offices established in Vietnam |
| Tax | Business License tax; Profit tax; PIT; VAT; | VAT; PIT | VAT; PIT | PIT |
| Capital contribution term | 90 days from the date of issuance of the enterprise registration certificate | Agreements of parties | Agreements of parties | None |
| Granted a visa, WP, TRC |
WP, Visa, TRC |
WP, Visa, TRC | WP, Visa, TRC | WP, Visa, TRC |
For more information, you can contact us directly via hotline at 02862 779 399, 03939 30522 or .email info@lawplus.vn to be consulted and .answered by the Law Plus team.
