Setting up a hotel business in Vietnam

Currently, tourism business is one of the professions that is being encouraged by our country. In addition, this is also an industry that attracts a large amount of capital from abroad. Especially, more and more domestic and foreign investors choose to do hotel business in Vietnam. Hotel business is a conditional business line, so when establishing a business company of this type, it is necessary to comply with the provisions of the law. In the article below, Viet An Law would like to provide you with a summary of the legal provisions on setting up a hotel business in Vietnam.

Legal basis

• Vietnam’s schedule of commitments on services in the WTO;
• Investment Law 2020;
• Enterprise Law 2020;
• Law on Tourism 2017;
• Decree 168/2017/ND-CP detailing a number of articles of the Law on Tourism, amended and supplemented by Decree 142/2018/ND-CP and Decree 94/2021/ND-CP;
• Decree 96/2016/ND-CP stipulates security and order conditions for a number of conditional investment and business lines.

Market access conditions for foreign investors in Vietnam

• For hotel services, Vietnam has committed in the WTO Schedule of specific commitments on services with codes CPC 64110 (hotel accommodation services), CPC 642 (food services) and CPC 643 (beverage services).
• To establish a company in Vietnam, foreign investors must meet conditions including:
• Regarding capital contribution: the capital contribution ratio of foreign investors in the hotel service industry is unlimited;
• Regarding the form of investment: foreign investors may establish representative offices, branches and companies in Vietnam with the capital contribution ratio up to 100% of foreign capital;
• In addition, within 8 years from the date of joining, the provision of services should be carried out in parallel with investment in construction, upgrade, renovation or acquisition of hotels. Currently, this condition has expired the statute of limitations.

Therefore, foreign investors are now equal in terms of market access with domestic investors of Vietnam.

Conditions for setting up a hotel business in Vietnam

The hotel belongs to the category of tourist accommodation establishments. Therefore, in order to conduct a hotel business, it is necessary to meet the general conditions for tourist accommodation business and specific conditions for hotel business.

General conditions

• Having registered tourist accommodation business;
• Take measures to ensure security, order, environmental sanitation, safety, fire prevention and fighting in accordance with the provisions of law for tourist accommodation establishments.
• Satisfy the conditions to apply for a security and order permit for accommodation service business:
• Meet the conditions for fire safety and fighting in accordance with the law on fire prevention and fighting.
• Be registered, licensed or established in accordance with the provisions of Vietnamese law;
• The person responsible for security and order of the business establishment does not fall into one of the following cases:

For Vietnamese

• Having been criminally prosecuted for which Vietnamese or foreign procedural agencies are conducting investigation, prosecution or trial;
• Having previous convictions for crimes infringing upon national security or other crimes committed by intentional error sentenced to more than 03 years in prison or more without having their convictions cleared; is in the period of deferred imprisonment; is serving a non-custodial rehabilitation sentence; are being placed on probation, banned from residing, banned from holding office, prohibited from doing business in investment lines subject to security and order conditions according to court decisions;
• Being subjected to educational measures in communes, wards or townships; make a decision to apply administrative handling measures pending the execution of the decision; are addicted to drugs; are being temporarily postponed or temporarily suspended from observing decisions on admission to compulsory education institutions or compulsory detoxification establishments; has been subjected to administrative sanctions but has not yet reached the time limit to be considered as having not been subjected to administrative sanctions.

For overseas Vietnamese holding foreign passports and foreigners, who have not yet been granted residence permits by competent authorities of Vietnam;

Individual conditions

Conditions for appropriate business registration

When doing hotel business, it is necessary to register the short-term accommodation service industry with business line 5510. For hotels that combine to provide catering services, the following business liness must be registered:

• Business line 5621: Provision of catering services under irregular contracts with customers (catering banquets, meetings, weddings);
• Business line 5629: Other food services;
• Business line 5630: Beverage service services.

It should be noted that hotel business accompanied by food services, in addition to meeting the conditions for hotel business, enterprises need to meet other conditions such as food safety and hygiene, alcohol trading conditions… throughout the operation.

Minimum conditions on material and technical foundations and services for tourists

Hotels are divided into categories including: Resort hotels, roadside hotels, floating hotels, and city hotels. Corresponding to each type, the hotel needs to meet the conditions of its own technical facilities and services.

• Have a minimum of 10 sleeping rooms; there is a reception, shared restrooms;
• There is parking for guests for resort hotels and roadside hotels;
• There are kitchens, puffs for catering services for resort hotels, floating hotels, roadside hotels;
• There are beds, mattresses, blankets, pillows, face towels, towels; change upholstery, blanket cover, pillow cover, face towel, towel when there are new guests;
• There are staff available 24 hours a day;

Conditions on types of licenses required by law

In order to ensure the legal operation of the hotel business, it is necessary to obtain all relevant licenses, including but not limited to:

• Certificate of business registration;
• Certificate of eligibility for fire protection;
• Security and order certificate;
• Certificate of satisfaction of food hygiene and safety conditions (if any).

Procedures for setting up a hotel business in Vietnam

Step 1: Prepare and submit the business establishment dossier

The owner shall submit the application at the Department of Planning and Investment where the enterprise is headquartered. The set of business establishment dossiers includes:

• Application for business registration;
• The company’s charter;
• List of founding shareholders and shareholders being foreign investors (for joint-stock companies); List of members (for limited liability companies with two or more members);
• Legal documents of individuals, legal entities being members, shareholders, legal representatives of the company: Certified copy of identity card or citizen identity card or passport (if an individual); establishment decision, enterprise registration certificate or equivalent document and citizen identity card or identity card or passport with written authorization for the capital manager in Vietnam (if it is an organization);
• An investment registration certificate has been issued.
• Power of attorney for Viet An Law (in case of choosing the company’s services).

Step 2: Disclosure of business information content

After being granted the Certificate of Business Registration, an enterprise must make a public announcement on the National Business Registration Portal within 30 days from the date of publication and must pay fees as prescribed by law. Contents of the announcement include

• Certificate of business registration;
• Specific information about business lines;
• List of founding shareholders; list of shareholders being foreign investors, for joint-stock companies (if any).
• Publication fee: The request for publication of enterprise registration contents and payment of fees for disclosure of enterprise registration contents shall be made at the time the enterprise submits the enterprise registration dossier. In case an enterprise is not granted enterprise registration, the enterprise will be refunded the fee for announcing enterprise registration contents.

The announced fee is VND 100,000 as prescribed in Circular 47/2019/TT-BCT.

Step 3: Engrave the seal of the business

• Seals include seals made at seal engraving establishments or seals in the form of digital signatures in accordance with the law on e-transactions;
• The enterprise shall decide on the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise;
• The management and retention of the seal shall comply with the provisions of the company’s charter or regulations promulgated by the enterprise, branch, representative office or other unit of the enterprise bearing the seal. Enterprises use seals in transactions in accordance with the provisions of law.

Step 4: Other procedures after being granted the Certificate of Business Registration

• Hang a sign at the company headquarters;
• Notification of application of tax calculation method;
• Open a bank account of the enterprise, register form 08 of a bank account with the tax authority, register for electronic tax payment;
• Registration of electronic digital signatures for electronic tax payment;
• Print and order invoice printing;
• Declare and pay license tax;
• Make full capital contribution on time within 90 days from the date of issuance of business registration.

If you want to be consulted and find out more information about the conditions for setting up a hotel business in Vietnam, please contact Viet An Law Firm for our best support!