Fees for setting up a foreign capital company in Vietnam

The integrated economy is growing, leading to many foreign companies being set up in Vietnam. However, setting up a profile company is complicated and costly. And to answer your questions , Viet An Law Firm offers an article on the fee for setting up a foreign capital company below.

Legal bases

• Investment Law 2020.
• Enterprise Law 2020.
• Decree 31/2021/ND-CP on guiding the Law on Investment.
• Circular 47/2019/TT-BTC stipulates the collection rate, regime of collection, payment, management and use of fees for providing business information and business registration fees.

What is a foreign capital company?

Pursuant to the Law on Investment, a foreign capital company is a company set up by a foreign investor to carry out investment activities in Vietnam or a Vietnamese company purchased shares, merged or acquired by a foreign investor.

The current law stipulates that economic organizations with 100% capital of foreign investors or joint venture economic organizations between domestic investors and foreign investors set up foreign capital company under the types of limited liability company,  joint-stock company, partnerships in accordance with the Law on Enterprises.

In addition to the provisions of law of general application, in accordance with international commitments to which Vietnam is a contracting party and to facilitate investment management, the law on enterprises and on investment applies exclusively to foreign investment in the field of conditional investment,  on regulations on the establishment of joint-stock company and private enterprises, on investment procedures, on the head of investment project dossiers and on the location of registration procedures.

Forms of set up of foreign capital company

• Setting up a foreign capital company in the form of investors contributing capital from the beginning. Accordingly, foreign investors will contribute capital right from the beginning of establishment of the company in Vietnam. Accordingly, the capital contribution rate of foreign investors, depending on the field of operation, can contribute capital from 1% to 100% of the company’s charter capital.
• Setting up foreign capital company in the form of capital contribution and share purchase. With this form, foreign investors will contribute capital to Vietnamese company that already have an Enterprise Registration Certificate. Foreign investors, depending on their field of operation, can contribute capital from 1%-100% capital to Vietnamese company. Foreign investors will carry out procedures for buying contributed capital and buying shares of Vietnamese company. After that, the Vietnamese company became a foreign capital company.

Types of foreign capital company that can be set up in Vietnam

• A partnership (in fact, this type is very rarely chosen by investors).
• An one-member limited liability company
• A limited liability company with 2 or more members;
• A a joint stock company.

Fees for setting up a foreign capital company in Vietnam

Pursuant to Article 32 of Decree 01/2021/ND-CP, the company must pay the registration fee at the time of submitting the company establishment dossier. According to Circular 47/2019/TT-BTC, the fees and charges payable by the company include:

• The fee for disclosing business registration content is 100,000 VND, equivalent to about 4.09 USD.

This is the initial fee payable at the time of submitting the company registration dossier and is paid directly at the Business Registration Office (where the business registration dossier is submitted).

Note: In case of online business registration, you will not need to pay the business establishment registration fee, but only need to pay the business registration content disclosure fee.

In addition, the company annually after incorporation will have to pay license fees. The license fee is based on the company’s charter capital and divided into the following two levels:

• Charter capital is over 10 billion, license fee is 3,000,000 VND/year equivalent to 122.77 USD/year.
• Charter capital from less than 10 license fee rate is 2,000,000 VND/year, equivalent to 81.85 USD/year.

The process of setting up a foreign capital company when investors contribute capital from the beginning in Vietnam

Procedures for setting up a foreign capital company with from 1% to 100% capital contributed by foreign investors immediately upon establishment are carried out according to the following steps:

Step 1: Prepare dossiers for issuance of Investment Registration Certificate

Step 2: Submit the application for issuance of the Investment Registration Certificate

Step 3: Issuance of Investment Registration Certificate

Within 15 days from the date of receipt of a complete dossier, the investment registration agency shall issue an Investment Registration Certificate. In case of refusal, it must notify the investor in writing clearly stating the reason.

Step 4: Prepare the dossier and submit the dossier for issuance of the Certificate of Business Registration

Step 5: Announce the contents of business registration information

Step 6: Engrave the company’s seal

Step 7: Issuance of a business license or operating license

Step 8: Open a foreign direct investment account

Step 9: The foreign capital company shall carry out the following procedures for company establishment

The process of establishing a foreign capital company in the form of capital contribution and share purchase in Vietnam

Step 1: Establish a company with Vietnamese capital

Foreign investors can only contribute capital to buy shares when there are already Vietnamese company. In case the company establishment procedures have not been carried out, the Vietnamese partner must proceed with the establishment of a 100% Vietnamese-owned company.

Step 2: Prepare registration dossiers for purchase of contributed capital and purchase of shares of foreign investors

Step 3: Submit the application for registration to buy contributed capital or buy shares of foreign investors

Step 4: Foreign investors make capital contribution, purchase of shares, contributed capital and Vietnamese enterprises.

Step 5: Change the business registration certificate

Step 6: Issuance of Business Licenses and Operating Eligibility Licenses

Step 7: Issuance of a business license or operating license

Dossier of set up a foreign capital company in Vietnam

Dossiers for foreign investors being individuals

Foreigners who directly invest in establishing a foreign capital company in Vietnam should prepare:

• Certified copy of passport of foreign individual.
• Lease contract for the company’s headquarters/location of the investment project.
• A legal statement of the bank’s account balance at least equal to the amount of capital invested in the company.

Dossiers for foreign investors being organizations

• Certified copy of business registration license, consular legalization
• Financial statements audited or certified by tax authorities in the latest year, consular legalization
• A copy of the identity card or passport of the certified representative
• Charter of the managing company
• Written authorization of the organization for the representative of the contributed capital in the company intended to be established in Vietnam
• Dossiers proving foreign investors’ experience and financial capacity

Advantages of procedures for foreign investors to contribute capital or buy shares in Vietnamese company

Advantages of procedures for foreign investors to contribute capital or buy shares in Vietnamese company compared to the establishment of foreign capital company foreign investors contribute capital at the beginning as follows:

• Foreign capital company, even if their members are foreign investors, are not required to carry out procedures for issuance of investment certificates. When an enterprise does not have an investment certificate, it will minimize procedures when there is a change in the contents of enterprise registration with state agencies.
• Simple change procedures: When an enterprise only has an Enterprise Registration Certificate, it must only be done when there is a change in company name, company address, owner information,… carry out the same procedures as Vietnamese enterprises;
• Do not have to carry out procedures for updating investment information on the investment management system.
• The procedure for proving financial capacity is also simpler and easier.
• In case a foreign investor contributes capital or buys shares in a Vietnamese company that already has an enterprise registration certificate (including the case of buying up to 100% of the contributed capital of the company) is also not required to carry out procedures for issuance of an investment registration certificate, except for the case of the company doing business in the field of education and training, if a foreign investor buys from 1% of the contributed capital, it is also necessary to carry out procedures for issuance of an Investment Registration Certificate.

If you need advice on the fee for establishing a foreign capital company in Vietnam, please contact Viet An Company for the best support.