Dezan Shira & Associates have maintained an office in Vietnam since 2013, and provide pre-entry advisory, corporate establishment, tax planning, accounting, compliance and audit services throughout the country, managed from our offices in Ho Chi Minh and Hanoi.
Vietnam gained full independence in 938 AD. Successive Vietnamese royal dynasties flourished as the nation expanded geographically and politically into Southeast Asia, until the Indochina Peninsula was colonized by the French in the mid-19th century. Following a Japanese occupation in the 1940s, the Vietnamese fought French rule in the First Indochina War, eventually expelling the French in 1954. Thereafter, Vietnam was divided politically into two rival states, North and South Vietnam. Conflict between the two sides intensified, with heavy intervention from the United States. The war ended with a North Vietnamese victory in 1975.
Despite the return of peace, for over a decade the country experienced little economic growth because of conservative leadership policies, the persecution and mass exodus of individuals - many of them successful South Vietnamese merchants - and growing international isolation. However, since the enactment of Vietnam’s “doi moi” (renovation) policy in 1986, Vietnamese authorities have committed to increased economic liberalization and enacted structural reforms needed to modernize the economy and to produce more competitive, export-driven industries. Vietnam joined the World Trade Organization in January 2007, which has promoted more competitive, exportdriven industries. Vietnam became an official negotiating partner in the Trans-Pacific Partnership trade agreement in 2010. Agriculture’s share of economic output has continued to shrink from about 25 percent in 2000 to less than 20 percent in 2013, while industry’s share increased from 36 percent to more than 42 percent in the same period.
The global recession hurt Vietnam’s export-oriented economy, with GDP in 2013 growing at five percent, the slowest rate of growth since 1999. However, exports increased by more than one percent, year-on-year in 2013. Although Vietnam unveiled a broad, “three pillar” economic reform program in early 2012, proposing the restructuring of public investment, state-owned enterprises, and the banking sector, little perceptible progress has been made. On average, it takes around 34 days to set up a business in Vietnam – however, this number is expected to be reduced soon as a result of upcoming legislation.
Vietnam has begun to extend its development zone policy to include SEZs and has expanded the US$1.5 billion Hon La SEZ situated on the central east coast of Vietnam to include deep water facilities in addition to upgrading its port and infrastructure on the South China Sea. The country is also increasing its presence at border areas and has invested in the Laos SEZ in Vientiane. Additional export-processing facilities, and possibly SEZs, may develop along Vietnam’s long eastern seaboard as it seeks to compete with South China for foreign investment.
Please find the full contact information of our Vietnam offices here.Dezan Shira & Associates Hanoi
The number of foreign workers coming to Vietnam has steadily increased in recent years, surging to over 77,000 at the end of 2013. The large majority of foreign workers that come to Vietnam are employees of foreign contractors, working for, or establishing, FDI projects. A Vietnamese entity is permitted to recruit foreigners to work as managers, executive directors and experts where local hires are not yet able to meet production and business requirements. Unlike in some other Asian countries, such as China, Vietnamese representative offices are also able to hire staff directly.
Annually, employers (except for contractors) determine the demand for foreign workers for every position in which no competent Vietnamese workers can be found; they then send a report to the President of the People’s Committee of the province or central-affiliated city where the head office of the employee is situated. During the process, any change in the labor demand for foreign workers should be reported to the President of the People’s Committee of the province. The President will issue written approval to the employer for the employment of foreign workers for each position.
The company is required to get approval for the employment of foreign workers in each position before official recruitment. Under the law, the approval should occur in 15 days, however, in reality this often takes 30~40 days from the date of application by the President of the People’s Committee of the province and is included in the application dossiers of the work permit, which should be submitted no later than 15 working days before the foreigner is to begin work in Vietnam.
There are five main types of vehicles for foreign investment in Vietnam:
Other options for establishing a commercial presence in Vietnam include business cooperation contracts (BCCs), build-operate-transfer contracts (BOT s), build-transfer-operate contracts (BTO s), and build-transfer contracts (BTs). The difference between these contract types is at what point the title of the project is transferred to the government.
While there are usually no minimum capital requirements for foreign investors who intend to establish a presence in Vietnam (except for those investing in special industries like banking, finance, and real estate), investors should put enough capital in to cover their business operations for one year. Charter capital can be used as working capital to operate the company. It can be combined with loan capital or constitute 100 percent of the total investment capital of the company. Both charter capital and the total investment capital (which also includes shareholders’ loans or third-party finance), along with the company charter, must be registered with the license-issuing authority of Vietnam. Any increases or decreases in charter capital are decided by the shareholders of the company and must be registered in order to update into the Investment Charter of the company. If this is not done, any increase or decrease in charter capital will not be valid.
In addition to the FIE’s investment certificate, capital contribution schedules are set out in FIE charters (articles of association), joint venture contracts and/or business cooperation contracts. Members and owners of Limited Liability Corporations (LLCs) must contribute charter capital within the capital contribution schedules of their chosen method of business establishment.
In order to be able to transfer capital into Vietnam, after setting up the FIE, foreign investors must open a capital bank account in a legally licensed bank. A capital bank account is a special purpose foreign currency account designed to enable tracking of the movement of capital flows in and out of the country. This type of account allows money to be transferred to current accounts in order to make in-country payments and other current transactions.
You can find extensive collection Vietnam’s tax treaties from our Knowledge Sharing Platform.