It is expected that there will be quite a lot of legal documents on mechanisms and policies on investment incentives for foreign investors in Vietnam taking effect in 2020. Accordingly, businesses need to understand the new regulations and investment incentives when setting up a company in Vietnam.
With the desire to offer best support for foreign investors in terms of legal framework to establish companies in Vietnam, VietnamCredit, the leading business information as well as related services provider in Vietnam, will guide foreign investors how to set up an FDI company in details as follows:
Foreign investors who have to register investment certificates when establishing foreign-invested companies include:
Foreign investors contribute from 1% to 100% of the capital since the establishment of the company;
Foreign-invested companies (companies that have been granted investment registration certificates in Vietnam) continue to set up more economic organizations, purchase shares of or contribute capital to other economic organizations, invest under BCC must apply for investment certificates:
Newly establish or contribute from 1% to 100% to the company's charter capital;
Foreign investors who contribute capital to or purchase shares of Vietnamese companies that already have business registration certificates (including cases where 100% of companies' capital is purchased) are not required to apply for investment registration certificates, except for companies doing business in the field of education and training.
For companies doing business in the retailing of goods or goods retail establishments, a business license must also be applied for;
Foreign-invested companies established before July 1, 2015, foreign-invested economic organizations established in Vietnam, if having new investment projects, may carry out such investment project without necessarily establishing a new economic organization.
If foreign investors and Vietnamese people join hand to establish a company (i.e., a joint venture between a Vietnamese and a foreign investor), the steps should be as follows:
Step 1: Establish a Vietnamese company;
Step 2: Apply for a qualifying license for conditional business lines;
Step 3: Transfer stakes to foreign investors;
Step 4: Apply for a business license (a business license is only applied to companies doing business in the field of retailing goods or retail establishments of goods).
For this plan, even though shareholders of the company are foreigners, it does not have to apply for an investment certificate. When companies do not have investment certificates, procedures will be reduced when there is a change in the contents of business registration.
For investment projects eligible for investment promotion, the investment registration agency shall grant investment registration certificates to investors within 5 working days after receiving the investment decision. For investment projects not eligible for investment promotion, investors shall apply for investment registration certificates as follows:
Before applying for an investment registration certificate, investors must declare information about the investment project on the National Foreign Investment Information Portal. Within 15 days after the online application is submitted, investors shall submit the application for the investment registration certificate to the Investment Registration Agency.
After the Investment Registration Agency receives the application, investors are provided with an account to access the National Foreign Investment Information Portal to monitor the application processing. The Investment Registration Agency shall use the National Foreign Investment Information Portal to receive, process and return results of investment registration documents, update application processing and issue codes to investment projects.
Proposal for implementing investment project;
Copy of ID card or passport for individual investor; copy of the establishment certificate or other equivalent documents certifying the legal status for institutional investors;
Proposal of investment project including the following contents: investors, investment objectives, investment scale, investment capital and capital raising plan, location, duration, schedule of investment, demand for labor, proposal of investment incentives, impact assessment, socio-economic efficiency of the project;
A copy of one of the following documents: financial statements in the last 2 years; financial support commitment of the parent company; financial support commitment of financial institutions; guarantee of financial capacity the investor; documents explaining the financial capacity of the investor;
Office lease agreement, proof of lessor's right (land use right certificate, construction permit, business registration certificate containing the function of real estate business of the lessor or equivalent documents).
Proposal of land use. In case the project does not request the State to allocate, lease land, or permit the change of land use purpose, a copy of the venue leasing agreement or other documents certifying that the investor has the right to use the land must be submitted;
Explanation on technology used in investment projects for projects using technology on the list of technologies restricted from transfer under the law on technology transfer including: technology name, technology origin, technology process diagram; main specifications, usage status of main machines, equipment and technology lines;
BCC contracts for investment projects operated in the form of BCC contracts.
Within 15 days after receiving a complete dossier, the investment registration agency shall grant an investment registration certificate. In case of refusal, the agency must notify the investor and clearly state the reason in written form.
Investment project code
Name and address of the investor
Name of the investment project
Objectives and scale of the investment project
Location of the investment project; land area used
Investment capital of the project (including capital contributed by investors and mobilized capital), capital contribution schedule and capital mobilization sources Operation duration of the project.
Schedule of the investment project: schedule of construction (if any); progress of the operational objectives and major items of the project; in case the project is divided into phases, the objectives, duration and operation contents of each phase must be specified.
Investment incentives, conditions for application (if any)
Provisions for investors implementing the project
Conditions for the investor (if any).
Department of Planning and Investment shall receive, issue, adjust and revoke investment registration certificates for the following investment projects:
Investment projects outside industrial parks, processing zones, hi-tech parks and economic zones;
Investment projects on development of infrastructure of industrial parks, processing zones and hi-tech parks and investment projects in industrial parks, processing zones and hi-tech parks in localities where Management Boards of industrial parks, processing zones and high-tech parks have not yet been established.
Management boards of industrial parks, processing zones, hi-tech parks and economic zones shall receive, issue, adjust and revoke investment registration certificates for investment projects in industrial parks, processing zones, hi-tech parks and economic zones, including:
Investment project on development of infrastructure of industrial parks, processing zones and hi-tech parks;
Investment projects in industrial parks, processing zones, hi-tech parks and economic zones.
Department of Planning and Investment where the investor locates or intends to locate its head office or executive office shall receive, issue, adjust and revoke investment registration certificates of the following investment projects:
Investment projects operate in many provinces and centrally-run cities;
Investment projects operate simultaneously inside and outside industrial parks, processing zones, hi-tech parks and economic zones.
>> Steps to establish an FDI company in Vietnam - 2020 updated (part 2)
Source: VietnamCredit
