Vietnam Market Entry: Business Setup Guide for FDI (Update 2026)

Vietnam offers five market entry structures for foreign investors: FDI companies (LLC or JSC), representative offices, branches of foreign traders, and employer-of-record (EOR) arrangements—each governed by Law on Investment 2020 and Law on Enterprise 2020 (as amended by Laws 29/2025 and 76/2025, effective July 1, 2025).

Vietnam attracted USD 38.23 billion in FDI in 2024, ranking third in ASEAN after Singapore and Indonesia. But getting in is the easy part. The standard licensing timeline—IRC (15 working days, 35 for conditional sectors) → ERC (3 working days) → tax/labor registration (7–10 days) → charter capital contribution (90-day deadline)—runs 4–6 weeks. Staying compliant afterward is where most foreign investors stumble.

Three compliance risks derail more FDI projects than any others: late charter capital contribution (VND 30–50 million / ~USD 1,200–2,000 fines + potential IRC/ERC revocation), social insurance violations (VND 50–75 million / ~USD 2,000–3,000 penalties for 50–100 unregistered employees), and blocked profit remittance from incomplete tax clearance. Register your 3–5 year business activities from day one—narrow scope requires costly amendments (6–8 weeks + VND 5–10 million / ~USD 200–400) and re-approval in conditional sectors.

This guide maps the complete operational lifecycle from entity selection through profit repatriation, with statutory deadlines, penalty exposures, and practical execution requirements.

1. Understanding Your Market Entry Options

Vietnam offers multiple legal structures for foreign investors. Your choice affects governance, liability, operational scope, and exit flexibility. The two dominant FDI structures are limited liability companies (LLC) and Joint Stock Companies (JSC). Alternative entry modes—representative offices, branches, and EOR arrangements—serve specific, limited purposes.

1.1 Foreign Direct Investment Structures

Limited Liability Company (LLC)

LLCs with foreign ownership in Vietnam are the most popular structure for foreign investors—offering operational flexibility, limited liability protection, and straightforward governance.

LLCs come in two forms:

• Single-Member LLC: One owner (entity or individual). The owner appoints a Director to manage daily operations. No board of members required.
• Multi-Member LLC: 2–50 members. Governed by a Board of Members, which appoints a Director. Capital changes, charter amendments, and dissolution require member approval per charter-specified voting thresholds.

Capital contribution requirements vary by sector—most have no minimum, while specialized sectors (securities, banking) require VND 42 billion / ~USD 1.7 million or higher (Law on Securities 2019, Article 46). Members’ liability is limited to contributed capital (Law on Enterprise 2020, Article 50). Exit via capital transfer requires approval from other members unless the charter waives this.

Joint Stock Company (JSC)

JSCs suit investors planning future capital raises, IPOs, or broad shareholder bases. They require at least 3 founding shareholders and operate under a formal governance structure: General Meeting of Shareholders → Board of Directors → General Director (Law on Enterprise 2020, Articles 111–157).

Shares are freely transferable unless restricted by charter provisions (Article 120). JSCs face stricter disclosure obligations—mandatory annual general meetings, shareholder voting records, and dividend announcements. Minimum charter capital applies in certain sectors: VND 42 billion (~USD 1.7 million) for securities companies, VND 65 billion (~USD 2.6 million) for insurance companies.

Unlike LLCs, JSCs offer higher exit flexibility since shares transfer without IRC/ERC amendments. The trade-off is heavier governance overhead. Compared to Singapore’s private limited companies—where share transfers are straightforward—Vietnam’s JSC structure still requires charter compliance checks, but the mechanism is significantly more flexible than LLC capital transfers that require DPI notification.

For most first-time FDI investors, the single-member LLC provides the fastest path to operations. JSCs make sense when you’re planning Series A fundraising or eventual listing on HOSE or HNX.

1.2 Alternative Entry Modes

Representative Office

A representative office—or EOR arrangement for hiring without incorporation—lets foreign companies test the Vietnam market without full entity setup. Representative offices can’t generate revenue, sign commercial contracts, or issue invoices (Decree 07/2016/ND-CP, Article 3). Permitted activities: market research, liaison, and promotion only.

They operate under 3-year renewable licenses. All expenses must be funded by the foreign parent. Local hiring is restricted to 5 Vietnamese staff without MOLISA approval. For companies that need to hire quickly without entity setup, EOR arrangements offer a faster alternative—typically operational within 1–2 weeks versus 3–4 weeks for a representative office.

Branch of Foreign Trader

A branch can earn revenue from specific activities but requires a sub-license from the relevant ministry—MOIT for trading branches (Decree 09/2018/ND-CP, Article 12). Branches are restricted to import-export, logistics, and support services. The foreign parent bears full liability.

1.3 Structure Comparison and Decision Framework

For detailed governance, capital requirements, and decision criteria, see our LLC vs JSC vs representative office vs branch comparison for foreign investors.

2. The Complete Setup Roadmap: From Market Entry to Operational Compliance

2.1 Phase 1: Pre-Investment & Market Access Check

Screening Business Lines and Foreign Ownership Caps

Before drafting an investment proposal, screen your intended business activities against Vietnam’s conditional business lines and market access requirements for foreign investors. Foreign ownership caps restrict participation to 49–100% depending on sector (Decree 31/2021/ND-CP, Appendix II). The Ministry of Planning and Investment (MPI) and MOIT maintain sector-specific guidance, but the rules interact in complex ways—e-commerce platforms are capped at 49% unless technology transfer commitments are demonstrated (Decree 52/2013/ND-CP, Article 12), while telecommunications services require separate sub-licenses from the Ministry of Information and Communications (Law on Telecommunications 2009, Article 28).

If your target sector has a 49% cap, you can’t structure around it via nominee shareholder, legal representative, or chief accountant arrangements. Vietnamese authorities cross-check ultimate beneficial ownership during IRC review.

Retail distribution and FDI trading license requirements deserve special attention—Economic Needs Test approval adds 4–8 weeks to your timeline for each retail establishment beyond the first.

⚠️ IMPORTANT: Registering insufficient or overly narrow business lines at incorporation requires later IRC/ERC amendments. This costs 6–8 weeks + VND 5–10 million (~USD 200–400) and re-approval in conditional sectors. Map medium-term activities and register appropriate business lines from day one. DPI won’t approve vague descriptions like “consulting services”—you must specify sub-categories (management consulting, IT consulting, tax consulting).

Location and Investment Form Decisions

As of October 1, 2025, location-based CIT incentives for industrial parks have been removed under the amended CIT Law (Law 32/2025/QH15). Current incentives prioritize high-tech sectors (semiconductors, renewable energy, supporting industries) with 10% CIT for 15 years. SMEs receive revenue-based rates: 15% for revenue ≤VND 3 billion (~USD 120,000), 17% for revenue VND 3–50 billion (~USD 120,000–2 million).

Industrial zones still offer faster customs clearance and pre-built infrastructure. The trade-off: stricter environmental compliance and higher labor costs near urban centers. Unlike Thailand’s BOI zones that bundle tax incentives with location approval, Vietnam now separates these—your location choice and incentive eligibility are evaluated independently.

If you locate inside an industrial zone, the Management Board processes your IRC application. Outside industrial zones, the provincial DPI serves as the licensing authority. In Ho Chi Minh City, the DPI’s Investment Management Division handles projects exceeding USD 10 million.

2.2 Phase 2: Licensing—IRC and ERC

Investment Registration Certificate (IRC)

The IRC confirms your project complies with Vietnam’s investment policy, sectoral restrictions, and capital adequacy requirements (Law on Investment 2020, Articles 38–39). DPI issues it—or the Management Board for industrial zone projects.

Document Checklist:

• Investment proposal (project description, capital structure, implementation timeline)
• Legal documents of the foreign investor (certificate of incorporation, good standing, audited financials for 2 years)
• Project feasibility study (required if capital exceeds VND 15 billion / ~USD 600,000 or conditional sector)
• Financial capacity proof (bank reference letter, shareholder resolution committing capital)
• Lease agreement or land use rights certificate
• Environmental impact assessment or environmental protection commitment (per Decree 08/2022/ND-CP)

Timeline: 15 working days from complete dossier acceptance (Decree 31/2021/ND-CP, Article 39). Conditional projects requiring inter-ministerial clearance: 35 working days. In practice, DPI often requests clarification within the first week—budget an additional 5–7 days for resubmission.

Enterprise Registration Certificate (ERC)

Once you hold the IRC, apply for the ERC with the Business Registration Office under DPI (Law on Enterprise 2020, Articles 26–31). The ERC gives your company legal standing—it assigns your Tax Identification Number (TIN) and authorizes bank accounts, hiring, and contracts.

Timeline: 3 working days from complete dossier (Decree 01/2021/ND-CP, Article 27). The Business Registration Office automatically forwards your information to the tax office, social insurance agency, and statistical office.

Your legal representative carries personal liability beyond their employment scope—understand these risks before making the appointment decision.

For step-by-step IRC and ERC document templates and submission procedures, see our foreign company registration process guide.

2.3 Phase 3: Go-Live Compliance

Tax Registration and E-Invoice Setup

The Business Registration Office automatically forwards your ERC data to the General Department of Taxation (GDT). Complete tax registration formalities within 10 working days of ERC issuance (Law on Tax Administration 2019, Article 33). This means submitting Form 01-DK-TCT, registering for e-invoice issuance, appointing a chief accountant, and declaring your accounting method.

Don’t wait. The tax office schedules an initial site visit within 5 working days to verify your registered address and accounting readiness. If you lack a chief accountant or accounting software, they’ll issue a compliance notice—delaying your first VAT refund or CIT finalization.

From 2025, enterprises must also complete corporate e-ID registration for digital tax filing and banking transactions.

⚠️ RISK ALERT: As of January 16, 2026, Decree 310/2025/ND-CP significantly revises penalty structures for tax and invoice violations. Delayed VAT or CIT filing can block VAT refunds and profit remittance downstream. Engage your accounting provider before ERC issuance—not after.

Charter Capital Contribution

The deadline is firm: 90 days from ERC issuance (Law on Enterprise 2020, Article 47, Clause 1). Transfer the full charter capital into your company’s Direct Investment Capital Account (DICA) at an SBV-licensed bank. Unlike Singapore—where paid-up capital of SGD 1 is legally sufficient—Vietnam enforces actual capital contribution with real consequences for shortfalls.

Practical execution steps:

• Open the DICA before ERC issuance (requires IRC, draft charter, legal representative appointment)
• Complete KYC process (source of funds declaration, ultimate beneficial ownership disclosure per Circular 06/2019/TT-NHNN)
• Arrange inbound transfers via telegraphic transfer (TT) or contribution in kind (requires independent valuation)
• Obtain the bank’s capital contribution confirmation within 5 working days of funds receipt
• Submit confirmation to DPI within 10 working days (Decree 01/2021/ND-CP, Article 44)

Miss this deadline, and you face VND 30–50 million (~USD 1,200–2,000) fines (Decree 122/2021/ND-CP, Article 46). Beyond monetary penalties: DPI may require mandatory charter capital reduction if the shortfall exceeds 50%. If the delay exceeds 180 days, DPI may revoke your IRC/ERC entirely.

Banks process large inbound transfers slowly—especially through multiple intermediary banks. Pre-fund your capital account before ERC issuance.

Labor and Social Insurance Registration

Within 30 days of hiring your first employee, register with DOLISA and the Vietnam Social Security (VSS) agency (Law on Social Insurance 2014, Article 6). You’ll need labor registration forms, internal labor regulations compliant with Labor Code 2019 (covering working hours, overtime, leave, and disciplinary procedures per Articles 109–126), employee labor contracts, and social insurance registration forms (Form TK1-TS, Form D02-TS).

The Labor Code 2019 requires written labor contracts for all employees (Article 13). No exceptions. Verbal agreements or “trial periods” without contracts expose you to labor inspection penalties immediately.

The contribution rate: 21.5% (employer) + 10.5% (employee) of gross salary. This applies to Vietnamese employees and foreign employees with work permits and contracts exceeding 3 months.

For detailed Vietnam employment law and HR compliance requirements for FDI employers, including work permits, internal labor regulations, and social insurance procedures, see our dedicated guide.

Penalty Warning: Failing to register 50–100 employees for social insurance incurs VND 50–75 million (~USD 2,000–3,000) fines (Decree 12/2022/ND-CP, Article 17). MOLISA targets this aggressively in manufacturing and logistics sectors.

2.4 Phase 4: Ongoing Operational Compliance

Periodic Tax Filing Obligations

Once operational, you enter a continuous compliance cycle. Vietnam’s tax system requires monthly or quarterly filings for VAT, CIT, and PIT, plus annual finalization returns.

Key deadlines:

• VAT: Monthly by the 20th (revenue >VND 50 billion / ~USD 2 million) or quarterly by the 30th of the first month of the following quarter
• CIT: Quarterly provisional payments by the 30th of the first month of the following quarter. Annual finalization by March 31 (Decree 126/2020/ND-CP, Article 44)
• PIT: Monthly withholding by the 20th. Annual finalization by March 31
• FCT: Withholding on payments to foreign contractors: 2–10% VAT + 5–10% CIT depending on service type (Circular 103/2014/TT-BTC)

Transfer pricing documentation is mandatory for related-party transactions exceeding VND 50 billion (~USD 2 million) annually or if reporting consecutive losses (Decree 132/2020/ND-CP, Article 15).

Investment Reporting to Authorities

Foreign-invested enterprises must submit quarterly and annual investment reports to DPI and MPI covering capital disbursement, business line implementation, employment compliance, environmental measures, and financials (Law on Investment 2020, Article 75).

Quarterly reports: due by the 10th of the first month of the following quarter. Annual reports: due by January 31 (Decree 31/2021/ND-CP, Article 58). Late or missing reports cost VND 5–10 million (~USD 200–400) per incident (Decree 122/2021/ND-CP, Article 15). If your project stays inactive for 12 months, DPI may suspend or revoke the IRC.

DPI cross-checks investment reports against tax filings and social insurance records. Discrepancies trigger compliance reviews.

Mandatory Statutory Audit

All foreign-invested enterprises must have annual financial statements audited by a Vietnam-licensed independent auditing firm (Law on Independent Audit 2011). This isn’t optional—it applies regardless of company size or revenue. The audited report must be submitted with your CIT finalization by March 31. VAS differs significantly from IFRS—you can’t submit parent company reports or use international audit firms not licensed in Vietnam.

No audit means no profit remittance. Banks require both the audited financial report and CIT finalization receipt to process any outbound dividend transfer. Plan for audit engagement by December of each fiscal year—auditing firms in Vietnam get fully booked in January–February.

Profit Repatriation and Foreign Exchange

You can remit profits abroad after satisfying two conditions: all tax obligations settled (CIT finalized, zero outstanding debts) and audited financials confirm distributable profits (Law on Investment 2020, Article 13). The process requires a profit distribution resolution, tax finalization acceptance document, and bank instruction to transfer from your DICA to the foreign parent.

Banks reject remittance if tax clearance is incomplete or the amount exceeds audited distributable profits. Processing: 3–5 working days once documentation is complete (Circular 06/2019/TT-NHNN). Unlike Thailand or Malaysia where dividend remittance is relatively frictionless, Vietnam’s dual-gate system (tax clearance + audit requirement) means planning your repatriation timeline at least 3–4 months in advance.

3. Compliance Risks and Enforcement Landscape

Vietnam’s enforcement regime combines statutory penalties with discretionary administrative measures. Understanding the penalty structure—and the inspection practices behind it—helps you prioritize compliance investments.

3.1 Common Compliance Failures

Charter capital contribution failure carries the heaviest operational risk beyond the fine itself. DPI may require mandatory capital reduction if the shortfall exceeds 50% of committed capital. Delays beyond 180 days risk IRC/ERC revocation. Pre-fund your capital account and complete banking documentation before ERC issuance.

3.2 Inspection Practices

Vietnamese authorities conduct three types of inspections: scheduled, ad-hoc, and complaint-triggered.

Tax Audits: GDT targets companies with large VAT refund claims, transfer pricing arrangements, or consecutive losses. Audit cycles run 3–5 years for standard taxpayers, 2–3 years for high-risk sectors (real estate, construction). Focus areas: invoice validity, related-party pricing, management fee deductibility. Unlike Singapore’s IRAS—which relies primarily on data analytics and written queries—Vietnam’s GDT frequently conducts on-site audits with document-by-document review.

Labor Inspections: MOLISA checks labor contracts, social insurance registration, and occupational safety. Inspections spike in Q4 before Tet. The most common violation: unregistered employees or verbal employment agreements. Labor-intensive sectors—manufacturing, logistics, construction—face inspections most frequently.

Investment Compliance Reviews: DPI reviews project implementation annually or upon complaints. Red flags: zero revenue for 12+ months, capital disbursement below 50% of committed amount, unregistered business line activities. DPI cross-checks your reports against tax filings and social insurance records, so discrepancies between what you report to DPI and what you file with GDT will trigger a compliance review.

3.3 Risk Scenarios

Case 1: Project Suspension from Late Investment Reports

A Singapore-owned logistics company skipped quarterly investment reports for three consecutive quarters. DPI’s compliance notice triggered a site inspection—which revealed warehousing operations without the required MOIT sub-license. Result: IRC suspension, operations ceased for 6 months. Total cost: lost revenue + VND 45 million (~USD 1,800) in penalties + legal fees.

Case 2: Blocked Profit Remittance

A Korean manufacturer applied to remit USD 2 million to its parent. Bank rejected the request—CIT finalization was still under tax audit, and the company hadn’t responded to GDT’s transfer pricing documentation request within the 10-day statutory deadline. Resolution took 3 months. The delay disrupted the parent’s cash flow planning.

Case 3: IRC Revocation from Capital Contribution Failure

A Hong Kong investor registered USD 10 million charter capital for a real estate project. Only USD 2 million was contributed within the 90-day deadline. DPI issued a penalty notice and required charter capital reduction to USD 2 million. The investor failed to comply within 60 days. DPI revoked the IRC and ERC. Sunk costs exceeded USD 500,000.

4. Your Next Steps

Foreign investors enter the Vietnam market through a structured lifecycle: market access screening, entity selection, IRC/ERC licensing, go-live compliance, and ongoing operational obligations. Success depends on understanding statutory deadlines, pre-positioning capital and banking relationships, and maintaining continuous compliance across tax, labor, and investment reporting.

The enforcement landscape is real. Late charter capital triggers VND 30–50 million fines and potential IRC revocation. Social insurance violations cost up to VND 75 million. Blocked profit remittance from incomplete tax clearance disrupts parent company cash flow. These aren’t theoretical risks—they’re the scenarios we see foreign investors navigate regularly.

Your competitive advantage lies in execution discipline:

• Register broad business lines from day one—amendments cost 6–8 weeks you don’t have
• Pre-fund your capital account before ERC issuance—banking delays are the #1 cause of missed 90-day deadlines
• Engage your accounting provider and chief accountant before tax registration deadlines—not after the compliance notice arrives
• Submit investment reports on time, every quarter—DPI cross-checks everything
• Protect your brand early with trademark registration and IP protection in Vietnam—IP disputes cost more to resolve than to prevent

Indochina Link Vietnam provides company setup services from feasibility assessment through post-licensing compliance management. We navigate DPI, GDT, MOLISA, and SBV processes daily—IRC/ERC licensing, tax registration, capital contribution support, and ongoing compliance management tailored to your investment objectives. Questions about your specific structure? Contact us for a consultation.

Important: This information reflects regulations current as of January 2026. Vietnamese tax and investment laws change frequently. For specific situations, consult qualified legal and tax professionals licensed in Vietnam.