Vietnam company registration
Healy Consultants Group PLC
09 April, 2014
Vietnam company registration is difficult for foreign investors because of complex licensing procedures. That said, economic reforms are attracting foreign investors, export-orientated manufacturing industries. With an ample amount of cheap labor supply, Vietnam is a great option for investors who want to expand to the APAC region. Vietnam company registration has the following advantages:
· A Vietnam limited liability company can be incorporated with a minimum of one shareholder and one director of any nationality. The minimum paid up share capital is US$1 and you will not need to travel to complete the engagement.
· Vietnam company formation assists global investors to legitimately conduct business in Vietnam with 100% foreign ownership in selected sectors.
· A Vietnam Join Venture is an ideal strategy for foreign investment in Vietnam and to gain ready access to local markets.
· A representative office is a cost-effective option for global companies looking to carry out Vietnam company incorporation, to create a market presence.
· According to Vietnam company law, Vietnam company incorporation requires a minimum of one director, who need not be resident in Vietnam.
· Generally, there are no minimum capital requirements for Vietnam business setup except for a few specific business lines such as real estate, insurance, aviation services, banking and securities.
· Vietnam joined the WTO in January 2007, obliging it to reform it legal system, strengthen intellectual property rights protection and lift trade barriers.
· Vietnam has the lowest labor rates in the region which is US$40 monthly, followed by Cambodia where average monthly labor costs US$45 and Thailand where the average labor cost is US$70.
· Vietnam is a member of ASEAN, meaning free trade access such as no import duty with other member countries.
Before entering the Vietnamese market, foreign investors should be aware of the following accounting and tax regulations:
· Any corporation established under Vietnamese law must pay taxes on its worldwide income. Foreign companies with permanent operations in Vietnam must pay taxes on income from within Vietnam as well as foreign income generated as a result of the Vietnam office's operations. On the other hand, foreign companies without permanent Vietnam offices only need to pay taxes on locally-sourced income. The standard Corporate Income Tax (CIT) rate is 25%, though for enterprises operating in the oil and gas sectors may be subject to rates between 32% and 50%.
· For tax purposes, an individual who has resided in Vietnam for more than 183 days in a year or 12 consecutive months from arrival is considered a resident. Residents are subject to tax on worldwide income, which is on a progressive scale.
· Non-resident individuals (whose who have stayed for more than 90 days but less than 183 days) are taxed at a flat rate of 20%. Taxable income includes income received from working in Vietnam throughout the tax year, though DTA provisions with non-residents' home countries may cause the tax rate to vary.
· With regards to accounting foreign-invested entities are required to adopt the Vietnamese Accounting System. Should the company deviate from, or modify, the VAS, it is required to seek approval from the Ministry of Finance before the changes are implemented.
· Accounting records must be kept in the local currency, which is Vietnamese Dong. They must also be written in Vietnamese, though they may be accompanied by a common foreign language such as English.
· A Vietnam-based auditing company must audit annual financial statements of foreign business entities. These statements must be filed with the licensing agency, the Ministry of Finance, the statistics office, and tax authorities 90days before the end of the year.
With recent economic reforms and the Government effort to offer more tax incentives for foreign investors, Vietnam is becoming a more favorite destination for multinational firms.
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