Vietnam Key Industries

Infrastructure Industry Capabilities

Manufacturing Industry Capabilities

Agriculture Industry Capabilities

 Incorporating in Vietnam

Types of Entities

Registering a Limited Liability Company

  1. Obtain a form for registering a Limited Liability Company which can be obtained from the Business Registration Office.
  2. Draft the company charter.
  3. After which, prepare a list of the company’s members, attached with valid personal identification documents.
  4. Attach a copy of a decision of establishment, certificate of business registration or other relevant certification of the institutional member.
  5. Next, obtain a certification of legal capital and a valid copy of the practice certificate of the general partners or individual.
  6. After completing all the documents, the registration has to be done at the Provincial Business Registration Office under the Department of Planning and Investment in the province where the office is going to be located at.

Registering a Joint Stock/Shareholding Company

  1. Obtain a form for registering a Shareholding Company which can be obtained from the Business Registration Office.
  2. Draft the company charter.
  3. After which, prepare a list of the company’s members, attached with valid personal identification documents.
  4. Attach a copy of a decision of establishment, certificate of business registration or other relevant certification of the institutional member.
  5. Next, obtain a certification of legal capital and a valid copy of the practice certificate of the general partners or individual.
  6. After completing all the documents, the registration has to be done at the Provincial Business Registration Office under the Department of Planning and Investment in the province where the office is going to be located at.

Employment Regulations

Employment

The employment law in Vietnam is governed by the Ministry of Labour – Invalids and Social Affairs’ Labour Code. Employers with more than 10 employees are required to issue and register their Internal Work Regulations (Chapter VIII) with the Ministry. Unless the work duration is less than three months, the employer and employee have to conclude the employment contract in writing, with both parties having a copy each. The contract has to include key particulars including employer, employee and salary details as stipulated in Article 23. In addition, the employment contracts must comply with Vietnamese laws and the collective bargaining agreement, if any. If there are any supplements or amendments made to the contract by any party, the other party has to be notified at least three working days in advance. The agreed supplements or amendments have to be included in a signed annex to the contract or a new signed contract. Lastly, if the parties failed to reach an agreement, the initial contract shall continue to be enforced.

Termination

An employer has the right to unilaterally terminate the employment contract when any of the following applies:

The employer has to provide notice to the employee when unilaterally terminating an employment contract.

Employment Type

Notice

Indefinite term employment contract

At least 45 days

Definite term employment contract

At least 30 days

Seasonal work employment contract or for a specific task of less than 12 months

At least 3 working days

Employees may also terminate the contract unilaterally under certain circumstances under Article 37.  In this case, each party may withdraw their unilateral termination at any time prior to the expiry of the notice period by a written notification. The withdrawal will be considered valid if it is agreed by the other party. 

Payroll and Tax Regulations 

Social Security Scheme

Vietnam’s social security system consist of 3 elements, Social Insurance (SI), Unemployment Insurance (UI) and Health Insurance (HI). SI and UI are only applicable to Vietnamese employees. HI contributions are required for Vietnamese and foreign employees under Vietnam labour contracts. Therefore, foreign employees under overseas employment contracts in Vietnam do not require HI contributions. Both the employer and employee are required to make contributions to the fund. Consequently, the contribution is calculated based on the employee’s gross salary, capped at 20 times the regional gross minimum salary which is subjected to change every year.

Vietnam Tax

Ministry of Finance is responsible for managing tax in Vietnam.

Corporate Income Tax

There is no difference in tax residency for Corporate Income Tax (CIT). The CIT applies to all domestic entities which are incorporated under Vietnamese laws, and foreign entities which are incorporated under foreign laws while doing business in Vietnam. The standard CIT rate is at 20%. However, preferential CIT rates of 17% may be granted to certain encouraged projects. In addition, oil and gas companies are subjected to CIT rates ranging from 32% to 50%, depending on the project’s conditions such as its location. In the same fashion, mineral resources companies are subjected to rates of 40% or 50%, depending on the project’s location.

Personal Income Tax

All tax residents are subjected to the Personal Income Tax (PIT) on all global taxable income. Tax residents are individuals who:

Employment income is applied on progressive tax rates.

Resident Employment Income Tax Rates

Annual Taxable Income

(in million VND)

Monthly Taxable Income

(in million VND)

Rate (%)

Up to $60

Up to $5

5%

Above $60 to $120

Above $5 to $10

10%

Above $120 to $216

Above $10 to $18

15%

Above $216 to $384

Above $18 to $32

20%

Above $384 to $624

Above $32 to $52

25%

Above $624 to $960

Above $52 to $80

30%

Above $960

More than $80

35%

Other income is taxed at different rates.

Resident Other Incomes Tax Rates

Type of Taxable Income

Tax rate

Business income

0.5% to 5%

Interest (but not bank interest) / dividends

5%

Sale of shares

0.1% of the sales proceeds

Capital assignment

20% of the net gain

Sale of real estate

2% of the sales proceeds

Income from copyright

5%

Income from franchising / royalties

5%

Income from winning prizes

10%

Income from inheritances / gifts

10%

Non-residents are subjected to PIT at a flat tax rate of 20% on their Vietnam-sourced employment income. For Vietnam-sourced business income, the rates are taxed between 1% and 5%, depending on the type of business activity. Other incomes are subjected to flat rates as shown below. Notehat the rates may differ if there are any Double Taxation Agreements enforced.

Non-resident Employment Income and Other Incomes Tax Rates

Type of taxable income

Tax rate

Employment income

20%

Other Incomes

Business income

1% to 5%

Interest/dividends

5%

Sale of shares/Capital assignment

0.1% of the sales proceeds

Sale of real estate

2% of the sales proceeds

Income from royalties/franchising

5%

Income from inheritance/gifts/winning prizes

10%

 

Other Taxes

Immigration

Work Passes and Permits

Work Permit

 Who is it for?

  • For manager, executive director, expert or technician

Requirements

  • The state agencies have to approve in writing on the use of foreign workers
  • Applicant has to possess adequate health condition
  • Applicant has to be able to meet job requirements
  • Being free of criminal records internationally and in Vietnam

Brief overview of application steps

  1. The applicant has to request for the issuance of a work permit from the employer in accordance with regulations of the Ministry of Labour – Invalids and Social Affairs.
  2.  Secondly, the health or medical certificate is to be issued by a competent foreign or Vietnamese health care agency or organization.
  3. Obtain a judicial record or written document confirming the foreign worker is not an offender or being prosecuted for criminal liability issued by the foreign country. A judicial record issued by Vietnam is sufficient if the foreign worker resides in Vietnam.
  4. Next, produce the proof of professional qualifications and skills of foreign workers or other documents as required by the occupation group, certifying that he/she is a manager, executive, expert or technician
  5. After which, prepare the certified copy of the applicant’s passport, valid papers or international travel documents, as well as other documents relating to the foreign worker such as the work agreement
  6. The photocopy of the medical certificate, judicial record, proof of foreign worker’s qualifications and skills as well as other foreign worker documents has to be collated with the original copy. Foreign documents have to be translated into Vietnamese and consularized – unless exempted.
  7. Lastly, undergo the notarization of documents.