Advantages of Vietnam Business Set Up

Vietnam joined the World Trade Organization in 2007 and implemented economic reforms. Vietnam’s economic reforms  led to a increase in FDI, particularly in trade and investment liberalization. Vietnam attracted more than $20 billion in FDI pledges in 2007, 70% more than in 2006.

Investors looking to incorporate in Vietnam have several the choice of several legal business entities. Businesses can be set up with 100% foreign ownership, either as a representative office or a joint venture. A joint venture company is an excellent way to gain ready market access; whereas a representative office is an efficient way for global businesses to create a market presence in Vietnam.

Vietnam business set up requires a minimum of one director, who need not be resident in Vietnam and there are no capital gains requirements.

A Vietnamese company can be set up with just one shareholder and director.

Vietnamese companies recording tax losses can carry them forward for up to 5 years.

Vietnam continues to have rising investments but is still regarded as a risky destination by foreign investors. According to a Japanese External Trade Organization recent survey of Japan firms operating in Vietnam, complaints include high utilities costs, office rentals and skilled labour. Other issues/complaints include official corruption and bureaucracy, the lack of transparent regulations, and the failure to enforce investor rights.

Following forming a company in Vietnam, all foreign-invested companies are required to submit annual audited financial statements.

The World Bank and US-based Heritage Foundation have both ranked Vietnam as a difficult place to do business. (View the World Bank survey and the 2010 Index of Economic Freedom).

Vietnam is negatively ranked 75th by the Global Competitiveness Report 2009-2010, which offers invaluable insight into the policies, institutions, and factors driving productivity in Vietnam.

Vietnam is negatively ranked as the world's 144th freest economy in the Heritage Organisation’s 2010 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labour markets.

Investors interested in representative office  company formation should note that to obtain a business license in Vietnam, a foreign company must have been in operation for at least one year from its date of incorporation in its home country.

After Vietnam business set up, the company must pay a corporation tax of 28% on all taxable income.

Despite legal reforms, Vietnamese company law is complicated and often poorly enforced. Vietnam is negatively perceived as the world's 120th least corrupt country in the 2009 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians.