THE TOP 5 THINGS INVESTORS NEED TO KNOW ABOUT VIETNAM
(1) Starting a company
There are licenses (e.g., Investment Registration Certificate, Enterprise Registration Certificate, etc.) that investors need to apply before setting up a company in Vietnam and commencing its operations. The documents required for the license application will vary depending on the types of business and the intended structure of the company. This will be the first hurdle that investors commonly face.
(2) Foreign ownership restriction
Although Vietnamese laws does not restrict a company to be 100% owned by foreigners, investors must be aware that there are certain restrictions depending on the types of the business activities (e.g., health care and distribution) that a 100% foreign-owned company can undertake. It is best to find out about these restrictions before setting up a company.
On land ownership, foreigners can obtain a “Land Use Right” that allows the title owner to use the land for a maximum of 50 years in accordance with their valid and approved investment location.
The Vietnamese government understands the importance of foreign direct investments into Vietnam and offers reduced tax rates from 20% to 10% or less to businesses in encouraged industries like those in technology as well as encouraged locations at the certain industrial zones.
Do note that there is double tax agreement between Singapore and Vietnam that Singapore investors can enjoy. For example, no capital gain tax if certain conditions are met.
Vietnam being a Socialist Republic uses similar terms like People’s Republic of China (e.g., land use rights, red invoice, etc.). Investors who have invested in the People’s Republic of China may find it easier to understand the terms that are being used.
For the culture in Vietnam, Vietnamese prefer face-to-face meetings and emphasize the importance of relationships. They are punctual for meetings and expect others to be on time.
(5) Changes in the law
Vietnam’s laws are going through a number of changes. Their interpretation may not always be clear and many new laws lack precedent cases for clarity. Investors must be prepared to spend additional time and effort to clarify the changes and determine how these will impact their business.
THE IMPORTANCE OF WORKING WITH ADVISORS WHO KNOW VIETNAM
Investors will be able to:
- Understand the finer details of doing business in Vietnam
- Develop a greater appreciation of practical issues on the ground and the best ways to overcome them
- Better manage the budget for the incorporation and maintenance of the company
- Obtain holistic advice on advisory and compliance matters
YOUR IDEAL LAUNCHPAD INTO ASEAN
Singapore is an excellent base for reaching out to the region’s developing markets.
- Businesses in Singapore enjoy tax and other benefits of intra-ASEAN trade. They also enjoy free trade and double tax agreement benefits that Singapore has with neighbouring countries such as China, India, Australia, Japan and South Korea
- Singapore is the de facto financial capital of ASEAN’s treasury function
- It enjoys a low corporate income tax rate (currently at 17%), has no tax payable on dividends earned externally from its borders (subject to meeting conditions) and offers tax incentives/financial assistance to small-medium enterprises wishing to establish operations overseas
- There is no capital gain tax. If a Singapore holding company were to sell its shares in the subsidiary and makes a profit, there is no capital gain tax at the Singapore holding company level
- Strong reputation as a leading global financial hub