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Everything you need to know before buying real estate is included in our Vietnam Property Pack
Due diligence in Vietnam involves comprehensive business licensing, tax compliance, corporate structure selection, and legal verification processes that foreign property investors must navigate. Understanding these requirements is crucial before making any real estate investment decisions in Vietnam's rapidly evolving market.
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Foreign companies need Investment Registration Certificates and Enterprise Registration Certificates to operate legally, with setup costs averaging $20,000-$37,000.
Vietnam imposes a 20% corporate tax rate, 10% VAT, and various sector-specific restrictions on foreign ownership, particularly in sensitive industries.
| Key Requirement | Timeline | Cost Range (USD) |
|---|---|---|
| Investment Registration Certificate | 15 working days | Varies by sector |
| Enterprise Registration Certificate | 3-5 working days | $300-900 |
| Legal services (full setup) | 4-8 weeks | $10,000-$25,000 |
| Bank account opening | 1-2 weeks | $500-$1,500 |
| Annual audit requirements | Quarterly filings | $5,000-$10,000 |
What licenses and permits does a foreign company need to operate legally in Vietnam?
Foreign companies must obtain two primary documents to establish legal operations in Vietnam's property market.
The Investment Registration Certificate (IRC) is mandatory for most foreign-invested businesses with ownership exceeding 50%. The Department of Planning and Investment issues this certificate, which authorizes foreign capital and defines the investment project scope. Processing typically takes 15 working days, though sensitive sectors may require additional time.
The Enterprise Registration Certificate (ERC) serves as the main business license establishing the company's legal identity. This certificate is issued within 3-5 business days after IRC approval by the relevant department. Both certificates are essential for any foreign property investment activities.
Additional sector-specific licenses may be required depending on your business activities, such as international travel services, education, or finance. These permits are issued by relevant ministries and vary significantly in processing times and requirements.
VAT registration, tax identification with the General Tax Department, and employer registration complete the basic licensing requirements for foreign companies operating in Vietnam's real estate sector.
What are the typical processing times and government fees for these licenses?
The Investment Registration Certificate requires approximately 15 working days for standard applications, though complex projects or sensitive sectors may extend this timeline significantly.
Enterprise Registration Certificate processing is faster, typically completed within 3-5 working days following IRC approval. The sequential nature of these applications means total licensing time ranges from 18-20 working days minimum for straightforward cases.
Government fees vary by sector and registered capital. The Business License Tax currently ranges from 1,000,000 to 3,000,000 VND annually depending on registered capital, but this tax will be abolished starting January 1, 2026. Some sectors have specific appraisal fees, such as 650,000 VND for tour guide cards in travel services.
Full company setup including professional fees typically costs US$20,000-$37,000, covering incorporation, licensing, bank account opening, and legal registration fees. This comprehensive cost varies based on business type, scope, and complexity of the investment structure.
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What are the main business taxes and current rates in Vietnam?
| Tax Type | Standard Rate | Special Conditions |
|---|---|---|
| Corporate Income Tax | 20% | 15% for SMEs (revenue up to VND 3 billion) |
| Corporate Income Tax | 20% | 17% for SMEs (VND 3-50 billion revenue) |
| Value Added Tax | 10% | 0% on qualifying exports |
| Personal Income Tax | Variable | Applied to employee salaries |
| Social Insurance | 17.5% (employer) | 8% employee contribution |
| Health Insurance | 3% (employer) | 1.5% employee contribution |
| Unemployment Insurance | 1% (employer) | 1% employee contribution |
Which corporate structures are available to foreign investors?
Limited Liability Companies (LLC) represent the most popular choice for foreign property investors in Vietnam, offering flexibility for wholly foreign-owned entities or joint ventures.
Joint Stock Companies (JSC) suit larger investment projects and allow share issuance, making them ideal for substantial property development ventures. This structure provides greater flexibility for raising capital and bringing in additional investors over time.
Branch offices are permitted for certain activities but face significant restrictions on operational scope. Representative offices serve market research purposes only and cannot generate direct revenue, making them unsuitable for active property investment activities.
Most foreign property investors choose LLC structures due to their operational flexibility, straightforward management requirements, and compatibility with Vietnam's foreign investment regulations. The LLC structure also provides better protection for investors while maintaining compliance with local ownership restrictions.
What restrictions exist on foreign ownership in different sectors?
Foreign ownership restrictions in Vietnam vary significantly by industry, with critical sectors facing the strictest limitations.
Banking, telecommunications, media, and defense sectors typically impose ownership caps ranging from 49% to 65% foreign participation. These restrictions directly impact property investors seeking to establish related service businesses or financing operations.
Many ordinary commercial sectors now permit up to 100% foreign ownership, including most property-related services, construction, and real estate development activities. This liberalization has opened significant opportunities for foreign property investors in recent years.
Land ownership, broadcasting, and certain professional services maintain stricter limits, with land ownership completely prohibited for foreign entities. Foreign investors can only obtain land use rights through long-term lease arrangements, which creates specific due diligence requirements for property investments.
Real estate brokerage and property management services generally allow substantial foreign participation, though specific licensing requirements apply to these activities.
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What are the legal requirements for hiring Vietnamese and foreign employees?
Vietnamese employees require formal labor contracts complying with minimum wage regulations, social insurance contributions, and comprehensive labor law requirements.
Foreign staff must obtain work permits before beginning employment unless specifically exempted under Vietnamese law. Employers must sponsor work permit applications and ensure all employment contracts align with local labor regulations. The work permit process typically requires educational credentials, criminal background checks, and health certificates.
Employment contracts must specify salary, benefits, working hours, and termination conditions in accordance with Vietnam's Labor Code. Both Vietnamese and foreign employees are entitled to statutory benefits including annual leave, sick leave, and maternity/paternity benefits.
Employers must register with local labor authorities and maintain detailed employment records for all staff members. Social insurance registration is mandatory for all employees, with specific contribution rates applying to both employers and employees.
Probationary periods, overtime compensation, and performance evaluation procedures must comply with Vietnamese labor standards, which are strictly enforced by local authorities.
What are the current labor costs including wages and social contributions?
1. **Minimum wage rates vary by region:** VND 4.68-5.2 million monthly in major cities like Ho Chi Minh City and Hanoi2. **Social insurance contributions:** 17.5% employer contribution, 8% employee contribution of gross salary3. **Health insurance requirements:** 3% employer contribution, 1.5% employee contribution4. **Unemployment insurance:** 1% each from employer and employee5. **Additional mandatory costs:** Annual bonuses (typically 1-2 months salary), overtime pay, and statutory allowances for transportation and mealsHow long does opening a local bank account take for foreign companies?
Opening a local bank account for foreign-owned companies typically requires 1-2 weeks after complete business establishment documentation.
Required documents include company registration certificates, operating licenses, and identification documents for legal representatives. Banks may also request business plans, projected financial statements, and proof of registered office address.
Foreign investors should expect additional scrutiny during the account opening process, including enhanced due diligence procedures and potential requirements for minimum deposit amounts. Some banks specialize in serving foreign-invested enterprises and offer streamlined processes.
The account opening timeline can extend if documentation is incomplete or if the bank requires additional approvals from head office or regulatory authorities. Engaging experienced local banking partners can significantly reduce processing times and ensure compliance with all requirements.
What annual financial reporting and auditing requirements must businesses meet?
All companies operating in Vietnam must prepare annual financial statements following Vietnamese Accounting Standards or International Financial Reporting Standards.
Foreign-invested enterprises generally require independent audits by licensed Vietnamese auditors, with audit reports submitted to tax authorities and the Department of Planning and Investment. These audited financial statements must be completed within 90 days of the financial year-end.
Quarterly tax filings and monthly VAT returns are mandatory for most businesses, requiring detailed revenue, expense, and tax liability reporting. Companies must maintain comprehensive accounting records in Vietnamese language or provide certified translations.
Annual corporate income tax returns must be filed within 90 days of year-end, accompanied by audited financial statements and supporting documentation. Late filing or non-compliance results in significant penalties and potential business license suspension.
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What are the main risks with land use rights and how can they be verified?
Foreign entities cannot own land in Vietnam, only long-term lease use rights, creating complex title verification requirements for property investors.
Land use rights verification involves examining multiple documents including land use certificates, construction permits, and zoning compliance records. Encumbrance searches must confirm no outstanding liens, mortgages, or legal disputes affecting the property rights.
Common risks include unclear title chains, unauthorized construction, zoning violations, and disputes with previous owners or government authorities. Environmental compliance issues and infrastructure development plans can also significantly impact land use rights value and transferability.
Due diligence requires specialist legal counsel familiar with Vietnamese land law to review all documentation with relevant registries. Physical site inspections should verify actual land boundaries, construction compliance, and infrastructure access rights.
Government master planning changes, infrastructure projects, and environmental regulations can affect land use rights without prior notice to current holders, requiring ongoing monitoring of regulatory developments affecting specific locations.
What dispute resolution methods are available and how reliable are Vietnamese courts?
Vietnam offers four primary dispute resolution methods: negotiation, mediation, arbitration, and litigation through Vietnamese courts.
Arbitration, both domestic and international, is commonly recommended for foreign investors due to concerns about court efficiency and neutrality in commercial disputes. The Vietnam International Arbitration Centre and other recognized institutions provide more predictable resolution processes.
Vietnamese courts are generally viewed as slow and less predictable, particularly in cases involving foreign entities or complex commercial disputes. Court proceedings can extend for years, with limited transparency in decision-making processes.
International arbitration tends to be faster and more enforceable internationally, making it the preferred choice for significant property investment disputes. Arbitral awards are generally more readily recognized and enforced across jurisdictions.
Many foreign investors include mandatory arbitration clauses in contracts to avoid potential complications with the local court system while ensuring access to internationally recognized dispute resolution mechanisms.
What do professional services for due diligence typically cost?
| Service Type | Typical Cost Range (USD) | Scope Included |
|---|---|---|
| Legal Services | $10,000 - $25,000 | Incorporation, licensing, contract review |
| Accounting & Auditing | $5,000 - $10,000 | Financial setup, compliance, annual audit |
| Business Consulting | $2,000 - $10,000 | Market entry, regulatory guidance |
| Tax Advisory | $3,000 - $8,000 | Tax structure optimization, compliance |
| Property Due Diligence | $5,000 - $15,000 | Title verification, legal compliance |
| Banking Services | $1,000 - $3,000 | Account setup, financial documentation |
| Translation Services | $500 - $2,000 | Document translation, notarization |
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Due diligence in Vietnam requires comprehensive understanding of licensing, taxation, corporate structures, and regulatory compliance that can significantly impact property investment success.
Foreign investors must navigate complex land use rights, employment regulations, and professional service costs while ensuring proper dispute resolution mechanisms are in place before committing to Vietnamese property investments.
It's something we develop in our Vietnam property pack.
Sources
- ASEAN Briefing - Investment Licensing in Vietnam
- EmerHub - Business License in Vietnam
- Lawyers Vietnam - Company Opening Guide
- Healy Consultants - Vietnam Company Registration
- VietAn Law - Travel Service License Fees
- VietAn Law - Company Setup Fees
- ASEAN Briefing - Taxation Guide
- RBA Asia - Corporate Income Tax Law