In case the foreign company wishes to carry out business activities in Vietnam for a long term and for the profit purposes, it shall be required to setup a Foreign Invested Company in Vietnam.
Foreign Invested Company in Vietnam can be structured under the form of Limited Liability Company or Join Stock Company.
Given that the Company would like to become unique owner of the subsidiary company in Vietnam, it should be structured under the form of Limited Liability Company with one member.
In order to setup a Foreign Invested Company in Vietnam, the Company shall be required to inject capital.
For example, with the respect to IT Services, Vietnam Law does not apply any requirement for minimum rate of capital. It does mean that in theory, the Company can setup a subsidiary company with only 01 US Dollar.
However, according to our practical experience, during examining application for setting up Foreign Invested Company, the Company must prove that the proposed capital to be injected into Vietnam is sufficient for covering cost arising during the operation term of such company.
Also, the Competent Authority shall determine the operation term of Foreign Invested Company in Vietnam based on its equity capital. From our experience in similar cases, we are in opinion that for operating in the field of IT Services, the Company can consider to contribute from 70,000 to 150,000USD.
We also further note that charter capital contribution can be made into one or more installations. However, capital contribution must be completed within 36 months from establishment of the Foreign Invested Company.
During operation, the Foreign Invested Company in Vietnam may be subjected to following taxes:
- Corporate Income Tax(25%) which is levied on the taxable income of the Company. Taxable income of the Company to be calculated Corporate Income Tax shall be revenues generated in its course of production less reasonable expenses in the relevant fiscal year;
- Value Added Tax (VAT) (0-10%)applies to the supply of goods and services for use in production, business or consumption in Vietnam. VAT is calculated on the sale/purchase price of relevant goods or service before the addition of VAT;
- Import and Export Duties
- Personal Income Tax (PIT): PIT shall be applied to resident foreigner who stay in Vietnam for 183 days or more within a consecutive 12 month period at progressive rates on worldwide-sourced regular income (regardless of where the income is paid) and Vietnam-sourced irregular income. PIT shall be applied to non-resident foreigner who stays in Vietnam for less than 183 days in a consecutive 12 month period on regular and irregular income sourced in Vietnam during their residence in Vietnam. PIT shall be applied to Vietnamese citizens working in Vietnam or outside Vietnam on worldwide-sourced regular income and irregular income.