Question: I am looking to establish a whole foreign owned company for the purpose of opening a bicycle assembly factory here in Vietnam.
We want the company to be 50% owned by my USA company and 50% owned by my partners Hongkong company.
Could you advise me on the best way to proceed, timeline and cost.
Answer: SBLAW would like to present you with additional information you should be aware of when running a company in Vietnam, under Q&A as follows:
– Quorum: 51% of voting shares
A foreign investor will be able to generally control a JSC with only a 51% stake.
2/ What would be the ideal timeline for such a company set-up?
4/ What documents the investor need to provide to SBLAW to start with company set-up?
(1) In case of having 01 foreign Legal Representative, Work Permit and Temporary Residence Card must be apply and obtain for this person; or
(2) Having from 02 Legal Representatives upward, at least one of them is local and reside in Vietnam.
– Obtainment of a bachelors degree or equivalent
– Having at least three years’ experience in the relevant industry.
– Employment contracts without fixed term in which both Parties do not specify the term and the expiry date of the contract;
– Fixed-term Employment Contracts in which both parties specify the term and the expiry date of the contract within 12 to 36 months;
– Casual employment contracts or regular employment contracts with terms under 12 months.
In case the parties in Employment Contract do not specify the expiry date of the Contract, it shall be classified to the Employment Contracts without fixed term.With the reference to Employment Contract without fixed term, Vietnam Law strictly limits rights of Employer to unilaterally terminate employment contract.
Foreign investors are permitted to remit their profits annually at the end of the financial year or upon termination of the investment in Vietnam. Foreign investors are not permitted to remit profits if the invested company has accumulated losses. In order to repatriate profits, a company must ensure that it has completed the declaration of corporate income tax of the relevant financial year and issued audited financial statements.
The company must then report its intention to repatriate its profits to the tax bureau. If, within 7 days, there is no notice from the tax bureau, the profits may be remitted out. Accordingly, after completing their tax obligations to the State of Vietnam, foreign-invested companies are free to transfer profit abroad and shall not be subjected to withholding tax. However, individual investors are still subject to tax.
Please kindly be advised by Tax/Accounting Advisor for further details.