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Vietnam is an attractive destination for foreign investors seeking to enter the service sector, thanks to its growing economy and expanding middle class. However, setting up a service business in Vietnam requires strict compliance with local laws and regulatory frameworks. Foreign investors who fail to meet these mandatory conditions often face delays, additional costs, or even denial of their business registration. This guide outlines the key legal and practical requirements to establish a service business in Vietnam.
1. Oversea Investment and Business Registration
Investment Registration Certificate (IRC)
Foreign investors must apply for an Investment Registration Certificate (IRC) when establishing a service business. The IRC outlines the project details, including capital, scope of business, and duration of operation.
Enterprise Registration Certificate (ERC)
After obtaining the IRC, investors must apply for an Enterprise Registration Certificate (ERC). This certificate legally recognizes the company’s existence and grants it the right to operate.
Key Point: Both IRC and ERC are mandatory for foreign-owned service businesses.
2. Compliance with Market Access Conditions
Vietnam imposes specific conditions on foreign investors in the service sector. These conditions depend on Vietnam’s commitments under international agreements such as the WTO and CPTPP. Some services, like logistics, education, and healthcare, may require additional approvals or be subject to foreign ownership restrictions.
How to Comply: Investors must review Vietnam’s Schedule of Commitments under the WTO and related bilateral or regional trade agreements to determine eligibility.
3. Minimum Capital Requirements
While Vietnam does not set a general minimum capital requirement, certain service industries—such as finance, education, and real estate—require higher charter capital to obtain approval. Investors must demonstrate sufficient financial capacity to support their proposed operations.
Tip: Ensure financial statements and proof of capital are prepared according to Vietnamese regulations.
4. Location and Lease Agreement
To establish a service business, investors must provide a valid office lease agreement in compliance with local zoning laws. Virtual offices are typically not accepted for business registration.
Note: The business address stated in the ERC must match the lease agreement submitted to authorities.
5. Business Lines and Licensing Requirements
Foreign investors must clearly define their intended business lines in line with Vietnam’s classification system. Some service activities require sub-licenses, such as:
- Education services (requires approval from the Ministry of Education and Training)
- Healthcare services (requires approval from the Ministry of Health)
- Tourism services (requires a travel business license)
Advice: Conduct a pre-licensing review to ensure all required sub-licenses are identified.
6. Tax and Accounting Compliance
Once established, service businesses must comply with Vietnamese tax obligations, including:
- Corporate Income Tax (CIT)
- Value-Added Tax (VAT)
- Personal Income Tax (PIT) for employees
They must also adopt Vietnamese Accounting Standards (VAS), even if they also use international standards for internal reporting.
FAQs
1. Do foreign investors always need an IRC to set up a service business in Vietnam?
Yes, foreign investors are required to obtain an IRC before applying for the Enterprise Registration Certificate.
2. Are there restrictions on foreign ownership in Vietnam’s service sector?
Yes, certain service sectors are restricted or capped under Vietnam’s WTO and FTA commitments.
3. What documents are required for company registration?
Commonly required documents include investor identification, financial proof, office lease agreement, and company charter.
4. Can a service company use a virtual office address?
No, Vietnamese authorities require a physical business address stated in a valid lease contract.
5. What are the ongoing compliance obligations for service businesses in Vietnam?
They include tax filings, labor registration, social insurance contributions, and annual financial reporting under VAS.
Conclusion
Establishing a service business in Vietnam offers excellent opportunities, but success depends on strict compliance with legal requirements. Investors must secure the necessary certificates, meet capital and location conditions, and carefully review sector-specific restrictions. By preparing thoroughly and working with experienced advisors, foreign investors can ensure a smooth and efficient entry into Vietnam’s dynamic service sector.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top-tier Vietnam law firm for doing business in Vietnam. If you need any advice, please contact us for further information or collaboration.
