1. Conditions for foreign investors to set up a company in Hue City

First, foreign investors who want to set up a company in Hue City must meet market access conditions for foreign investors. Specifically, it is necessary to consider industries and occupations that limit foreign investors, including: Industries and occupations that do not have market access, industries, and occupations that have conditional market access.

See details: https://phong-partners.com/en/dich-vu-phap-ly/investment-consulting/market-access-requirements-for-foreign-investor-1179.html

Currently, Vietnamese law regulates 84 industries and occupations that limit market access for foreign investors, including:

• 25 industries and occupations that have not yet had market access, such as press activities; investigation and security services; producing and trading in weapons, explosives and support tools;…
• 59 industries and occupations have conditional market access, such as real estate business; educational services; hydropower, offshore wind power and nuclear energy; insurance; bank; securities trading and other services related to insurance, banking, securities trading;...

Contact us to find out you can set up a company in Vietnam: https://phong-partners.com/

Second, before setting up a company in Hue City, foreign investors must have an investment project and carry out procedures for granting the Investment Registration Certificate and Enterprise Registration Certificate later then. Exception for some cases of setting up innovative small and medium-sized startups creation and innovative start-up investment fund according to the provisions of law on supporting small and medium-sized enterprises.

2. How much money do you need to invest when you set up a company in Hue City?

According to Vietnamese investment laws, at present there are a total of 228 conditional business lines, of which more than 100 business lines require legal capital or deposits. This is a measure for businesses in general and foreign investors in particular to prove to state agencies that they are economically capable and can ensure the safety, legitimate rights and interests of customers and partners when participating in transactions with your business. Therefore, when foreign investors want to set up a company in Hue City with business lines that require legal capital or deposits, they must meet those requirements.

Examples of business lines require legal capital or deposits: Business of labor subleasing services – the Deposit level is 02 billion VND.

 Otherwise, the remaining industries which are not required for a minimum capital, basically, the foreign investors are freely to put any amount to set up a company in Hue City. However, due to the policies to prevent money laundering, illegal immigration, trespassing on national territory and many other reasons, the government has the right to refuse your application of setting up a company in Hue City with an amount of capital is too low. The capital must ensure to run a project, enough to pay for necessary expenses such as office rent, salary & wages, legal expenses...

3. What are basic licenses when you set up a company in Hue City?

There are two basic licenses that every foreign investors must get when they set up a company in Hue City:

• Investment Registration Certificate
• Enterprise Registration Certificate

In addition, some licenses and certificates are required if the foreign investors invest in a condition industry which is required those, such as: Work permit foe foreign labor; International travel business license; Liquor license; security and order conditions license; Food hygiene and safety license; construction certificate… Those are called sub-license.

4. Step-by-step set up a company in Hue City, Vietnam

4.1. Phase 1: Pre-investment approval

When entering Vietnam to invest in a project, foreign investors must complete procedures to apply for an Investment Registration Certificate. However, before applying for an Investment Registration Certificate, in some cases investors must register their investment policies under the authority of the National Assembly, the Prime Minister or the People's Committee provincial people.

After the investment policy has been approved by competent authorities. The investment registration agency issues Investment Registration Certificates for investment projects subject to investment policy approval within 5-15 days depending on each specific case.

This procedures required some difficult conditions and requirements as well in some special industries.

4.2. Phase 2: Investment Registration Certificate Application

After pre-investment approval or some cases that are not subject to investment policy decisions, applying for IRC is a mandatory steps for foreign investors who set up a company in Hue City.

Step 1: The investor submits 01 set of application documents for an Investment Registration Certificate to the investment registration agency. The profile includes the following contents:

• Document requesting implementation of investment project, including commitment to bear all costs and risks if the project is not approved.
• Documents on the investor's legal status.
• Documents proving the investor's financial capacity.
• Proposed investment project. In cases where the law on construction stipulates the preparation of a pre-feasibility study report, the investor may submit a pre-feasibility study report instead of the investment project proposal.
• In case the investment project does not request the State to allocate land, lease land, or allow change of land use purpose, submit a copy of land use rights documents or other documents determining the right to use the location for implementation current investment project.
• Explanation content about technology used in investment projects for projects subject to appraisal and consultation on technology according to the provisions of law on technology transfer.
• BCC contract for investment projects in the form of BCC contract.
• Other documents related to the investment project, conditions and capacity requirements of the investor according to the provisions of law (if any).

Step 2: The investment registration agency considers the dossier and issues the Investment Registration Certificate to the investor within 30 days from the date of receipt of valid documents when the project meets all the regulations of law on: industries or occupations, location, planning of the city, market access conditions and so on.

4.3. Phase 3: Enterprise registration certificate application

Step 1: Prepare documents to set up a company

• After obtaining the Investment Registration Certificate, investors need to prepare documents to set up a company, including:
• Application for business registration.
• Company rules.
• List of members/ List of founding shareholders and shareholders who are foreign investors.
• Copy: Citizen identification card or Identity card or Passport of individual members; Establishment decision, Business registration certificate of the organization and authorization document; Legal personal identification documents of the authorized representative of the organizational member.
• Enterprise registration certificate or equivalent document must be consular legalized for organizational members.
• Investment registration certificate for foreign investors

Step 2: Submit application to Hue City City Department of Planning and Investment (Business Registration Office)

Working time: 05-07 working days from the date of receipt of complete and valid documents.

Step 3: Announce the business registration content

After completing the company registration procedures at the Department of Planning and Investment of Hue City City, the next step to set up a company is to announce the business registration content.

Information on business registration must be published on the National Information Portal within 30 days from the date of issuance of the Enterprise Registration Certificate.

Implementing agency: Announcement publishing department of the Business Registration Agency.

Working time: within 30 days

Step 4: Company seal

This is the final step in the process of set up a 100% foreign-owned company. This step is carried out after obtaining the Business Registration Certificate and posting the business establishment announcement.

The company engraves the seal and announces the use of the seal sample on the National Business Registration Portal. The company has the right to decide the seal model and number of seals.

Receiving agency: Enterprise registration office - Department of Planning and Investment of Hue City city - where the business is headquartered.

Working time: about 5-8 working days

• Note: Documents issued or certified by competent foreign agencies must be consular legalized and translated and notarized according to Vietnamese law. In addition, depending on the case, you must provide some other necessary documents.

4.4. Phase 4: Post licensing procedures

As mentioned above, foreign investors need to apply for sub-license if any.

5. How can you find legal advice when you set up a company in Hue City?

With more complicated requirements and procedures than domestic investors, it is certain that foreign investors shall encounter difficulties when they set up a company in Hue City. Therefore, to support foreign investors in setting up a company in Hue City, Phong & Partners is honor to introduce and provide you legal services with our knowledgeable and experiences in setting up a company in Hue City.

Find out more legal services of Phong & Partners at www.phong-partners.com   

5.1. Legal Counseling Package:

• Counseling on conditions, choosing investment forms and locations; investment incentive policies, tax policies, labor laws…;
• Counseling, setting up investment projects and conducting investment registration procedures in Vietnam;
• Counseling on legal issues throughout the implementation and operation of the project;
• Counseling procedures to set up company, establish representative offices and branches of foreign companies in Vietnam;
• Counseling all of the other issues when setting up a company in Vietnam.

5.2. Legal Procedures Package:

• Preparing all the documents;
• Guiding Clients to prepare dossiers needed;
• Submitting the application for investment registration and company registration at competent agencies;
• Conducting procedures for applying for sub-licenses for each conditional business line if required;
• And many other legal procedures.

To minimize risks and damages when starting you business in a strange market, it is necessary to "be friends" with lawyers to be provided with quick, timely and effective legal services.

6. FAQ related to set up a company in Hue City

(1) What are preferential policies when foreigners set up a company in Hue City?

Investment incentive policies in Vietnam are one of the top concerns when investors set up a company in Vietnam. Investment incentives are applied when the investor's project is eligible for investment incentives which may include Tax exemption, tax reduction, exemption from import tax, exemption or reduction of land use fees, land rent, land use tax…

For those who are the legal representative, the owner, members or shareholders of the company in Vietnam, they are entitled to a residence policy in VN with a business visa, in which, the maximum stay in Vietnam is up to 5 years.

(2) What are the forms when you set up a company in Hue City?

The foreign investors whom are individuals or organization can set up foreign-invested companies in Vietnam in the form of:

• One member liability limited company – the foreign investors hold 100% of the capital.
• Two members or more liability limited company – there are at least two members who put money/property in setting up a company. They share loss and profit under the level of contributing capital.
• Joint stock company - there are at least three shareholders who join the company. They may join the profit and share loss as per the policy of the Two members or more liability limited company but with the joint stock company, it can release stock and be listed on the stock exchange.

(3) What are payable taxes and expenses when you set up a company in Hue City?

The obligation to pay tax is one of the mandatory obligations for businesses regulated under Vietnamese law, including businesses of foreign investors.

After set up a company in Hue City, taxes for foreign-owned businesses include value added tax, corporate income tax and personal income tax.

The company may pay for some payable expenses such as salary and wages, insurance and other expenses for labors; office rent…

(4) What are industries that foreigners can own 100% capital when you set up a company in Hue City?

In principle, for industries that are not on the list of restricted market access, foreign investors are subject to the same market access conditions as domestic investors. This means that foreign investors will not be limited in their capital ownership ratio in businesses with industries that are not on the list of market access restrictions.

For industries in the list of restricted market access, the capital ownership ratio of foreign investors must comply with the provisions of relevant Vietnamese legal documents, in the List of restricted access Vietnam's market and international treaties on investment that Vietnam is a signatory to.

Examples of capital ownership limits for foreign investors:

If a foreign investor wants to invest in a Vietnamese credit institution, the capital ownership ratio will be determined according to Article 55 of the 2010 Law on Credit Institutions, amended in 2017:

• The share ownership ratio of a foreign individual must not exceed 5% of the charter capital of a Vietnamese credit institution;
• The share ownership ratio of a foreign organization must not exceed 15% of the charter capital of a Vietnamese credit institution, except for the case specified in Clause 3 of this Article;
• The share ownership ratio of a foreign strategic investor must not exceed 20% of the charter capital of a Vietnamese credit institution;
• The share ownership ratio of a foreign investor and related persons of that foreign investor must not exceed 20% of the charter capital of a Vietnamese credit institution.

Investors can refer to the statistical table of capital ownership ratios of foreign investors in some industries based on Vietnam's WTO Commitments on Services below:

(5) Virtual office, is it possible to set up a company in Hue City?

According to the Vietnamese law, the head office of the enterprise must be located in Vietnam, be the contact address of the enterprise and determined according to the administrative unit boundaries.

Thus, the law does not prohibit the case of one address being used as the headquarters for many businesses. Therefore, using a virtual office as the business registration address (headquarter address) is not contrary to the law.

However, there are not all of the case can apply for virtual office; and although using virtual office, it is required to have company's sign to show the company carries out business activities that location.

(6) Want to stay in Vietnam for 5 years, is setting up a company in Hue City possible?

Vietnamese law stipulates that DT visas (DT1, DT2, DT3, DT4) are issued to foreign investors in Vietnam and representatives of foreign organizations investing in Vietnam. Each kind of DT visas has its own period of residence in Vietnam corresponding with your capital amount.

For instance, with capital contribution from 50 billion VND to less than 100 billion VND, the foreign investor is granted a DT2 visa with a term of 05 years.

(7) What can make it difficult for you to set up a company in Hue City?

Although Vietnam has made great strides in attracting investment capital, a large part of foreign investors when set up companies in Hue City still find many difficulties and inadequacies:

Language barrier: language barrier is always be an obstacle for any foreigner when go abroad, especially when they set up a company in Hue City. All of the dossier need to be done in Vietnamese; and those must applied at proper competent agency. Hue City lawyer who have considerable experience and knowledge shall help the investor to prepare the dossier and work with the agencies.

Policy and regulations: It is impossible to foreign investor can know, updates and understand all of the policies and regulations when they set up a company in Vietnam. This may lead to not in time catching good incentives and other advantages for foreign investors. The role of Hue City lawyer at this time is increasingly emphasized in which they may provide you with proper regulations and potential of business in Vietnam.

Competent agency: Competent agency and dossiers may a huge difficult with foreign investors. The Vietnamese officer only conduct the legal administration procedures in Vietnamese. The foreign investor may not familiar to Vietnamese administrative system and they may face with many difficulties during the procedures of setting up a company in Hue City.

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