Choosing a corporate structure

Establishing a company typically requires moderate or greater amounts of investment capital than other entry modes and can require several months to complete all steps in the process, before the company becomes operational. This is an expected risk of a fixed investment strategy, and for these reasons, it is important that investors first understand the Vietnam business, financial, consumer, or local cultural landscapes, and the options that might best help realize the goals of the investment. Choosing a corporate structure Vietnam permits 100% foreign ownership of a business for most sectors. Yet before choosing which type of company to open in Vietnam, it is important to consider different aspects of the target entity types, such as differences in structure, legal liability, statutory compliance requirements, time required to establish it, what types of activities it can engage in, and more. These considerations help to identify the appropriate business constraints, costs, requirements and risks, necessary to enable the company’s future targeted capabilities, developments, and growth. The below links explain these factors for each of the main entity types that can be set up in Vietnam. There are several types of foreign-invested corporate vehicles in Vietnam, the 3 more common of these are: Comparison of Business Structures RO Representative Office BO Branch Office LLC 100% Foreign-Owned Enterprise Separate legal entity No No Yes Liability Extension of parent company Extension of parent company Liability limited to capital contribution. Naming of the Entity Must be same as parent company Must be same as parent company Can be the same or different from parent company Permitted Activities Only market research and coordination. No business activities that yield profit.  Commercial activity within parent company’s scope Can be the same or different from the parent company How many Weeks to set up this Entity Type? 6 to 8 weeks 6 to 8 weeks 6 to 8 weeks Is an Annual Tax Return filing required?  No. Companies required to declare all employees’ Personal Income Tax (read about PIT).  Yes Yes Audit required?  Yes Yes Yes Summary of Advantages Easy registration procedure Can remit profits abroad ·    Limited liability to capital contribution ·    Freely engage in any registered business lines that are not banned by local laws Summary of Disadvantages Cannot conduct revenue generating activities Parent company bears liability Limited to certain industry sectors Parent company bears liability Cannot issue shares Maximum of 50 shareholders