Foreign investors interested in knowing if they can set up holding companies in Vietnam should know that this type of entity is not specifically defined by any laws here, however, there are no restrictions on registering them here.
Our Vietnam company registration agents can explain the laws under which holding companies can be created in this country.
| Quick Facts | |
|---|---|
| Legal entities used |
Limited liability company (wholly foreign-owned, partially foreign-owned) Joint stock company |
|
Incorporation method |
Registration with the Trade Register in Vietnam |
|
Incorporation time |
Approx. 8 weeks |
| Advantages |
Quick incorporation procedure, access to double tax agreements |
| Precautions | Legal address in Vietnam, resident director |
| Shareholding structure |
At least one shareholder |
| Minimum Capital |
10,000 USD for limited liability company and joint stock company |
| Taxation | 20% standard corporate tax rate. |
| Control | Full foreign ownership is available |
| Accounting and Reporting | Audited financial statements must be filed annually |
| Number of double taxation treaties | Approx. 80 |
Definition of the holding company in Vietnam
Foreign investors must comply with two sets of laws if they want to create holding companies in Vietnam.
The first one is the Enterprise Law which provides for the company registration process in Vietnam and the second one is the Investment Law which provides for the conditions under which foreigners can set up companies here.
The holding company can also be called a foreign-invested company and it will be subject to the same share capital requirements as any other type of foreign-controlled entity in Vietnam.
Our company formation specialists in Vietnam can explain the requirements for establishing a holding company.
We can also help you register your company’s name as a trademark in Vietnam.
Legal entities used to create holding companies in Vietnam
Compared to other jurisdictions that provide for specific regulations related to the establishment of holding companies, Vietnam does not impose special requirements.
The Vietnamese government has recently released a wide range of regulations and guidelines to entice foreign investors to open businesses there. A foreigner can incorporate a holding company in Vietnam as one of the aforementioned structures, under the following conditions:
- Single-member limited liability company: The single-member limited liability company is an entity owned by a single organization or person, according to Clause 1, Article 74 of Enterprise Law 2020. The company’s charter capital will serve as the owner’s limit on his/her obligation for debts and other liabilities;
- Multi-member limited liability company: A corporation with two to fifty members, either organizations or people, is referred to as a multi-member limited liability company. Except in the circumstances outlined in Clause 4, Article 47 of the Enterprise Law 2020, a member is liable for the debts and other liabilities of the company up to the amount of capital supplied to the company. Furthermore, a multi-member limited liability corporation cannot issue shares;
- Joint stock company: Vietnamese law refers to a joint-stock company, a type of corporation, as a shareholding company. Shares are owned by shareholders and are freely transferable between shareholders. The owners of a joint-stock corporation are not responsible for the company because it is a separate legal entity from its shareholders.
Apart from these, the foreign-owned limited liability company is one of the most appealing structures under which a holding company can be operated in Vietnam. For this purpose, a single shareholder of any nationality is required, with the mention that the entity must have at least one director who must obtain a Vietnamese work permit.
If you want to set up a holding company in Vietnam in any form mentioned above, you are welcome to get in touch with our agents.
The main characteristics of a Vietnamese holding company
Starting a business in Vietnam implies completing complex formalities, especially as a foreign investor.
One of the important is obtaining a license for the company. When it comes to opening a holding company, similar requirements must be met, however, running such an enterprise is also subject to certain particularities, as this entity is usually created for certain purposes.
Here are the main aspects to consider when choosing to operate such an entity in Vietnam:
- the holding company acts as a parent company with one or more subordinate companies called subsidiaries;
- the holding company can own all the shares or the majority of shares and capital in order to have decision power in its subsidiaries;
- the holding cannot enter commercial activities, it can only make decisions on behalf of the operations of the subsidiaries;
- it is usually created with the purpose of owning and controlling assets.
Among the assets that can be owned by a holding company in Vietnam are:
- real estate properties;
- intellectual property rights;
- shares and other financial instruments.
Considering such an enterprise does not engage in trading or other activities that require a business license, foreign investors interested in setting one up must only respect the requirements of obtaining the investment certificate.
Our Vietnamese company formation consultants can offer detailed information about the particularities of holding companies and can help foreign entrepreneurs who want to establish them.
Registration of a holding company in Vietnam
The registration of a Vietnam holding company will imply preparing the incorporation documents, but also a feasibility study which will be submitted to the authority registering the company. With respect to this authority, it can be the Provincial People’s Committee or the Industrial and Export Processing Zones Management Authority.
Before the registration of the Vietnam holding company, the investor must obtain an investment certificate. Based on this the registration certificate of the company will be issued by one of the authorities mentioned above.
The incorporation of a holding company in Vietnam will take longer than the establishment of any other type of company.
The virtual office is a service made available to local and international businesspeople and companies looking to establish a contact point in a nation or one or more cities. If you are planning to get a virtual office in Vietnam for your business, you can get help from our agents.
How to register a holding company as an entity with foreign investment capital
Vietnam is an appealing destination for foreign investors, and the 2015 amended Enterprise Law provides for the creation of economic organizations with foreign investment capital that can be set up by overseas businesspersons.
According to the law, such an entity must meet one of the following requirements:
- 51% or more of the share capital is owned by foreign entrepreneurs;
- 51% or more of the share capital is owned by a foreign company or;
- 51% or more of its share capital is divided between a foreign entrepreneur and the company.
Provided that any of these requirements, the licensing requirements are more stringent, which is why we recommend using our company incorporation services in Vietnam if you are a foreign investor and want to create a holding company.
Steps to open a holding company in Vietnam
After amending the Enterprise Law and the Investment Act in 2015, the incorporation procedure of a holding company in Vietnam has been simplified, as the appraisal of the application has been abolished.
This means that the process now implies the registration of the application and the issuance of the investment certificate when it comes to foreign ownership of such an enterprise.
With respect to the investment certificate, the minimum amount to obtain it is 10,000 USD.
Why open a company in Vietnam as a holding?
Vietnam has modified the relevant legislation to promote foreign investment. After joining the WTO, Vietnam committed to treating domestic and foreign investors equally while conducting business.
The Vietnamese government pledges to assist foreign companies looking to invest and conduct business in Vietnam by offering the best possible conditions. You can find below some reasons for opening a holding company in Vietnam:
- Geographical location: Vietnam has a significant geographic advantage because it borders numerous Asian nations, particularly China. In terms of trade with other ASEAN members, Vietnam serves as the region’s portal of entry. This country has also a significant location near maritime routes due to its lengthy coastline, which creates suitable conditions for import and export;
- International investment agreements: Having 9 bilateral investment treaties and 20 treaties with investment provisions, Vietnam is a party to several international investment agreements. Particularly, Vietnam has joined the CPTPP and EVFTA, two significant FTAs that will greatly benefit its import and export to and from signatory nations. You can learn about these agreements from our company formation agents. They can guide you if you are eligible to seek benefits from these agreements;
- Effective legal system: To foster an environment that is open and equitable for international investors, the Vietnamese legal system is continually being improved and developed. The Vietnamese law specifically contains provisions for the protection of investments, such as protection against expropriation.
If you are a foreigner who wants to invest in Vietnam by incorporating a holding company, you can get in touch with our agents. They can explain to you in detail all the other benefits you can get by investing in this country, for instance: labor force, infrastructure, etc.
Tax incentives in Vietnam
If you want to set up a holding company or any other type of company in Vietnam you should know the main tax incentives available in this country.
Vietnam’s tax incentives stand out as a distinctive aspect of the tax system and are used across the nation on a range of businesses and projects.
Three types of tax incentives are offered to businesses operating in Vietnam, according to the country’s investment law:
- a reduced corporate income tax rate for a specific time frame or the course of the project’s execution;
- Import taxes on supplies and components utilized in the project that are imported as fixed assets may be waived or reduced;
- A waiver, or a cut in land rents/tax.
The categories of projects that are eligible for incentives and the types of incentives that these projects are eligible for are specified in the Vietnam Law on Investment and its subsequent decrees and circulars.
The most frequent incentives are those offered for investments made in the state’s specialized regions or investment zones.
If you want to take advantage of these tax incentives, you can get help from our agents. They can help you incorporate a holding company in Vietnam and benefit from the tax incentives available for this type of company.
Taxation of holding companies in Vietnam
From a taxation point of view, holding companies must register with the General Department of Taxation just like any other enterprise. They must also register for VAT purposes.
When it comes to the taxes to be paid, the following must be considered:
- the corporate tax which has a standard rate of 20% on annual net profits;
- the same 20% rate applies to capital gains obtained by companies;
- the withholding tax rate in Vietnam is 5% if the shareholders are natural persons;
- the VAT is set at a standard rate of 10% (one of the lowest in the region), but a 5% rate is also applicable to the sale and supply of certain goods, respectively services.
For information on the taxation of holding companies and assistance in setting one up, please contact our Vietnam company registration consultants.
In addition to setting up a holding company in Vietnam, a well-known company structure in this country is the branch office.
A foreign business can operate in Vietnam through an office of this kind and perform the same tasks as it does in its home country.
Our company incorporation agents in Vietnam can offer you assistance to incorporate a branch office.