Holding Companies in Vietnam
Vietnam is a very special country from a foreign investments point of view because of the distinct requirements related to opening a company here for each category of entrepreneurs: local and foreign. With respect to the latter category, Vietnam has also established the types of structures they can use if they want to establish operations in this country.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 in registering them here.
Our Vietnam company registration agents can explain the laws under which holding companies can be created in this country.
|Legal entities used|| |
Limited liability company (wholly foreign-owned, partially foreign-owned)
Joint stock company
|Registration with the Trade Register in Vietnam|
|Approx. 8 weeks|
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. There are three corporate forms, such a company can take, and these are:
- the single-member limited liability company, however, this is usually used by local investors;
- the multi-member limited liability company which can be used by foreign investors;
- the joint stock company which can be a suitable legal form for large operations conducted by a holding company.
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 such a company here, our company formation advisors in Vietnam can help you incorporate it.
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 the 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 with 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.
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 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.
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.