Tiếng ViệtVietnam is increasingly becoming a strategic investment destination for international enterprises due to its stable political environment, competitive labor costs, and young population. In the context of globalization and supply chain shifts, many foreign investors prioritize establishing a 100% foreign-owned company in Vietnam to gain full control over business operations, proactively expand into regional markets, and optimize profits.
However, to ensure effective implementation, investors must thoroughly understand the applicable legal conditions, administrative procedures, and potential legal risks when investing in Vietnam. This article by Lexconsult & Partners provides a comprehensive overview of the legal process for establishing a wholly foreign-owned enterprise in Vietnam in 2025, along with practical legal insights to help investors avoid common pitfalls and accelerate licensing procedures.
1. Legal Conditions for Establishing a 100% Foreign-Owned Company
Pursuant to the Law on Investment 2020 and the Law on Enterprises, foreign investors must meet the following conditions:
1.1. Business lines
– Must not fall under the list of prohibited investment sectors (Article 6 of the Law on Investment 2020);
– If operating in conditional business sectors, the investor must satisfy specific requirements such as legal capital, practicing certificates, and foreign ownership caps.
Examples: education, logistics, advertising services, e-commerce, etc.
1.2. Investor eligibility
– Must demonstrate financial capacity and relevant experience;
– Individuals or foreign organizations must prove the legal origin of their investment capital, transferred through an investment capital account.
1.3. Investment capital
– No general minimum capital requirement, but the registered capital must be appropriate to the scale and nature of the project;
– Certain sectors impose statutory capital requirements, e.g., real estate business requires a minimum capital of VND 20 billion.
2. Legal procedure for establishing a 100% foreign-owned company
Step 1: Obtain an Investment Registration Certificate (IRC)
Applicable to first-time foreign investors in Vietnam. The application dossier includes:
– Investment project proposal;
– Valid passport or business registration certificate of the foreign investor;
– Proof of financial capacity (bank balance confirmation, audited financial reports for the last 2 years);
– Documentation proving a legal office address.
Processing time: 15–30 working days.
Step 2: Obtain an Enterprise Registration Certificate (ERC)
After receiving the IRC, the investor proceeds with business registration at the Department of Planning and Investment. The dossier includes:
– Application for enterprise registration;
– Charter of the company;
– List of members/shareholders.
Processing time: 3–5 working days.
Step 3: Post-licensing procedures
– Engrave the company seal, open an investment capital account, and contribute charter capital within 90 days;
– Complete initial tax declarations, register a digital signature, and issue VAT invoices.
3. Common legal risks when establishing a 100% foreign-owned company
Although Vietnam encourages foreign investment, investors still face procedural and legal barriers. Below are typical legal risks:
3.1. Failure to verify conditional business lines may lead to IRC denial
Sectors such as education, logistics, real estate, healthcare, e-commerce, and advertising are subject to foreign ownership limits or require prior approvals. Failure to comply may result in IRC rejection, delaying market entry.
3.2. Inability to prove legal capital sources
Investment applications may be rejected for reasons such as:
– No bank confirmation of investment capital;
– Unnotarized bank statements or unclear documentation;
– Absence of audited financial reports for corporate investors.
3.3. Delays in capital contribution may lead to license revocation
Enterprises have 90 days from the issuance of the ERC to contribute their full charter capital. Common issues include:
– Failing to open an investment capital account on time;
– Failing to transfer capital adequately or punctually;
– Neglecting to notify the investment authority of capital contribution.
Violations may result in administrative sanctions or revocation of the IRC.
3.4. Misunderstanding profit remittance rules may trigger tax risks
Before transferring profits abroad, foreign-invested companies must:
– File tax returns accurately;
– Prepare audited financial statements;
– Remit through a designated investment account under SBV regulations.
Failure to comply may lead to corporate income tax arrears or denial of repatriation.
4. Legal guidance from foreign investment lawyers
To minimize legal risks and ensure regulatory compliance, foreign investors are strongly advised to consider the following:
4.1. Determine the correct business line at the outset
– Review the list of prohibited and conditional sectors under the Investment Law;
– Consider Vietnam’s WTO commitments and bilateral/multilateral agreements;
– Verify whether foreign ownership restrictions or joint venture conditions apply.
4.2. Prepare transparent financial documentation
– Provide a valid bank confirmation stating investment purpose;
– Submit recent audited financial reports (for organizations);
– Ensure all documents are translated and notarized as needed.
4.3. Develop a capital contribution plan
– Open a capital account immediately after obtaining the ERC;
– Transfer capital within 90 days as required;
– Submit a notice of capital contribution to the Department of Finance.
4.4. Seek early tax and remittance consultation
– Ensure tax compliance (CIT, foreign contractor tax, etc.);
– Have consistent audited financial statements and tax declarations;
– Register profit remittance with the State Bank of Vietnam.
4.5. Engage a legal advisor from the initial stage
Working with an experienced foreign investment lawyer helps:
– Shorten processing time;
– Avoid costly errors and document revisions;
Optimize investment structure aligned with long-term strategy.
5. Frequently Asked Questions
Can a foreign investor own 100% of a company in Vietnam?
→ Yes, provided the business line is not restricted or subject to foreign ownership limits. Certain sectors (e.g., real estate, logistics, education, advertising) may require joint ventures or special approvals.
How long does the setup process take?
→ On average:
IRC: 15–30 working days
ERC: 3–5 working days
Post-licensing procedures: 5–7 working days
With legal assistance and full documents, the process may be completed in 10–15 working days.
Is a physical office required for company registration?
→ Yes. A valid business address is mandatory. Residential apartments or restricted-use properties are not eligible.
Can individual foreign investors open a company?
→ Yes. Requirements: a valid passport, proof of financial capacity (bank statement), legal office address in Vietnam. No Vietnamese co-owner is required unless specified by law.
What is the minimum capital requirement?
→ There is no universal minimum, but the amount must align with the business scale. Some sectors require statutory capital: Real estate: ≥ VND 20 billion; Education: ≥ VND 5 billion; Logistics: varies by type.
Can profits be remitted abroad after capital contribution?
→ Yes, if the company has: Fulfilled all tax obligations; Audited financial statements; Complied with SBV remittance procedures.
Establishing a 100% foreign-owned company in Vietnam is a strategic move for international investors in 2025 and beyond. However, success depends on careful legal and financial preparation. Working with qualified investment lawyers ensures timely compliance, minimizes legal risks, and optimizes long-term outcomes.
Need tailored legal support for your investment plan? Contact LexConsult & Partners – a trusted legal advisor specializing in FDI and foreign-invested enterprises in Vietnam. We offer end-to-end legal services, including:
– Investment licensing & company incorporation;
– Dossier preparation & business line advisory;
– Long-term legal support for FDI companies.
Contact us today for a consultation: Lexconsult & Partners
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