Guide to Setting Up A Company in Vietnam

Vietnam is a hub for startups known for its young, skilled workforce, and a fast-growing economy. The country also has plenty of trade agreements and government initiatives to support Foreign Direct Investment (FDI) growth in the country. 

But before you commit to incorporating a business, you should understand how the process works, the legal structures available for foreigners, and foreign equity rules. In this article, we will break these down and discuss key alternatives to expanding your business in Vietnam.

Foreign Ownership Rules in Vietnam

Vietnam's investment framework operates under a Negative List. Business sectors in Vietnam are grouped into three tiers: fully open, conditional, and prohibited. To identify sectors, the country uses a classification system or a VSIC (Vietnam Standard Industrial Classification) code, with each belonging to a specific category in the Negative List. 

Most mainstream business activities are accessible to foreign investors in Vietnam, either with full ownership or through a conditional pathway. The key is verifying your specific VSIC code and business activities before committing to a structure.

Fully Open Sectors (100% Foreign Ownership Permitted)

If your business falls outside Vietnam's list of prohibited and conditional sectors, you're entitled to the same market access as a domestic investor. Companies open in fully open sectors enjoy 100% foreign equity without the need for a partner. 

The following sectors are broadly open to full foreign ownership:

• Manufacturing and processing
• Information technology and software development
• E-commerce
• Consulting and market research
• Wholesale and retail trading (subject to licensing for multiple outlets)
• Education services (excluding higher education and some specialised training)
• Hospitality (restaurants, cafes, hotels, and accommodation)
• Logistics and freight forwarding (though some sub-sectors have caps)
• Construction and real estate development (for approved project types)

Conditional Sectors (Additional Requirements Apply)

Conditional sectors are those where foreign investment is permitted, but subject to ownership caps, mandatory joint ventures, specific licences, or government approval before you can operate. As of 2026, there are around 142 conditional business lines in Vietnam. Common examples include:

• Telecommunications: Foreign ownership is capped and subject to national security review. Specific caps vary by type of telecom activity and typically require government approval.
• Banking and financial services: Foreign ownership in commercial banks is generally capped at 30%, or up to 49% with government approval. Non-bank credit institutions allow up to 50%.
• Real estate trading: Foreign investors can participate in approved project types but cannot own land outright (land in Vietnam is only leased, not owned). Condominiums are capped at 30% foreign ownership per project.
• Retail distribution (multiple outlets): Subject to an Economic Needs Test (ENT) before a foreign investor can open a second or subsequent retail location.
• Media, publishing, and broadcasting: Typically restricted or requires a local partner. Foreign ownership of content platforms and publishers remains tightly controlled.
• Education (higher and specialised): Permitted with conditions and specific licensing requirements from the Ministry of Education and Training.
• Healthcare and pharmaceuticals: Permitted but subject to additional licences and compliance requirements from the Ministry of Health.
• Data-related services: Added to the conditional list under the Law on Data 2024 (effective July 2025). Covers data intermediary services, data analysis and aggregation platforms, and data trading services.

Trade agreements can improve your access in conditional sectors. The CPTPP and the EU-Vietnam Free Trade Agreement (EVFTA) provide preferential treatment for eligible investors. Benefits include reduced ownership caps, simplified licensing, and faster approvals in sectors like retail, IT, and professional services.

Prohibited Sectors (Off-Limits to All Investors)

These are sectors that are completely off-limits to both local and foreign investment under Vietnamese Article 6 of the Law on Investment:

• Trading in narcotics
• Trading in hazardous chemicals, minerals, and wildlife specimens covered under CITES
• Prostitution
• Human trafficking and trade in human tissues, organs, or fetuses
• Human cloning
• Trading in firecrackers
• Provision of debt collection services
• Production and trade of e-cigarettes and heated tobacco products (banned as of January 2025)Choosing the Right Legal Entity

Your choice of legal entity determines how you operate, how you raise capital, and what compliance obligations you carry. There are four main options for foreign investors.

1. Limited Liability Company (LLC)

The LLC is the most common structure for foreign investors. It is straightforward to establish, supports 100% foreign ownership in eligible sectors, and limits your personal liability to your capital contribution.

There are two types:

• Single-Member LLC (SMLLC): One investor, either an individual or a corporate entity.
• Multi-Member LLC (MMLLC): Between 2 and 50 investors.

For most foreign investors entering Vietnam for the first time, the LLC is the practical starting point. It provides full operational control without the compliance burden of more complex structures.

2. Joint Stock Company (JSC)

The JSC is built for businesses planning large-scale fundraising or a future stock exchange listing. It operates as a separate legal entity and divides capital into freely transferable shares, making it easier to bring in venture capital or private equity.

The trade-off is compliance overhead. A JSC requires annual general meetings, audited financial statements, and board resolutions. This is significantly more demanding than an LLC. Choose this structure if your growth plan specifically requires it.

3. Representative Office (RO)

A representative office is suitable for foreign companies that want to research the Vietnamese market before making a full commitment. Setup is faster and less expensive than an LLC, but your parent company must have been operating for at least one year before you can apply. 

However, you are not allowed to sign contracts, issue invoices, or generate revenue. Its permitted activities are limited to market research, business liaison, and supporting the parent company. If your goal is generating revenue in Vietnam, an RO will not be sufficient.

4. Branch Office

A branch office can issue invoices and sign contracts under the parent company's name, which gives it more commercial functionality than a representative office. However, it is not a separate legal entity and is limited to specific regulated sectors, including banking, insurance, auditing, legal services, and education.

Branch offices carry tighter compliance obligations than representative offices. They are best suited for established foreign companies operating in those specific regulated industries.

Key Requirements Before You Register

To establish a business in Vietnam, you must meet baseline requirements before registration with the Department of Planning and Investment (DPI):

• Charter Capital: There is no fixed minimum for most industries, but the licensing authority will assess your proposed capital to confirm it is sufficient to fund operations until the business becomes self-sustaining. For most general commercial operations, capital ranges from USD 15,000 to USD 40,000. Capital-intensive sectors and regulated industries such as finance, healthcare, and aviation have their own fixed requirements. Your business plan must justify the amount you declare.
• At Least One Director: Every company in Vietnam must have at least one appointed director.
• At Least One Shareholder: You need a minimum of one shareholder, which can be an individual or a corporate entity.
• Legal Representative with Vietnamese Residency: Vietnamese law requires at least one legal representative who is physically based in Vietnam. Foreign nationals filling this role must hold a valid work permit or Temporary Residence Card.
• Registered Physical Address: A physical office address in Vietnam is mandatory. Virtual offices are heavily scrutinized and generally disallowed for conditional or regulated sectors. You must provide a signed lease agreement or MOU with your landlord as part of the application.

How to Register a Foreign Company in Vietnam

To legally operate a business in Vietnam, you need to register your company with the DPI. A standard registration process takes 6 to 10 weeks from submission to completing post-licensing procedures. Sectors that require additional regulatory approvals will take longer. Having complete, properly notarized documentation ready before you start is the most effective way to avoid delays.

Here’s an overview of the registration process:

1. Reserve Your Company Name: Submit your proposed company name to the DPI for approval. Names must not duplicate existing registered businesses or use prohibited terms. Once approved, the name is reserved until your registration is finalized.
2. Obtain the Enterprise Registration Certificate (ERC): an ERC is the official document that gives your company legal standing in Vietnam. It includes your company name, registered address, business registration number (which also functions as your tax ID), and legal representative details. The ERC is the equivalent of a Certificate of Incorporation.
3. Complete Post-Licensing Requirements: Within 30 days of receiving your ERC, you must complete the following steps. These are mandatory, and some carry specific deadlines:
4. Obtain Your Tax Identification Number and Set Up Payroll: Your tax code is issued with your ERC, but you must formally activate it with the local Tax Department. This step includes VAT registration (if your revenue qualifies), e-invoice setup, and confirming your obligations for Personal Income Tax (PIT) withholding on employee salaries.

An Alternative to Starting a Company in Vietnam

Starting a business in Vietnam is a long-term commitment that requires careful planning and capital. If you want to expand your business in the country or start a team in Vietnam, you may want to consider partnering with an Employer of Record (EOR). 

An EOR like RecruitGo already holds a legal entity in Vietnam. Your employees are formally employed through our entity, but they work entirely under your direction. RecruitGo handles employment contracts, payroll, tax withholding, social insurance contributions, and work permit sponsorship for foreign hires. You get a compliant team on the ground without setting up your own entity.

This works well for companies that are:

• Building a remote engineering, product, or support team in Vietnam
• Hiring a regional manager or market lead while evaluating the opportunity
• Onboarding staff immediately while their company registration is in progress
• Growing headcount without the compliance overhead of running a local entity

RecruitGo's EOR service in Vietnam starts from USD 49.99 per employee per month. No hidden fees. No entity setup costs.

If you need to invoice Vietnamese customers, hold assets, or operate under a local license, you need a registered company. If your goal is hiring people in Vietnam to support your broader operations, an EOR gets you there faster and at lower cost.

Book a free consultation with RecruitGo to determine your best options for your business.