Services

Foreign Investment in Vietnam

General Information

Capital	Hanoi
Language	Vietnamese, English
Area	331,210 sq km
Population	98.9 million
Currency	VND (Vietnamese dong)
Harbor	HCM, Hai Phong, Da Nang

　　Vietnam is bordered by China to the north, Laos to the northwest, and Cambodia to the southwest. Ho Chi Minh City, also known by its former name of Saigon is the most populous city.

　　Vietnam being a member of WTO, and ASEAN has signed multinational trade agreements include Vietnam-EU Free Trade Agreement, Japan-Vietnam Economic Partnership Agreement, Asean-Hong Kong, China Free Trade Agreement…etc.

Major Types of Entity
　　There are four options of foreign investment in Vietnam:

1.	Representative Office: mainly engage in market research and business promotion, and is not allowed to participate in any profit-making activities.
2.	Wholly Foreign-Owned Enterprise: can be established by one or more foreign investors. There is no extra special requirement by Vietnam government for most businesses, except for particular business sectors, i.e. banking, insurance, real estate.
3.	Foreign Joint-Stock Company: a foreign investor may make capital contribution to a LLC or partnership. An entity with more than 51% foreign investor is deemed as foreign owned company.
4.	Branch: is a dependent unit of a foreign entity , and it is not common in Vietnam as the Vietnam government only allows certain industries such as banking, insurance (excluding life insurance) and tourism to set up branch offices.

Major Taxes in Vietnam

Tax	Rate	Scope
CIT	20%	Standard rate: 20% Preferential rates:10%, 15%, 17%
VAT	0%	Export goods/services
	5%	Essential goods/services
	10%	Standard rate
PIT	5-35%	Tax resident: 183-day rule
SST	1%-150%	Cigarettes, cigars, beer, dance hall, casinos, golf clubs, electric car…etc.
Social Insurance	10.5%	Employees
Social Insurance	21.5%	Employers
Exp.Duties	0%-45%	Most export goods are 0%, except minerals & forestry goods.
Imp.Duties	0%-135%	Most export goods are 0%, except minerals & forestry goods.
NRT	1%-40%	Petrol, oil, coal…etc
Land Use Tax	0.03%-0.15% (m2/ann.)	Non-agricultural Land Use- paid by landlord
BLT	VND 1 million (Representative Office)	Base on registered capital, payable annually starting from the 2nd year after incorporation
	VND 2 million (≤ 10 billion)
	VND 3 million (≥ 10 billion)

Note:

CIT-Corporate Income Tax
PIT-Personal Income Tax
NRT-Natural Resources Tax

VAT-Value Added Tax
SST-Special Sales Tax
BLT-Business License Tax

　　The standard Corporate Income Tax (CIT) rate is 20%. New foreign investment projects enjoy CIT incentives if meet the following conditions:

1.	Located in particularly difficult socio-economic areas (enjoy tax holidays for 4 years & 50% reduction for 9 years, and a 10% preferential tax rate during the whole project life).
2.	Encouraged investment projects: high-tech, new material technology, biotechnology, scientific research and development, software production and large manufacturing investment projects (tax holidays for 4 years & 50% reduction for 9 years, and a 10% preferential tax rate for the following 2 years).
3.	Engaged in social projects such as education, vocational training, sports, culture, and medical care (enjoy tax holiday for 4 years & 50% reductions for 5 years, and a 10% preferential tax rate during the whole project life).
4.	Located in difficult socio-economic areas (enjoy tax holiday for 2 years & 50% reductions for 4 years, and a 17% preferential tax rate for the following 4 years).

Note: The preferential CIT rate and tax holidays are calculated from the 1st profit-making year. If the enterprise has not derived profits within 3 years of commencing operations, the preferential policies will start from the 4th year of operation.

Employment
　　The Vietnam Labor regulations provide the legal options of probation, indefinite and definite labor contracts. The labor contract must follow the key contents as provided by laws. A labor contract must be signed by the employer and employee before the employment relationship.

　　The working hour limit is 8 hours per day or 48 hours per week.

　　Employees who have worked for one year are entitled to 12 days of annual leave; every 5 years of service, 1 additional day can be added. There are 11 paid public holidays each year. The maternity leave period is 6 months.

　　Compulsory insurance system in Vietnam include social insurance, health insurance and unemployment insurance. Any foreign employees for more than a year in Vietnam, and who have obtained a work permit are required to participate in the compulsory social insurance.

Rate	SI	HI	UI
Employee	8%	1.5%	1%
Employer	17.5%	3%	1%
Capped Wage/VND	$36,000,000①		$99,200,000② (Region I)

Note:

SI - Social Insurance
HI - Health Insurance
UI - Unemployed Insurance

①The capped wage of SI and HI is equivalent to 20 times of the
　national basic salary of VND 1.8 million.
②UI contributions are capped at 20 times the minimum regional
　salaries, based on the minimum wage after the adjustment on
　July 1, 2024.

Foreign Investment in Vietnam

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